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ELRCPartially AllowedNot stated in judgment· [2023] KEELRC 3261 (KLR)

Adeya v Quick Mart Limited (Cause E156 of 2022) [2023] KEELRC 3261 (KLR)

Employment and Labour Relations Court
7 December 2023
BOByram Ongaya
2,319 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled that calling a worker a 'consultant' doesn't avoid employment law—Quickmart had to pay Kshs.945,000 for unfair termination.

What this practically means

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Executive summary

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The claimant, a human resource practitioner recruited through Summit Recruitment for the position of Head of Human Resource following the merger of Quickmart Limited and Tumaini Self-Service Limited, sued the respondent alleging he was an employee unfairly terminated on grounds of poor performance. He sought declarations of employment status and unfair termination, twelve months' compensation of Kshs.8,400,000, house allowance, overtime, NHIF/NSSF declarations, and constitutional damages. The respondent maintained he was a consultant engaged under a consultancy agreement for six months, invoicing fees subject to 5% withholding tax, whose services were properly ended per the contract. The court held that despite the consultancy label and invoicing, the contract titled 'Confidential Contract of Service' was a probationary contract of service: the respondent controlled the claimant, integrated him into its establishment with uniform, appraisal, equipment and organogram listing. On termination, the letter of 28.02.2020 took effect on 01.03.2020 without the contractually mandatory 30 days' notice, making the termination procedurally unfair under section 45 of the Employment Act. On remedies, the court awarded two months' gross salary less tax (Kshs.945,000) under section 49, considering the short service and the absence of evidence of poor performance. Overtime, house allowance and constitutional damages claims were declined for want of foundation; declarations on NHIF and NSSF contributions issued. Judgment was entered for the claimant on the declarations and compensation, with costs of the suit awarded to the claimant.

Key legal issues

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01

Contract of service versus consultancy (contract for services)

Holding

Despite the title 'consultancy' and invoicing of fees, the agreement was a probationary contract of service; the claimant was an employee

Reasoning

The court examined the written contract: it was titled a contract of service, provided for conversion to permanent service, prescribed working hours, supervision, uniform, performance evaluation and office equipment. The claimant was controlled by and fully integrated into the respondent's establishment and appeared on its organogram, so the substance outweighed the consultancy label.

p. 4
02

Unfairness of termination

Holding

Termination was procedurally unfair because the contractual 30 days' notice was not served; the letter gave effect from 01.03.2020

Reasoning

The contract required either party to give 30 days' notice in writing or payment of 30 days' consultancy fee in lieu. The termination letter took effect on 01.03.2020 while the contract ran to 13.04.2020. Even if performance was wanting, the mandatory one month's notice had to be served, and its omission was a breach making the termination unfair.

p. 5
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Remedies for unfair termination

Holding

Two months' gross salary less tax awarded under section 49; declarations on employment status, unfair termination and NHIF/NSSF contributions issued

Reasoning

The court applied the section 49 factors: no due notice, less than two months of service, and the alleged poor performance not demonstrated by evidence. Overtime, house allowance and constitutional damages were declined for want of contractual, statutory or evidentiary foundation; NHIF and NSSF declarations issued but liquidated statutory claims were not pursued.

p. 5

Legal principles established

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  • The true nature of an engagement is determined by the substance of the contract and the parties' conduct, not the label used; control and integration in the establishment make the worker an employee notwithstanding descriptions of 'consultancy'.
  • Failure to serve the contractually mandatory notice of termination renders a termination procedurally unfair under section 45 of the Employment Act.

Court orders

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  1. 1.Declaration that the claimant was an employee within the meaning of the Employment Act 2007
  2. 2.Declaration that the termination of the claimant's employment on account of poor performance was unfair, wrongful and unlawful
  3. 3.Award of Kshs.945,000.00 less tax for the unfair termination payable by 01.02.2023, failing which interest at court rates from the date of judgment till full payment
  4. 4.Declaration that the respondent ought to have contributed for the claimant's NHIF and NSSF contributions
  5. 5.Respondent to pay costs of the suit

Authorities

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Legislation

  • Employment Actsections 45, 49, 31
  • Constitution of KenyaArticles 41, 47
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act 2007 and Articles 41 and 47 of the Constitution of Kenya as invoked by the parties

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Adeya v Quick Mart Limited (Cause E156 of 2022) [2023] KEELRC 3261 (KLR)", Case Analysis (2023). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3261/eng@2023-12-07

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.