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ELRCPartially AllowedLamu CMELRC Appeal arising from Lamu CMELRC No. E03 of 2021· [2023] KEELRC 3461 (KLR)

Hamisa v Karisa (Appeal E066 of 2023) [2023] KEELRC 3461 (KLR)

Employment and Labour Relations Court
19 December 2023
1,490 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 a company's operations manager can't be sued personally for a worker's dues unless an employment relationship with them is first proven.

What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court at Mombasa against the judgment of the learned magistrate in Lamu CMELRC No. E03 of 2021 delivered on 4 July 2023. The respondent, employed as a security guard, claimed terminal dues including notice pay, house allowance, unpaid leave, underpayments, compensation, overtime, NHIF contributions and service pay, alleging unfair termination and underpayment. The appellant denied any employment relationship with the respondent, stating he was the operations manager of Fayyaz Bakery Limited and had not employed the respondent in his personal capacity. The trial magistrate found an employment relationship, lifted the corporate veil of Fayyaz Bakery Limited, and held the appellant personally liable for the terminal dues with costs. On appeal, Mbarũ J re-evaluated the record as required on a first appeal. The court found the respondent's own evidence fatal to his claim: he admitted being hired and paid through his supervisor Shukri, admitted he had wrongly sued Fayaz, and was never paid by the appellant. The appellant produced a letter of appointment dated 2 June 2015 showing the respondent as an employee of Fayyaz Bakery Limited. The court held the trial court erred in lifting the corporate veil before establishing an employment relationship, and that without such a relationship the trial court lacked jurisdiction and should have declined to assess the claims. The appeal was allowed, the lower court judgment was set aside in its entirety, and each party was ordered to bear their own costs for both the appeal and the proceedings before the lower court.

Key legal issues

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01

Existence of an employment relationship between the parties

Holding

No employment relationship was established between the respondent and the appellant; the respondent admitted being aware of the company and that wages were paid by his supervisor Shukri, never by the appellant

Reasoning

The respondent testified he was hired by Shukri, guarded the Mtwapa farm, and was paid through Shukri. He admitted having wrongly sued Fayaz. The appellant produced a letter of appointment dated 2 June 2015 showing the respondent as an employee of Fayyaz Bakery Limited. The nexus between the respondent and the appellant within an employment relationship was lost, so the core foundational claim failed.

p. 3
02

Lifting of the corporate veil by the trial court

Holding

The trial court erred: lifting the corporate veil was premature before establishing an employment relationship, and Fayyaz Bakery Limited was not a party to the suit

Reasoning

The respondent should have amended his pleadings to include Shukri and Fayyaz Bakery Limited once the appellant denied the employment relationship and produced the appointment letter. Proceeding against the appellant by piercing the veil without first establishing the employment relationship, and against a non-suited company, was error rendering the judgment unsustainable.

p. 3
03

Jurisdiction of the trial court

Holding

Without an employment relationship, the lower court lacked jurisdiction over the employment claims and ought to have declined to assess terminal dues

Reasoning

The court reasoned that the question of the employment relationship was so fundamental that, absent it, the suit was not properly before the trial court; it should have 'downed its tools'. Assessing terminal dues against a non-suited party was therefore an error going to jurisdiction.

p. 3

Legal principles established

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  • Upon a claim being filed, the employer has a duty to submit work records under Section 10(6) and (7) of the Employment Act, 2007, and once produced they are primary and lawful evidence unless negated
  • An employment relationship must first be established before a court can lift the corporate veil to fix personal liability on an individual
  • Without an employment relationship, the court lacks jurisdiction over employment claims

Court orders

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  1. 1.The appeal succeeds
  2. 2.The judgment in Lamu CMELRC No. E03 of 2021 is set aside in its entirety
  3. 3.Each party to bear own costs for the appeal and the proceedings before the lower court

Authorities

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Legislation

  • Employment Act, 2007Section 10(6) and (7)

Cases cited (3)

  • Casmir Nyankuru Nyaberi v Mwakikar Agencies Limited
    [2016] eKLR
  • Zarika Adoyo Obondo v Tai Shunjun & another
    [2020] eKLR
  • Galgalo Jarso Jillo v Agricultural Finance Corporation
    [2021] eKLR
On appeal from
Magistrates' Court (ELRC), Lamu
Lamu CMELRC No. E03 of 2021
Jurisdiction invoked
First appeal from the subordinate court in employment and labour relations matters

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, "Hamisa v Karisa (Appeal E066 of 2023) [2023] KEELRC 3461 (KLR)", Case Analysis (2023). Lamu CMELRC Appeal arising from Lamu CMELRC No. E03 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3461/eng@2023-12-19

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