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ELRCPartially AllowedAppeal from SPM Hon R. Odenyo's judgment of 3rd March 2022· [2024] KEELRC 573 (KLR)

Farm v Kituyi (Employment and Labour Relations Appeal E007 of 2022) [2024] KEELRC 573 (KLR)

Employment and Labour Relations Court
7 March 2024
3,506 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~14 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court cut a wage underpayment award from Kshs 1.7 million to about Kshs 45,000, but confirmed the worker was an employee and that old claims can still be filed.

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 (Maureen Onyango J) against a trial magistrate's judgment (Hon R. Odenyo SPM, 3rd March 2022) which had declared the Respondent's termination malicious, unlawful, unfair and unprocedural and awarded him one month's pay in lieu of notice (Kshs 7,500), compensation (Kshs 22,500), underpayment of Kshs 1,732,841.21, a certificate of service, costs and interest. The Appellant contended the Respondent was an independent contractor, not an employee, and that the trial court erred in applying the Regulation of Wages (Agricultural Industry) (Amendment) Order 2018 rather than the orders in force when the Respondent left employment in May 2016. The court held, applying the wages-payment test from Shena Security Co Ltd v Afropak, that payment of Kshs 250 per day fortnightly was indicative of wages, making the Respondent an employee under section 2 of the Employment Act. The ground challenging the duration of employment was held abandoned as it was not submitted on. On underpayment, the court agreed the trial magistrate erred in applying the 2018 wages order and, in the absence of the Respondent's evidence of his earnings or the relevant legal notices, recomputed underpayment using the statutory minimum wage legal notices from 2011 to 2015, limiting the award to the differential between statutory minimum and actual pay, quantified at Kshs 44,964.60. The court also held that section 90 of the Employment Act limits only the filing of claims, not back pay recoverable. The trial judgment was upheld except for the underpayment award, which was set aside and substituted with Kshs 44,964.60; each party was ordered to bear its own costs of the appeal.

Key legal issues

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01

Whether the Respondent was an employee or an independent contractor

Holding

The Respondent was an employee within the meaning of section 2 of the Employment Act, since he was paid wages of Kshs 250 per day paid fortnightly

Reasoning

Courts look at the terms of payment. Payments made by way of wages or salaries indicate a contract of service, whereas fees or commission indicate a contract for service. RW 1 admitted the Respondent was paid Kshs 250 per day fortnightly, which is indicative of wages. The Appellant, custodian of employee records, produced no documents to disprove employment.

p. 7
02

Whether the trial court erred in holding employment ran from 1999 to 2016

Holding

The ground was abandoned as it was not submitted on by the Appellant

Reasoning

Although raised as ground 4 in the Memorandum of Appeal, the issue was not listed among the issues for determination in the Appellant's submissions and was therefore not argued. The court concluded it stood abandoned.

p. 7
03

Whether the underpayment award was erroneous

Holding

The trial court erred in applying the 2018 Wages Order instead of the orders in force during the material years; the award was recomputed at Kshs 44,964.60

Reasoning

The correct measure is the difference between the statutory minimum wage under the legal notices in force for each year of alleged underpayment and what was actually paid. The Respondent produced no evidence of his earnings or the relevant legal notices. Based on RW1's admission of four years' work at Kshs 250 per day, the court recomputed underpayment for three years at Kshs 44,964.60.

p. 7
04

Whether section 90 of the Employment Act limits back pay to three years

Holding

Section 90 limits only the filing of claims, not the outcomes of such claims; how far back an employee can claim depends on the nature of the claim and the merits of each case

Reasoning

The court reasoned that section 10(6) requires employers to keep records for five years after termination and section 10(7) shifts the burden of proof to an employer who fails to produce them, which would be pointless if claims were limited to three years. Employees often refrain from suing while still employed for fear of losing their jobs.

p. 7

Legal principles established

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  • Payment by way of wages on a periodic basis is indicative of a contract of service rather than an independent contractor arrangement
  • Section 90 of the Employment Act limits only the filing of claims and does not limit back pay or unpaid benefits recoverable to three years
  • Where an employer fails to produce records, underpayment may be assessed on the evidence available and the admissions of the employer's witness

Court orders

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  1. 1.The award of underpayment of Kshs 1,732,841.21 is set aside and substituted with an award of Kshs. 44,964.60
  2. 2.The rest of the award remains undisturbed
  3. 3.The award of costs and interest by the trial court is not disturbed
  4. 4.Each party shall bear its own costs of the appeal

Authorities

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Legislation

  • Employment Actsections 2, 10(6), 10(7), 49(1)(c), 51, 90
  • Regulation of Wages (Agricultural Industry) (Amendment) Order 2018
  • Regulation of Wages (Agricultural Industry) (Amendment) Order 2015
  • Legal Notice No. 63 of 10th June 2011minimum wage for farm foreman
  • Legal Notice No. 70 of 2nd July 2012minimum wage for farm foreman
  • Legal Notice No. 196 of 30th August 2013minimum wage for farm foreman
  • Legal Notice No. 116 of 26th June 2015minimum wage for farm foreman

Cases cited (5)

  • Selle & Another v Associated Motor Boat Company Ltd & Others
    [1968] EA 123
  • Fredrick Byakika v Mutiso Menezes International
    (2016) eKLR
  • Wycliffe Juma Ilukol v Board of Management Father Okodui Secondary School
    (2022) eKLR
  • Christine Adot Lopeyio v Wycliffe Mwathi Pere
    (2013) eKLR
  • Shena Security Co Ltd v Afropak (Nig.) Ltd & 2 Others
    [2008] 18 NWLR
On appeal from
Magistrates' Court (SPM Hon R. Odenyo)
Jurisdiction invoked
First appeal from the trial magistrate's judgment in an employment dispute under the Employment Act

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, "Farm v Kituyi (Employment and Labour Relations Appeal E007 of 2022) [2024] KEELRC 573 (KLR)", Case Analysis (2024). Appeal from SPM Hon R. Odenyo's judgment of 3rd March 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/573/eng@2024-03-07

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