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ELRCDismissedCause No E921 of 2022· [2024] KEELRC 763 (KLR)

Brinken v Jos Hansen & Soehne (East Africa) Ltd (Cause E921 of 2022) [2024] KEELRC 763 (KLR)

Employment and Labour Relations Court
11 April 2024
BMB. O. M. Manani
1,028 words in judgment
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The bottom line

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A Kenyan company director can also be an employee, and employers can't dodge terminal benefits claims through preliminary objections after admitting employment in their defence.

What this practically means

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Executive summary

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The Claimant sued the Respondent for terminal benefits of Ksh. 7,202,605.00, contending he served as General Manager and later Managing Director before the parties mutually separated in March 2022. In its Statement of Response, the Respondent admitted the Claimant's employment history and that he was a diligent employee, but disputed the quantum, asserting the agreed exit dues were Ksh. 4,976,086.96. The Respondent then filed a Notice of Preliminary Objection on 1st December 2023 contending, for the first time, that there was no employment relationship because the Claimant was a director, and that the suit should be struck out. The court, per B. O. M. Manani, Judge, held that a preliminary objection must be a pure point of law determinable from the pleadings without extraneous evidence. The existence of an employment relationship, which the Respondent had itself conceded in its defence without amending it, was a factual issue requiring trial evidence. Further, relying on Robert Stack v Ajar Tec Ltd and the Asanyo case, the court held that directorship does not of itself preclude a concurrent employment relationship; what is required is a clear agreement separating the two roles. The preliminary objection was held to be devoid of merit and was dismissed with costs to the Claimant. The substantive claim for terminal benefits remains for determination at trial.

Key legal issues

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01

Whether the preliminary objection was a pure point of law

Holding

It was not; it sought to contest the existence of an employment relationship, a factual matter requiring evidence.

Reasoning

The court held that preliminary objections must be determinable from the pleadings and the law without more. The existence of an employment relationship, especially where the defence had conceded it, required trial evidence and could not be resolved summarily on extraneous material.

p. 2
02

Whether a director can also be an employee of the company

Holding

Yes; directorship does not preclude a concurrent employment relationship, which requires a clear agreement separating the two roles.

Reasoning

Relying on Robert Stack v Ajar Tec Ltd and the Asanyo case, the court distinguished between an office-holder director, who is not without more an employee, and a director separately engaged under a contract of service. Whether the Claimant fell in the latter category required evaluation of evidence at a full trial.

p. 2
03

Effect of the Respondent's concessions in its Statement of Response

Holding

Having conceded employment and diligence in the defence, the Respondent could not contradict those concessions via a preliminary objection without amending its defence.

Reasoning

The Respondent admitted at paragraphs 3 and 4 of its defence that the Claimant was employed as General Manager and later Managing Director and was diligent. It could not, without amending the defence, file a preliminary objection disputing the very relationship it had conceded.

p. 2

Legal principles established

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  • A preliminary objection must be founded on a pure point of law and cannot rest on matters requiring proof by extraneous evidence.
  • A company director may concurrently be an employee of the company if there is a clear agreement separating the two roles; directorship per se does not negate employment.
  • A party cannot dispute through a preliminary objection a fact it has already conceded in its pleadings without amending the defence.

Court orders

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  1. 1.The Notice of Preliminary Objection dated 1st December 2023 is dismissed
  2. 2.Costs of the preliminary objection awarded to the Claimant

Authorities

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Legislation

  • Employment and Labour Relations Court (Procedure) RulesRule 28(3)

Cases cited (4)

  • Robert Stack v Ajar Tec Limited
    [2015] EWCA Civ 46
  • Rift Valley Water Services Board and Others v Geofirey Asanyo and Others (the Asanyo case)
    Nakuru Court of Appeal Civil Appeal No. 60 of 2015 consolidated with Civil Appeal No. 61 of 2015 (unreported)
  • McMillan v Guest
    [1942] AC p.561
  • Parsons v Albert J. Parsons and Sons Ltd
    [1979] ICR p.271
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the ELRC Act; suit for terminal benefits before the ELRC

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, "Brinken v Jos Hansen & Soehne (East Africa) Ltd (Cause E921 of 2022) [2024] KEELRC 763 (KLR)", Case Analysis (2024). Cause No E921 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/763/eng@2024-04-11

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