Onchagwa v Coast Bottlers Limited & another (Cause 914 of 2017) [2024] KEELRC 951 (KLR)
The bottom line
#A Kenyan court confirmed labour outsourcing is legal but ruled a generic termination notice without reasons makes the dismissal unfair.
What this practically means
#Executive summary
#Key legal issues
#Who was the employer of the claimant
The 2nd respondent was the employer; the 1st respondent lawfully outsourced non-core labour to the 2nd respondent as an independent contractor.
The court applied the Wrigley parameters for credible outsourcing, noting the 1st respondent outsourced non-core labour through an agreement dated 7 September 2015. The claimant himself admitted employment by the 2nd respondent, who paid his wages and statutory dues through his bank account. The CBA in place related only to the 1st respondent.
Whether the termination was unfair
Yes - the general notice dated 1st November 2016 was not specific to the claimant and gave no reasons, breaching Sections 35 and 41 of the Employment Act.
The 2nd respondent's notice of 1st November 2016 was a general notice to all employees, not specific to the claimant, who was not unionised and had no CBA protection. A terminating notice must give reasons to allow the employee to respond under Section 47(5). The failure met the threshold of unfair termination under Sections 41, 43 and 45, entitling the claimant to notice pay and compensation.
Remedies
One month's notice pay and one month's compensation awarded against the 2nd respondent; leave, gratuity and extra notice claims failed; certificate of service ordered.
Notice pay at one month (ksh.15,500) was due under Section 35 as the claimant was not unionised. Terminal dues including leave had been paid, and leave application forms were produced. Gratuity accrued only under the CBA not applicable to him. Compensation was reduced because he was paid terminal dues immediately and transitioned to a new employer. Certificate of service is mandatory under Section 51.
Legal principles established
#- Outsourcing of labour, although not legislated in Kenya, is an acceptable labour practice subject to parameters such as not outsourcing core functions or using it to escape accrued obligations.
- A general notice of termination not specific to the employee and without reasons does not satisfy Sections 35 and 41 of the Employment Act and results in unfair termination.
Court orders
#- 1.Judgment entered for the claimant against the 2nd respondent for notice pay ksh.15,500
- 2.Compensation of ksh.15,500 awarded against the 2nd respondent
- 3.Issuance of Certificate of Service
- 4.Each party to bear its costs
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Onchagwa v Coast Bottlers Limited & another (Cause 914 of 2017) [2024] KEELRC 951 (KLR)", Case Analysis (2024). ELRC Cause (Mombasa). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/951/eng@2024-04-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.