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ELRCPartially AllowedKilifi ELRC Appeal arising from Kilifi CM ELRC No. E23 of 2022· [2024] KEELRC 1412 (KLR)

Lwanga v Nation Media Group Limited (Appeal E017 of 2023) [2024] KEELRC 1412 (KLR)

Employment and Labour Relations Court
16 May 2024
3,183 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

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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 Malindi against the judgment of 8 September 2023 in Kilifi CM ELRC No. E23 of 2022, in which the learned magistrate held that the appellant, engaged as a correspondent under an agreement dated 1 January 2020, was an independent contractor and not an employee, yet proceeded to award notice pay of Ksh.15,000 and leave pay of Ksh.30,000. The appellant challenged the finding that he was an independent contractor, relying on the definition of employee and contract of service under Section 2 of the Employment Act, 2007, the deduction and remittance of PAYE, the payment statement under the payroll, and case law on distinguishing contracts of service from contracts for service. The respondent maintained that the relationship was governed by a retainer contract terminable under clause 6.1. Allowing the appeal, M. Mbarũ J held that on the entirety of the agreement and payment records the appellant was an employee: he was paid a monthly wage under the guise of a retainer, enjoyed 25 leave days under the guise of relief, was covered by medical insurance, and suffered tax deductions at source under Sections 20 and 49(2) of the Act. The termination notice of 24 May 2021 assigned no reason and was therefore unlawful and unfair. The court set aside the trial judgment and ordered compensation of Ksh.261,966 (six months at the last gross wage of Ksh.43,661), notice pay of Ksh.43,661 and leave pay of Ksh.43,661, but declined service pay because the engagement lasted only 17 months and the appellant enjoyed medical cover, satisfying Section 35(5) and (6). Costs of the appeal were awarded to the appellant.

Key legal issues

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01

Whether the appellant was an employee or an independent contractor

Holding

The entirety of the agreement and the payment records showed an employment relationship; the retainer was a monthly wage, the 25 days relief were leave days, PAYE was deducted at source and the appellant enjoyed medical cover, so he was not an independent contractor.

Reasoning

The court re-evaluated the correspondent agreement. Clauses 3.4 and 3.6 provided for tax deduction at source and 25 relief days on retainer. The payment statement showed gross wage, taxable wage and tax deduction, replicating Section 20 records. Relying on the Alfajiri Villas hallmarks of an independent contractor (own hours, own business, invoicing, no PAYE or leave), none applied to the appellant.

p. 5
02

Whether the termination was lawful and fair

Holding

The termination notice of 24 May 2021 assigned no reason and was issued under the mistaken belief there was no employment relationship; it was unlawful and unfair.

Reasoning

Under Sections 35, 41, 43, 45 and 47(5) of the Employment Act, the employer must prove a valid and fair reason and follow fair procedure including notification and hearing. No reason was assigned for the termination here. The payment of one month in lieu of notice was for work done and did not amount to notice pay.

p. 6
03

Assessment of remedies

Holding

Notice pay and compensation were computed on the last gross wage of Ksh.43,661 under Section 49(2); the trial court's 6 months compensation was adopted; annual leave pay of Ksh.43,661 was awarded for 30 accrued days; service pay was refused.

Reasoning

The last payment statement showed a gross/taxable wage of Ksh.43,661, the applicable base under Section 49(2). The magistrate's 6-month compensation allocation was retained given her advantage of hearing witnesses. The relationship lasted 17 months under the agreement, and the medical cover benefit disentitled the appellant to service pay under Section 35(5) and (6).

p. 6

Legal principles established

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  • Where a purported contractor is paid a monthly wage, enjoys leave relief, is on the payroll with PAYE deducted and holds medical cover, the relationship is one of employment despite contractual labels
  • Termination of employment requires notice and a valid and fair reason proved by the employer under Sections 35, 41, 43 and 45 of the Employment Act

Court orders

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  1. 1.Judgment in Kilifi CM ELRC No. E23 of 2022 set aside
  2. 2.Declaration that the appellant was an employee of the respondent
  3. 3.Declaration that employment was terminated unlawfully and unfairly
  4. 4.Compensation awarded at Ksh.261,966
  5. 5.Notice pay Ksh.43,661
  6. 6.Leave pay Ksh.43,661
  7. 7.Costs of the appeal to the appellant

Authorities

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Legislation

  • Employment Act, 2007Sections 2, 20, 35, 35(5) and (6), 41, 43, 44, 45, 47(5), 49(2)
  • Employment and Labour Relations Court Act, 2011Section 12
  • Industrial Court Act, 2011

Cases cited (11)

  • Benjamin Joseph Omusamia v Underhill Spring Restaurant
    [2021] eKLR
  • Ready Mixed Concrete (South East) Limited v Minister of Pension and National Insurance
    [1968] 2 QB 497
  • Paul Ochieng Agola v Gateway Maine Services Limited
    [2018] eKLR
  • Edward Gacheru v Nation Media Group Limited
    [2019] eKLR
  • Fredrick Byakika v Mutiso Menezes International Unlimited
    [2016] eKLR
  • Kenya Hotel & Allied Workers Union v Alfajiri Villas (Magufa Ltd)
    [2014] eKLR
  • National Bank of Kenya Limited v Pipeplastic Samkolit (K) Ltd & Another
    Civil Appeal No. 95 of 1999
  • John Wango Oduge v Nation Media Group Limited
    Cause No. 667 of 2010
  • Christine Adot Lopeyio v Wyclifie Mwathi Pere
    [2013] eKLR
  • Leonard Musitsa Endoli v Odds and Ends Limited
    [2022] eKLR
  • Pius Machafu Isindu v Lavington Security Guards Limited
    [2017] eKLR
On appeal from
Magistrates' Court (Kilifi)
Kilifi CM ELRC No. E23 of 2022
Jurisdiction invoked
First appeal under Section 12 of the Employment and Labour Relations Court Act, 2011 read with Section 2 of the Employment Act, 2007

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, "Lwanga v Nation Media Group Limited (Appeal E017 of 2023) [2024] KEELRC 1412 (KLR)", Case Analysis (2024). Kilifi ELRC Appeal arising from Kilifi CM ELRC No. E23 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/1412/eng@2024-05-16

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