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ELRCDismissedNyeri ELRC Appeal arising from Nyeri CMELRC Case No. E040 of 2022· [2024] KEELRC 2423 (KLR)

2NK Sacco Society Limited v Respondents (Nyeri CMELRC Case No. E040 of 2022 - test suit)

Employment and Labour Relations Court
4 October 2024
2,245 words in judgment
View original judgmentRead on Kenya Law Watch case
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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 Nyeri against the judgment in Nyeri CMELRC Case No. E040 of 2022, taken as a test suit with awards in consolidated suits E041 and E042 of 2022. The respondents, formerly engaged as Customer Care Personnel by the appellant Sacco, had obtained findings that they were its employees and that their January 2022 terminations were unfair, with reliefs including 12 months' salary as compensation. The appellant contended no contract of service existed, that respondents were employees of its matatu-owner members, and that it merely coordinated operations, issuing uniforms and name tags for order and brand purposes. The appellant's CEO admitted lacking authority to testify for the Sacco. Makau J, guided by Selle v Associated Motor Boat Company Ltd, re-evaluated the evidence and framed three issues: employment relationship, unfairness of termination, and entitlement to reliefs. The court held that the name tags expressly declaring bearers to be the Sacco's employees, payment of wages and supervision proved an implied contract of service; the appellant's facilitative-role defence failed for want of evidence. Under section 45 of the Employment Act the appellant proved neither valid reason nor fair procedure, so the terminations were unfair. The maximum 12-month compensation was justified by over 19 years of service and was not manifestly excessive, and no basis was laid to disturb the other damages. The appeal was dismissed with costs, affirming the trial court's judgment and awards.

Key legal issues

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01

Whether the respondents were employees of the appellant

Holding

Yes - the name tags issued by the appellant declaring the bearers its employees, together with daily wages and supervision, established a contract of service.

Reasoning

The court applied section 2 of the Employment Act defining employee and contract of service (oral, written, expressed or implied). The respondents produced name tags carrying an express declaration that the bearer was the Sacco's employee, to be surrendered on termination. They were paid daily wages later as monthly salary and supervised by the appellant. The appellant's claim that members owned the vehicles was unproven. Facts distinguished from Samuel Wambugu Ndirangu case.

p. 4
02

Whether the employment was unfairly terminated

Holding

Yes - the appellant failed to prove a valid reason and fair procedure under section 45(1) and (2).

Reasoning

Section 45 places the burden on the employer to prove a valid and fair reason related to conduct, capacity, compatibility or operational requirements, and adherence to fair procedure. The appellant merely denied the employment relationship and the termination and adduced no evidence of misconduct or of a hearing. The respondents' unrebuted evidence of termination without notice or hearing therefore stood, constituting unfair termination within section 45.

p. 5
03

Whether the reliefs awarded by the trial court should stand

Holding

Yes - the maximum 12 months' compensation was justified by over 19 years of service and the other damages were unchallenged in substance.

Reasoning

Under sections 49(1) and 49(4) compensation is discretionary and an appellate court interferes only where the trial court acted on wrong principles or without supporting evidence, producing a manifestly excessive or low award. The trial court justified the maximum 12 months' salary award on the respondents' over 19 years of service and absence of misconduct. Salary in lieu of notice under section 35(1)(c) applied since no written contract specified notice. No basis was laid to vary the other damages.

p. 5

Legal principles established

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  • A contract of service may be oral or implied; issuance of name tags and uniforms declaring the bearer an employee, plus payment and supervision, proves employment.
  • An employer bears the burden of proving both valid reason and fair procedure for termination under section 45 of the Employment Act.

Court orders

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  1. 1.Appeal dismissed with costs
  2. 2.Findings affirmed that the respondents were employees of the appellant and were unfairly terminated
  3. 3.Trial court's awards (12 months' salary compensation, salary in lieu of notice and other damages) left undisturbed

Authorities

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Legislation

  • Employment Act, 2007Section 2 (definitions of employee, employer, contract of service)
  • Employment Act, 2007Section 45(1) & (2)
  • Employment Act, 2007Section 49(1) & (4)
  • Employment Act, 2007Section 35(1)(c)
  • ELRC Procedure RulesRule 28(3)

Cases cited (5)

  • Samuel Wambugu Ndirangu v 2NK Sacco Society Limited
    (2019) eKLR
  • Charles Muthusi Mutua v Kathi o Kakoka Services Limited
    (2022) eKLR
  • Walter Ogal Anuro v Teachers Service Commission
    (2013) eKLR
  • R v Registrar General & 13 Others
    (2005) eKLR
  • Selle v Associated Motor Boat Company Ltd
    (1968) EA 123
On appeal from
Nyeri Chief Magistrate's Court (CMELRC)
CMELRC Case No. E040 of 2022 (test suit; awards in E041 and E042 of 2022)
Jurisdiction invoked
First appellate jurisdiction over the subordinate court (ELRC Procedure Rules; ELRC 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, "2NK Sacco Society Limited v Respondents (Nyeri CMELRC Case No. E040 of 2022 - test suit)", Case Analysis (2024). Nyeri ELRC Appeal arising from Nyeri CMELRC Case No. E040 of 2022. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2423/eng@2024-10-04

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