Masai Rolling Mills Limited v Ongaki & another (Appeal E155 of 2022) [2025] KEELRC 510 (KLR)
The bottom line
#A Kenyan court ruled a factory worker was employed by the labour outsourcing agency, not the company where he worked, so claims must be restarted against the agency.
What this practically means
#Executive summary
#Key legal issues
#Whether an employer-employee relationship existed between the Appellant and the 1st Respondent notwithstanding a labour outsourcing agreement with the 2nd Respondent
The trial court erred; the evidence (bank statements showing salary from the 2nd Respondent, NSSF records naming the 2nd Respondent as employer, and the labour outsourcing agreement in place before the claimant was hired) showed the employment relationship was with the 2nd Respondent, not the Appellant.
The court defined an employee under section 2 of the Employment Act and listed common-law indicators of employment. It noted outsourcing is a lawful business strategy if consistent with fair labour practices. On the evidence, the claimant's salary and NSSF dues were paid by the 2nd Respondent under the outsourcing agreement, which was already in place when he was hired, and he produced no document linking him to the Appellant. The finding of employment by the Appellant was therefore erroneous.
Whether the 1st Respondent's services were unfairly terminated by the Appellant
Having found no employment relationship with the Appellant, the fairness of the termination could only be decided between the 1st Respondent and the 2nd Respondent as the actual employer; that question was remitted to the lower court.
The court held the termination issue could only be determined between the 1st Respondent and the 2nd Respondent, his employer. Only the Appellant had defended the suit, and the record did not show whether the 2nd Respondent was served. Since enforcement against the 2nd Respondent was not possible in those circumstances, the claim was to commence de novo between the 1st and 2nd Respondents on the termination and any compensation.
Legal principles established
#- A first appellate court must re-evaluate, re-assess and re-analyse the evidence on the record and determine whether the conclusions of the trial court should stand, giving reasons either way.
- The onus of proving employment under a contract of service lies with the person who alleges that he was so employed.
- Outsourcing of employees is not illegal provided it is carried out in accordance with fair labour practices and is not aimed at rendering an employee redundant.
- Where the trial court's finding of an employer-employee relationship is overturned, the question of fairness of termination falls to be determined between the claimant and the actual employer, and that issue may be remitted for trial.
Court orders
#- 1.The appeal is allowed
- 2.The finding that there was an employer-employee relationship between the Appellant and the 1st Respondent, and any award against the Appellant on that premise including consequential orders, are set aside and substituted with an order dismissing the suit as against the Appellant
- 3.The claim filed in the lower court commences de novo to determine between the 1st Respondent and the 2nd Respondent the issue of the fairness or otherwise of the termination of the 1st Respondent's service and compensation, if any, for such termination
- 4.No order as to costs
- 5.The outcome of this appeal applies to the other consolidated claims (CMEL E009 of 2021, E055 of 2021 and E076 of 2021)
- On appeal from
- Principal Magistrate's Court at Kajiado (Employment and Labour Relations claim)
- Kajiado CMEL No. E009 of 2021
- Jurisdiction invoked
- First appellate jurisdiction over an appeal from the trial magistrate's court in an employment and labour relations claim (ELRC Appeals Division); memorandum of appeal dated 12th September 2022
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Masai Rolling Mills Limited v Ongaki & another (Appeal E155 of 2022) [2025] KEELRC 510 (KLR)", Case Analysis (2025). Not stated in the judgment (the appeal record references an application filed as Appeal E141 of 2024; the appeal is from Kajiado CMEL No. E009 of 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/510/eng@2025-02-24
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.