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ELRCPartially AllowedNot stated in the judgment (Claim dated 25th September 2017)· [2025] KEELRC 1542 (KLR)

Mutua & 9 others v Steel Makers Limited; Real Max HR International Limited (Third party) (Cause 1906 of 2017) [2025] KEELRC 1542 (KLR)

Employment and Labour Relations Court
29 May 2025
2,682 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Ten Kenyan workers won 3-12 months' salary plus notice pay after their employer blamed a strike and an outsourcing firm it couldn't prove.

What this practically means

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Executive summary

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Ten former workers of a Nairobi-based employer (the Respondent) claimed they were summarily dismissed on 3rd January 2017 without explanation and sought notice pay, leave pay, house allowance, service gratuity and twelve months' salary in compensation. The Respondent denied the claims, contending that the Claimants had been outsourced to Realmax HR International Limited (joined as 3rd Party), that they were paid minimum wage inclusive of housing, were compensated in lieu of leave, and had participated in an unprotected strike from 5th December 2016. The 3rd Party disclaimed any involvement in the hiring or termination. The court framed three issues: the 3rd Party's propriety, unlawfulness of termination, and entitlement to remedies. Applying the Wrigley outsourcing parameters and Superfoam, the court found no credible outsourcing arrangement: the agreement post-dated the Claimants' employment and there was no evidence of a transfer, so the claim against the 3rd Party was dismissed. On termination, the unprotected strike allegation was unsubstantiated, and the Claimants were never afforded the procedural fairness mandated by Section 41 of the Employment Act, hence no valid reason existed under Section 43. The court awarded each Claimant one month's notice pay and compensation graduated between three and twelve months' salary according to service length. House allowance and historical leave pay were refused. Awards carry interest at court rates from judgment, with the Respondent bearing the Claimants' and 3rd Party's costs.

Key legal issues

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01

Whether the 3rd Party was a proper party and whether a credible outsourcing arrangement existed

Holding

No credible outsourcing arrangement existed; the Claimants remained employees of the Respondent and the claim against the 3rd Party was dismissed.

Reasoning

The outsourcing agreement took effect on 1st October 2016, after all the Claimants had been employed, and there was no evidence of when, or whether, the Claimants' services were transferred to the 3rd Party. Applying the Wrigley parameters and Superfoam, an employer transferring employees to an outsourcer must obtain their express acceptance and settle accrued dues. The Claimants disowned the 3rd Party as a stranger, so it could not be held liable or sought against for indemnity.

p. 6
02

Whether the termination of the Claimants' employment was unlawful

Holding

The termination was substantively and procedurally unfair; the Respondent failed to prove misconduct (unprotected strike) and afforded no procedural fairness.

Reasoning

An allegation of participation in an unprotected strike is a misconduct charge attracting Section 41 of the Employment Act, requiring explanation of the charges and an opportunity to be heard. No such process was followed. Per Chitavi, the employee must be informed of the charges and heard before dismissal. Consequently there was also no valid reason for termination as required by Section 43.

p. 7
03

What remedies were payable

Holding

Compensation of 3 to 12 months' salary graduated by length of service plus one month's notice pay; house allowance and historical leave pay refused.

Reasoning

Compensation was assessed taking into account each Claimant's period of service and the Respondent's failure to give them a hearing. Notice pay was awarded to each Claimant. House allowance was refused because the minimum-wage daily wage was ordinarily inclusive of housing. Leave pay for prior years was refused as compensated for 2016 and otherwise statute-barred.

p. 7

Legal principles established

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  • Outsourcing is a legitimate mode of organising labour but must meet defined parameters; an employer cannot use outsourcing to escape accrued obligations or transfer employees without their express acceptance.
  • An outsourcing agreement entered into without notice to affected employees, and without settling accrued dues, is not a credible outsourcing arrangement.
  • Termination on grounds of misconduct requires procedural fairness under Section 41 of the Employment Act before termination.
  • An employer alleging an unprotected strike as reason for dismissal must prove valid reason under Section 43 of the Employment Act.

Court orders

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  1. 1.The claim as against the 3rd Party is dismissed
  2. 2.Judgment entered in favour of each Claimant for compensation of 3 to 12 months' salary depending on length of service plus one month's salary in lieu of notice (specific amounts itemised per Claimant)
  3. 3.The awarded amounts to attract interest at court rates from the date of judgment until payment in full
  4. 4.The Respondent to pay the Claimants' costs as well as those of the 3rd Party

Authorities

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Legislation

  • Employment ActSection 41(1) and (2)
  • Employment ActSection 43
  • Employment ActSections 42(1) and 44(3) and (4)

Cases cited (3)

  • Wrigley Company (East Africa) Limited v Attorney General & 2 others and Sheer Logic Management Consultants Ltd
    [2013] eKLR
  • Superfoam Limited v Olwanda & 7 others
    [2022] KEELRC 4028 (KLR)
  • Anthony Mkala Chitavi v Malindi Water & Sewerage Company Ltd
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; claim for unlawful dismissal and terminal dues)

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, "Mutua & 9 others v Steel Makers Limited; Real Max HR International Limited (Third party) (Cause 1906 of 2017) [2025] KEELRC 1542 (KLR)", Case Analysis (2025). Not stated in the judgment (Claim dated 25th September 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1542/eng@2025-05-29

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