Mutua & 9 others v Steel Makers Limited; Real Max HR International Limited (Third party) (Cause 1906 of 2017) [2025] KEELRC 1542 (KLR)
The bottom line
#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
#Executive summary
#Key legal issues
#Whether the 3rd Party was a proper party and whether a credible outsourcing arrangement existed
No credible outsourcing arrangement existed; the Claimants remained employees of the Respondent and the claim against the 3rd Party was dismissed.
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.
Whether the termination of the Claimants' employment was unlawful
The termination was substantively and procedurally unfair; the Respondent failed to prove misconduct (unprotected strike) and afforded no procedural fairness.
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.
What remedies were payable
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.
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.
Legal principles established
#- 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
#- 1.The claim as against the 3rd Party is dismissed
- 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.The awarded amounts to attract interest at court rates from the date of judgment until payment in full
- 4.The Respondent to pay the Claimants' costs as well as those of the 3rd Party
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; claim for unlawful dismissal and terminal dues)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#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.