Amwoma & 116 others v Orbit Chemical Industries Limited & another (Cause 1324 of 2017) [2025] KEELRC 3025 (KLR)
The bottom line
#Kenya's Employment Court ruled that labour outsourcing is legal and a union-negotiated settlement barred 117 workers' Ksh 1.45 billion claim.
What this practically means
#Executive summary
#Key legal issues
#Identity of the employer under an outsourcing arrangement
The claimants were employees of the 2nd respondent, not the 1st respondent; the outsourcing arrangement was lawful and not a sham.
The claimants' contracts were drawn and signed by the 2nd respondent, which paid their salaries and managed discipline. The contracts for services between the 1st and 2nd respondents disclosed a labour-supply arrangement with a management fee. The court adopted the Court of Appeal's recognition of outsourcing as a legitimate business strategy and the prior finding by Wasilwa J that the 2nd respondent was an outsourcing company supplying labour to Orbit Chemicals. Nothing warranted a probe beyond the contracts.
Whether termination was unfair
There was no unfair termination; the fixed-term contracts expired, renewal was declined, and the parties executed a mutual separation agreement negotiated through the union, which was honoured.
The claimants' fixed-term contracts lapsed on 30th June 2016 with no expectancy of renewal. They rejected the renewed contracts of 20th July 2016 and demanded exit dues. Meetings of 22nd and 23rd July 2016 produced a mutual separation agreement on payment of notice, days worked, leave and ex-gratia at 15 days per year worked. The union represented the members under the majoritarianism principle, and the 2nd respondent paid the agreed dues; no vitiating factor was pleaded or proved.
Whether the claimants were paid the agreed dues
On a balance of probabilities the claimants were paid; they failed to produce bank statements to rebut the 2nd respondent's payment evidence.
The 2nd respondent produced payroll tabulations and bank payment records showing payments on 28th July 2016 and 17th November 2016. CW1 admitted seeing these documents but none of the claimants filed bank statements to show the money was not deposited. Applying sections 107 and 108 of the Evidence Act and the balance of probabilities standard, the court held payment more probable than not.
Whether the settlement agreement precludes the claims
Yes; the voluntarily negotiated and honoured settlement is binding and the court would not interfere with it.
Following Coastal Bottlers v Kimathi Mithika, a settlement voluntarily executed without misrepresentation or incapacity is a binding contract absolving the employer from further claims, and employees who accept payments under it are estopped from pursuing further claims. No coercion was proved and the union and selected claimant representatives participated in the negotiations.
Legal principles established
#- Outsourcing of labour is a lawful business strategy unless proved otherwise, and where contracts disclose the outsourcing company as employer, that company is the employer.
- A settlement negotiated by a registered trade union on behalf of its members, voluntarily entered into and honoured by payment, is binding and bars further claims.
- A party who asserts non-receipt of payments bears the burden of disproving proof of payment, on a balance of probabilities.
Court orders
#- 1.The claim is dismissed for lack of merit
- 2.No order as to costs in the suit
- Jurisdiction invoked
- Original jurisdiction of the Employment and Labour Relations Court under the Employment and Labour Relations Court Act over employment and labour relations disputes (Employment Act, 2007)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Amwoma & 116 others v Orbit Chemical Industries Limited & another (Cause 1324 of 2017) [2025] KEELRC 3025 (KLR)", Case Analysis (2025). Not stated in the judgment (Memorandum of Claim dated 13th July 2017). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/3025/eng@2025-10-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.