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IndustrialPartially AllowedICC No. 116 of 2014 (consolidated with ICC Nos. 117–162/2014 and 175–195 of 2014)· [2014] KEIC 95 (KLR)

Mwakela v Krystalline Salt Ltd (Cause 116 of 2014) [2014] KEIC 95 (KLR)

Industrial Court of Kenya
19 December 2014
4,928 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled 68 piece-rate salt workers were real employees, awarding them pay for unfair, unprocedural termination.

What this practically means

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Executive summary

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This Industrial Court judgment at Mombasa, delivered by O. N. Makau, Judge on 19 December 2014, resolves a lead claim by Kwekwe Mwakale against Krystalline Salt Limited, consolidated with 67 similar suits (ICC Nos. 117–162/2014 and 175–195/2014) by fellow packers terminated on 30 March 2013 at the Changamwe salt plant. The claimants alleged unfair, unnotified termination and sought notice pay, service/severance pay and leave dues. The respondent denied employment, contending the claimants were piece-rate workers engaged as independent contractors who deserted their jobs after refusing transfer or continued work. The court framed three issues: the nature of the engagement, whether there was desertion or unfair termination, and entitlement to reliefs. Applying the control test and persuaded by Indian authorities (Shri Birdhichand Sharma and States v Shankar Balaji Waje) plus its own decision in Mary Kitsao Ngowa, the court held the claimants were employees under contracts of service despite piece-rate remuneration, given recruitment, training, uniforming, supervision, discipline and workplace exclusivity. It further held that the relocation of packaging machines to Malindi rendered their services superfluous, and that the failure to follow the mandatory Section 40 redundancy procedure amounted to unfair termination under Section 45. The court awarded each of the 68 claimants one month's salary in lieu of notice and leave pay confined to the three-year limitation period, computed on the statutory minimum wage, aggregating Ksh.2,219,191.77. Severance and underpayment claims were dismissed; costs and interest went to the claimants.

Key legal issues

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01

Whether piece-rate packers were employees under a contract of service or independent contractors under a contract for services

Holding

The claimants were employees engaged under a contract of service, not independent contractors

Reasoning

The court applied the control test: the respondent recruited, trained, clothed, supervised, supplied machines to and paid the claimants. The claimants had no freedom to work elsewhere and faced discipline for lateness or absenteeism, which is inconsistent with independent contracting. The court was persuaded by Indian precedents holding that piece-rate status does not remove a worker from the category of 'worker'.

p. 6
02

Whether the claimants deserted employment or were unfairly terminated through an unlawful redundancy

Holding

The claimants did not desert work; they were unfairly terminated through an unlawful summary redundancy

Reasoning

The packaging work and machinery were relocated to Malindi, rendering the claimants' services superfluous. Under Section 40 of the Employment Act the respondent was bound to serve one month's written notice, notify the labour officer and conduct fair selection before declaring redundancy. Failure to follow that mandatory procedure rendered the termination unfair under Section 45.

p. 7
03

Entitlement to notice pay and leave dues, and the effect of limitation

Holding

Each claimant was awarded one month's salary in lieu of notice plus leave pay, with leave confined to the 3 years immediately preceding the suits

Reasoning

Under Sections 35(1)(c) and 37 of the Employment Act, employees working for over a month become entitled to 28 days' written notice before termination. The claimants were also entitled to 21 leave days per year of consecutive service, but leave earned before May 2011 was lost to limitation. Awards were computed on the minimum statutory wage for a machine attendant (Ksh.467.20 per day) as at 30/3/2013.

p. 7

Legal principles established

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  • A piece-rate worker is not necessarily an independent contractor; the true test is whether the employer exercised control over the worker, including recruitment, training, supervision, discipline and exclusivity of the workplace
  • A redundancy carried out without following the mandatory procedure under Section 40 of the Employment Act amounts to unfair termination under Section 45
  • Piece-rate pay is merely a formula for calculating wages and does not of itself render a worker an independent contractor

Court orders

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  1. 1.Declaration that the claimants were employed under a contract of service (permanent basis) for the respective periods they worked for the respondent
  2. 2.Declaration that the termination of the claimants' employment on 30/3/2013 was wrongful and unfair
  3. 3.Judgment entered for each of the 68 claimants in the aggregate sum of Ksh.2,219,191.77, apportioned per claimant as per the schedule (salary in lieu of notice plus leave pay within limitation period)
  4. 4.Costs of the suit to the claimants
  5. 5.Interest on the awarded sums
Jurisdiction invoked
Original jurisdiction of the Industrial Court over employment and labour relations disputes (Employment Act and the Industrial Court's jurisdiction over claims for termination 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, "Mwakela v Krystalline Salt Ltd (Cause 116 of 2014) [2014] KEIC 95 (KLR)", Case Analysis (2014). ICC No. 116 of 2014 (consolidated with ICC Nos. 117–162/2014 and 175–195 of 2014). Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2014/95/eng@2014-12-19

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