Abdallah Mumba Mgandi alias Abdalla Mumba, Keli Maundu, Abdul Break Salim, Mwaloma Omar Lonyo, Fumo Omar Fumo & Michael Mwakio Mwachenje v Mombasa Polythene Bags Limited & Ready Consultancy Limited [2019] KEELRC 2501 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT

AT MOMBASA

CAUSE NUMBER 797 OF 2015

BETWEEN

1. ABDALLAH MUMBA MGANDI ALIAS ABDALLA MUMBA

2. KELI MAUNDU

3. ABDUL BREAK SALIM

4. MWALOMA OMAR LONYO

5. FUMO OMAR FUMO

6. MICHAEL MWAKIO MWACHENJE..................CLAIMANTS

VERSUS

1. MOMBASA POLYTHENE BAGS LIMITED

2. READY CONSULTANCY LIMITED.................RESPONDENTS

Rika J

Court Assistant: Benjamin Kombe

Kennedy Ngaira & Associates, Advocates for the Claimants Beatrice Opolo Advocate

instructed by the Federation of Kenya Employers [FKE], for the 1st Respondent

Birir & Company, Advocates for the 2nd Respondent

_________________________________________

JUDGMENT

1. The Claimants filed their Statement of Claim, on 26th October 2015. The 1st, 2nd and 3rd Claimants state they were employed by the 1st Respondent as Extrusionists/ Operators, in March 2003. The 4th Claimant was employed by the 1st Respondent as an Operator in 2000. The 5th Claimant was employed as a Machine Operator in 2002, while the 6th Claimant was employed by the 1st Respondent on 1st May 2007. It is not indicated in the Statement of Claim in what position the 6th Claimant was employed.

2. The Claimants state on 1st March 2010, the 1st Respondent contracted the 2nd Respondent to take over management of the manpower and operations of the 1st Respondent. They were placed under 6 months’ contracts by the 2nd Respondent. The contracts were automatically renewed. Their contracts were terminated by the 2nd Respondent on 28th September 2015. They earned a monthly salary of Kshs. 13,848 as of the date of termination.

3. There was no reason given, to justify termination. They were required to sign fresh contracts, to remain in employment. They considered the fresh contracts illegal, oppressive and demeaning, meant to deny them their retirement benefits. They state that termination was unfair and unlawful.

4. The Claimants state they worked 14 hours a day. They never went on annual leave. They pray for Judgment against the Respondents in the following terms:-

a. Declaration that the Respondents engaged in unlawful, illegal and unfair labour practices from the year 2000 to 28th September 2015.

b. Declaration that the contracts given to the Claimants, for the period above, were discriminatory, unlawful, unconstitutional, null and void.

c. A declaration that the Claimants be deemed to have been confirmed permanent Employees with attendant benefits.

d. An order that the Claimants’ dismissal was unfair and unlawful and should be set aside.

e. The Claimants are paid by the Respondents: 1 month salary in lieu of notice; public holidays worked for the entire period of service; annual leave pay over the entire period; 12 months’ salary in compensation for unfair termination; and service pay. Under these heads the 1st Claimant, 2nd Claimant and 3rd Claimant pray for a sum of Kshs. 415,439 each; 4th Claimant Kshs. 491,604; 5th Claimant Kshs. 444,794; and 6th Claimant Kshs. 342,958.

f. Interest from the year of employment.

g. The Respondents to pay to the Claimant all overtime, all weekends and public holidays worked.

h. Damages and aggravated damages.

i. Costs of the cause plus interest.

5. The 1st Respondent filed its Statement of Response on 10th March 2016. Its position is that the Claimants were employed by the 1st Respondent as Casual Employees on diverse dates, up to the year 2010. The 1st Respondent outsourced labour from 2010. It entered into an outsourcing contract of 3 years with the 2nd Respondent. The contract was renewed for 4 years upon expiry, to December 2016. The Claimants were placed under contract by the 2nd Respondent. They were paid terminal dues by the 1st Respondent for the period served up to 2010. They ceased to be Employees of the 1st Respondent in 2010. The 1st Respondent prays the Court to dismiss the Claim with costs.

6. The 2nd Respondent filed its Statement of Response on 18th February 2016. Its position is that it first contracted the Claimants with effect from 1st October 2013, not 2010. They were informed upon expiry of contracts, that there would be no renewal. They were asked to report to 2nd Respondent’s offices for clarification, but failed to do so. They were not required to work on weekends or public holidays. Overtime worked was compensated. They took annual leave on pro-rata basis. The 2nd Respondent urges the Court to dismiss the Claim with costs.

7. The 1st Claimant testified on 10th November 2016 and on 20th February 2018. The 2nd Claimant, 3rd Claimant, and 4th Claimant, testified on 20th February 2018. The 5th Claimant testified on 12th June 2018, when Claimants’ case closed. The 1st Respondent did not call any Witness, opting to rely on the Pleadings, Documents and Submissions, filed by the Parties. The 2nd Respondent’s Human Resource Manager, Ibrahim Alhaji, testified on the same date, 12th June 2018, bringing the hearing to an end. The matter was last mentioned on 9th October 2018, when Parties confirmed the filing of their Submissions.

8. The 1st Claimant confirmed he was employed alongside his Co-Claimants by the Respondents, as stated in the Statement of Claim. He explained that an Extrusionist’s role, involves preparation of the rollers. He confirmed that the Claimants worked until 2010 when they were placed under the 2nd Respondent.

9. The Claimants all worked continuously. They did not go on annual leave. They worked 2 weeks of day shift and 2 weeks of night shift, every month. They were paid overtime at 1. 5 hourly rate instead of double rate. N.S.S.F was deducted but not remitted. When they were placed under the 2nd Respondent, they were paid terminal dues shown in 1st Respondent’s exhibit 3. There was no consultation on payable terminal dues. They were assured their contracts had not been terminated.

10. They were issued fresh contracts of 3 months by the 2nd Respondent, in 2013. On other occasions, they worked without written contracts. The 2nd Respondent issued Claimants with 6 months’ contracts in April 2015. Neither Party signed these contracts. N.S.S.F contributions were remitted inconsistently.

11. The Claimants received a letter dated 28th September 2015 to the effect that there would be no renewal. They were not paid terminal dues. They worked all public holidays, except idd-ul fitr. Termination was without notice and/or cause. The Claimants asked for conversion to permanent terms. Their request was denied. They were told not to join a Trade Union of their choice. If they joined, they would be dismissed.

12. The 2nd, 3rd, 4th and 5th Claimants associated themselves fully with the evidence of the 1st Claimant.

13. On cross-examination, the 1st Claimant testified that he does not represent the Co-Claimants in this dispute. The Claimants worked continuously. The 2nd Respondent entered the scene in 2010 not 2013. Claimants’ pay slips for 2015 were in the name of the 2nd Respondent. In 2014 they issued in the name of the 1st Respondent. Pay slips issued only after the Claimants demanded they are issued. The Claimants were asked by the 2nd Respondent to present themselves at 2nd Respondent’s offices when the last contracts expired. They did so. They did not forge any of the pay slips on record. It is not true that they declined offer for alternative employment from the 2nd Respondent. The 5th Claimant told the Court that the Claimants worked on all public holidays including the various idd holidays. They were not privy to the contracts executed between the Respondents. They claim service pay from both Respondents. They have not pleaded specific overtime pay. The last contracts stood terminated, if not renewed.   Lastly, the Claimants testified that the Respondents brought confusion to the Claimants’ terms and conditions of service. The Claimants did not refuse to continue working.

14. Alhaji testified that the 2nd Respondent was contracted to manage 1st Respondent’s manpower, from 1st October 2013. The 2nd Respondent did not terminate Claimants’ contracts; the contracts expired. 1st Respondent determined the contract period, depending on availability of work.

15. The 1st Respondent indicated to the 2nd Respondent that there was no more work. The 2nd Respondent instructed the Claimants to report to 2nd Respondent’s Office, to be offered alternative jobs.  The Claimants did not heed instructions. Overtime was paid at the end of each month as captured in Claimant’s pay slips. Leave was paid pro-rata as shown in the various contracts. Statutory dues were remitted to N.S.S.F and N.H.I.F.

16. Cross-examined by the Claimants’ Advocates, Alhaji testified the 2nd Respondent became an agent of the 1st Respondent, in October 2013. The 1st contract between the Respondents indicates effective date was 7th January 2010. The date was postponed to 2013. The 2nd Respondent found some Employees already employed by the 1st Respondent, and started managing them. The workplace remained Mombasa Polythene. 1st Respondent supplied details of the Employee’s personnel files. The contracts issued to the Claimants were periodical, but continuous in nature. The Claimants never stopped working for the period they were placed under the 2nd Respondent. The Claimants were placed under contracts by the 2nd Respondent in 2013. The copies of contracts exhibited in Court are unsigned. They would work overtime voluntarily. Any work done in excess of 8 hours daily, was compensated. Annual leave was paid as 1. 75 of the basic pay, in accordance with the contracts. Any defaults in the N.S.S.F Statements on record, is attributable to the N.S.S.F. The Respondents remitted contributions in full.

17. Cross-examined by the Advocate for the 1st Respondent, Alhaji testified that there was no evidence to show the contract of 2010, between the Respondents, was deferred to 2013. The Claimants state they were placed under the 2nd Respondent in 2010.

18. Redirected, Alhaji testified that copies of its contracts with the Claimants were signed. The contracts lapsed at the end of 6 months. The Claimants do not seek refund of unremitted N.S.S.F deductions.

The Court Finds:-

19. The Claimants were employed on various dates as Extrutionists /Operators in the years 2000, 2002, 2003 and 2007. They were employed by the 1st Respondent to work at the 1st Respondent’s workplace, and were under the control of the 1st Respondent, until the year 2010. They worked in continuity and cannot be deemed to have been on casual employment, for the aggregate number of years worked up to 2010 and beyond.

20. On 7th January 2010, the 1st Respondent entered into a contract for provision of labour services, with the 2nd Respondent. The contract was to run for a period of 3 years, ending 30th June 2013.

21. There is no evidence from the 2nd Respondent to establish that the effective date was postponed to 2013. There is evidence however that the Respondents executed another contract at the end of the 3 years. The 2nd contract was for another 3 years, running from 1st July 2013 to 31st December 2016.

22. The Claimants were therefore Employees of the 1st Respondent until 2010, when the 1st Respondent agreed with the 2nd Respondent, that the Claimants are placed under the employ of the 2nd Respondent effective from the date when the 1st contract between the Respondents, was executed- in the year 2010.

23. Liability to the Claimants, if any, should be apportioned to the Respondents, in proportion to the years the Respondents were Employers, of the Claimants.

24. The last contracts dated 1st April 2015, executed between the 2nd Respondent and the Claimants, alleged to have been for a period of 6 months, are unsigned, by the Parties. Those exhibited by the Claimants as well as by the Respondents, are all unsigned.

25. Section 9 of the Employment Act 2007, requires a contract of service for a period or number of working days, which amount in the aggregate to the equivalent of 3 months or more; or which provides for the performance of specific work which could not reasonably be expected to be completed within a period or number of working days in the aggregate to the equivalent number of 3 months; shall be in writing.

26. Section 9 [2] places the responsibility on the Employer who is a party to the contract, to cause the contract to be drawn up, stating particulars of employment. Subsection [3], requires the Employee consents to the terms and conditions of employment, by signing his name thereof; or by imprinting thereon, his thumb or 1 of his fingers, in the presence of a person other than his Employer.

27. The contracts exhibited by the Parties have no validity under Section 9[3] of the Employment Act 2007. The terms and conditions of service given under these contracts cannot be relied upon by the Court.

28. It has not been shown that the Claimants were employed by the 2nd Respondent on 6 months’ contracts, which lapsed, and were not renewed.

29. The 2nd Respondent wrote to the Claimants on 28th September 2015, advising that the contracts would not be renewed after they lapsed on 30th September 2015. There was no reason justifying termination, other than that the Claimants were on 6-months’ contracts which had lapsed.

30. The contracts relied upon to show this however, are not signed by the 2nd Respondent and importantly, by the Claimants and a Witness, other than the 2nd Respondent. The contracts are legally invalid.

31. Section 43 of the Employment Act requires that the Employer shall prove the reason or reasons for termination. Where the Employer fails to do so, termination is deemed to have been unfair, within the meaning of Section 45 of the Employment Act 2007.

32. Without exhibiting valid contracts, the 2nd Respondent has not shown that the Claimants’ contracts expired after the contracted 6 months. Secondly, it is not possible to accept that the contracts were not automatically renewable, the Claimants having worked from as early as the year 2000. In 2015, some had worked for about 15 years in continuity. What evidence is there, that they were to work lastly on 6 months’ contracts, which would not be renewed on expiry? Why would the 2nd Respondent turn Claimants’ long term indefinite contracts into 3 months’ or 6 months’ term contracts? Did the Claimants concede this change in writing? The contracts adopted by the 2nd Respondent, in establishing its position on the reason or reasons for termination, are not valid.

33. In the respectful view of the Court, the 2nd Respondent was Claimants’ last Employer. It was for the 2nd Respondent to show valid reason or reasons, justifying its decision of 28th September 2015. No such reason is, or reasons are, shown. Termination was unfair under Sections 43 and 45 of the Employment Act 2007. The Claimants merit compensation for unfair termination.

34. The Claimants worked under the 2nd Respondent for the same number of years, from 2010 to 2015. They are allowed compensation for unfair termination, equivalent to 5 months’ salary each, at Kshs. 69,240.

35. They are allowed the prayer for 1 month salary in lieu of notice, at Kshs. 13,848 each.

36. There is evidence, from the pay slips on record that, the Claimants were paid overtime for excess hours worked, every month. The 1st Claimant testified that overtime work was compensated at the hourly rate of 1. 5 hours. There is in any case no specific claim pleaded, for overtime pay.  The Claimants make an omnibus prayer for ‘’all overtime, all weekends and public holidays.’’ Similarly, the pay slips have shown that the Claimants received pro-rata annual leave pay. They have not accounted for what was paid, in their pursuit of annual leave pay, over their entire working period. These prayers are rejected.

37. Evidence of work done during public holidays is insufficient and inconsistent. The 1st Claimant testified it was only on idd-ul fitr that the Claimants did not work. His colleague, the 5th Claimant, testified that the Claimants worked on all public holidays including idd-ul fitr and idd-ul adha. This evidence is not tenable. The prayer for public holiday pay, which is duplicated under paragraphs [e] and [g] of the prayers in the Statement of Claim, is rejected.

38. There is evidence from the pay slips, and the N.S.S.F statements, that the Claimants were actively subscribed to the N.S.S.F. If there are gaps on remittance of contributions, this is a matter which the Claimants ought to pursue with the N.S.S.F, to enable them have full enjoyment of their pension. It is not a default which calls for the Court to extend the service pay regime to the Claimants. The statements are provisional. The Respondents state, they remitted N.S.S.F contributions, and default in the statements could be attributed to the N.S.S.F. The Claimants have not established that they merit service pay.

39. They have not established that they merit general and aggravated damages. The award of compensation serves to redress economic damage suffered by the Claimants, as a result of their loss of employment. The prayer for general and aggravated damages is declined.

40. No order on the costs.

41. Interest allowed at 14 % per annum from the date of Judgment till payment is made in full.

IN SUM, IT IS ORDERED:-

a. It is declared that termination was unfair.

b. Liability is apportioned to the 2nd Respondent solely.

c. The 2nd Respondent shall pay to each Claimant equivalent of 5 months’ salary in compensation for unfair termination, at Kshs. 69,240 amounting to Kshs. 415,440.

d. The 2nd Respondent shall pay to each Claimant 1 month salary in lieu of notice, at Kshs. 13,848, amounting to Kshs. 83,088.

e. In total the 2nd Respondent shall pay to the Claimants Kshs. 498,528 in full and final settlement of the Claim.

f. No order on the costs.

g. Interest allowed at 14% per annum from the date of Judgment, till payment is made in full.

Dated and delivered at Mombasa this 25th day of January 2019.

James Rika

Judge