Insubordination - Case Law Review: Kodi v Safarilink Limited [2024] KEELRC 2348 (KLR)

Background:

On insubordination, in the case of  Kodi v Safarilink Limited, the Claimant was accused of failing to report to work when her presence was required due to increased workload caused by the COVID-19 pandemic. 

Despite initially agreeing to come in, she ultimately did not report to duty and failed to communicate her absence. 

In her response, the Claimant stated that she was called in on a weekend, which was her scheduled off-duty period. 

She admitted to being aware of the need to report but chose not to do so as she was intoxicated and wanted to avoid violating the Respondent’s policy against intoxication.

Analysis:

The court noted that off days are mutually agreed periods when an employee is not expected at work. If an employee is asked to work on an off day but has prior commitments, communicating this is necessary so that alternative arrangements can be made. 

Court's Holding:

In this case, the court held that, although the Claimant could not be faulted for beginning her weekend early, she should have confirmed her unavailability when asked to report. Once she agreed to come in, the argument of being off-duty was no longer valid.

 

Full case available  Here

Tax Alert: The Supreme Court overturns the Finance Act, 2023

Introduction;

The Supreme Court of Kenya upheld the Finance Act, 2023, on Tuesday 29th October 2024, overturning a decision by the Court of Appeal that nullified the legislation on constitutional grounds. The Judgment addressed several issues related to the legislative process and specific provisions of the Act, ultimately setting aside the Court of Appeal’s (“CoA”) decision that had declared the entire Act unconstitutional.

The seven-judge bench, led by Chief Justice Martha Koome, ruled that Parliament adhered to public participation requirements when drafting the Finance Bill.

This judgment follows the CoA’s earlier ruling, which had deemed the Act unconstitutional due to insufficient public participation.

While the apex court ruling represents a setback for Kenyans facing increased taxation, it is a victory for the government in its effort to raise revenue through new tax measures. 

Background;

The Act, was assented to on 26 June 2023, and subsequently faced multiple constitutional petitions at the High Court (“HC”). 

At the High Court, the petitioners argued among other grounds that the Act required the concurrence of the Senate and further that there was no adequate public participation in the enactment of the Act. In its judgment, the High Court delivered Judgement and declared certain provisions of the Act unconstitutional and upheld the rest.

The Government appealed to the CoA whereby the Appeals croassappeals were consolidated. Upon hearing the parties, the CoA in its Judgement declared the entire Act unconstitutional, on the basis that the process of enacting the Act was procedurally flawed and that the principles of public participation were not adhered to in the enactment of the Act.

The Government the appealed to the Supreme Court of Kenya being the apex court for a final determination of the dispute.

Court's Holding (Supreme Court);

 "The preliminary objection on this Court’s jurisdiction is overruled. We hereby set aside the Court of Appeal’s finding declaring the entire Finance Act, 2023 unconstitutional," said the Supreme Court's ruling in a significant win for the government.

 Key implications of the decision;

The decision confirms the legality of Finance Act, 2023, which has been a focal point of national debate and public demonstrations.

Finance Act, 2023, which proposed tax increases on essential items like fuel to expand the government's revenue base, had faced widespread public backlash since its inception, culminating in nationwide protests.

The Finance Act 2023, signed into law by President William Ruto in June 2023, introduced a Housing Levy requiring a 1.5 percent contribution from employees, matched by employers, to fund affordable housing.

It also raised the value-added tax (VAT) on fuel from 8 percent to 16 percent, contributing to a rise in fuel prices, among other changes.

COVID-19 Update: What is a reasonable care for Employees Working from Home or Remotely?

By Messrs, B.N., O.G., and I.O.

In as much as the employers have the managerial discretion to undertake various strategies in ensuring the sustainability of their various businesses during this pandemic, it is highly expected that the rights of the employees are upheld at all times pursuant to Article 41 of the Constitution of Kenya including other reasonable enabling laws. The reasonable care for employees is interpreted as the specific duties and responsibilities by the employers to ensure the safety of its employees. 

However, the Employment Act, 2007 requires that the employment contracts state the place of work (see section 10(2) (f)) and it is highly likely that the majority of the employment contracts have such a provision. In situations where the employee has opted to work from home or remotely from work due to pandemics such as COVID19 outbreak, they are highly likely to be in breach of their contract and legal provisions as set out as a requirement by the employment Act not unless it is a result of the agreement between the employer and the employee. 

The duties that an employer has under the OSHA would extend to circumstances where such an employee renders services to the Company remotely from home. For purposes of the OSHA, the employee’s ‘workplace’ would be her/his home. Ordinarily, how the employer will ensure a healthy and safe working environment would depend on the sort of work that is being carried out from home and what equipment and assistance may need to be provided to employees by their employer. The specific duties of the employers are to ensure the safety, health, and welfare of employees at all times within the workplace (see section 6 of the Occupational Safety and Health Act).

The key duties applying to the working activity and workspace includes such as management and conducting all the work activities aimed at ensuring the employee has a reasonably practicable to uphold their safety, health and welfare, provision of safe systems of work that have been planned, organized and maintained; provision of assessment of risks and implementation of appropriate control measures and ensuring there are plans in case of any emergencies.

Additionally, the Responsibility for the health and safety at work pursuant to the OSHA 2007 rests with the employer notwithstanding whether they employee carries his/her duties from office or at home as agreed between themselves as noted above. It is therefore upon the employer to consult their employees and assure themselves that the employee is aware of the risks associated with working from home or remotely; that the assigned work activity or temporary space of work is suitable; that there is provided suitable equipment enabling work to be done; and that there are pre-arranged means of contact.

In addition to the OSHA, the Employment Act requires an employer to regulate the working time of its employees with due regard to their health and safety and to their family responsibilities. Employers are required to, as far as is reasonably practicable, provide a workplace that is free of risk to the health and safety of its employees and that this requirement would persist during the COVID-19 pandemic and the Lockdown subject, of course, to an employee actually working remotely from home. In the case of distant work, the employer shall consider suitable working time arrangements, special provisions concerning assignment and delivery of work, reporting requirements. Moreover, the employer is responsible for healthy and safe working conditions. It shall be considered carefully how to limit the options for the employee to change his working place at the employee’s discretion.

In the normal course, an employer may require their employees to sign an indemnity form in which they warrant, among other things, that their home office is safe. While the present circumstances are extraordinary, it would probably be appropriate for an employer to ask its employees to sign and return a warranty and indemnity form in relation to working remotely from home. 

However, it would probably also be prudent to take further steps under Section 6 (2)(c) of the OSHA to, inter alia, meets the requirement of “the provision of such information, instruction, training, and supervision as is necessary to ensure the safety and health at work of every person employed”, through appropriate information and instructions being given to employees working from home on how to avoid or limit the risks to their health and safety in the home working environment.

The employer is further responsible for providing the technical means for distant work and for ensuring that the employer’s property (i.e. the equipment provided to employees) is well preserved.

#KeepSafe

#CovidIsReal

THE EMPLOYMENT AND LABOUR RELATIONS COURT HAS JURISDICTION OVER FOREIGN COMPANIES (Case Review: Meta Platforms, Inc & another v Motaung & another; Kenya National Humans Rights Equality Commission & 9 others (Interested Parties) [2023] KECA 996 (KLR)

Background/Facts:

This decision in the stemmed from rulings delivered on 6th February 2023 and 20th April 2023 in Nairobi ELRC Petition E071 of 2022 and Nairobi ELRC Petition E052 of 2023, respectively. In ELRC Petition No. E071 of 2022, Daniel Motaung, representing former and current Facebook content moderators, filed a suit against Samasource Kenya EPZ Ltd (operating as Sama), Meta Platforms Inc., and Meta Platforms Ireland. Motaung claimed poor working conditions, unfair labor practices, and violations of fundamental rights. Samasource contested the case, arguing that Motaung, being a foreign national not residing in Kenya, lacked the legal standing to file the petition. 

 Furthermore, they contended that Meta was not subject to the court’s jurisdiction as it is a foreign corporation with no operations in Kenya. Meta Platforms Inc. and Meta Platforms Ireland sought dismissal of the case on jurisdictional grounds, but the court, ruled in favour of its jurisdiction and ordered Motaung to properly serve both Meta entities. Dissatisfied with this decision, Meta appealed, challenging the court's jurisdiction.

Reasoning; 

In ELRC Petition No. E052 of 2023, several former employees filed a suit against Meta, Samasource, and Majorel Kenya, claiming their rights had been violated due to an unjustified redundancy process. They also filed an application where they sought to effect service upon Meta Platforms Inc & Meta Platforms Ireland Limited in their principal offices situated in USA, wherein the court granted them ex parte orders maintaining the status quo pending hearing and determination of the application. In response, Meta and its affiliates sought to have the case struck out, arguing that the court lacked jurisdiction. The court’s ruling on determined that the nature and extent of Meta’s liability, including violations occurring virtually within Kenya’s jurisdiction, would be examined. Meta, once again, appealed this decision on jurisdictional grounds.

In the Court of Appeal,  the appellants argued that the Employment and Labour Relations Court (ELRC) could not assume jurisdiction over Meta because proper service had not been effected as required under Kenyan law, and even when service was allowed, the foreign defendant had a right to challenge jurisdiction. The 1st Respondent countered that the issue was now moot since service had been completed, and Meta was actively trading in Kenya through platforms like Facebook Pay and Facebook Marketplace, paying taxes to the Kenyan government. The appellants, however, insisted that Kenyan laws cannot be applied to foreign corporations unless there is evidence of them trading in the country, and enforcing such laws would breach the sovereignty of their home jurisdiction.

The two appeals were determined together.

Issues for determination:

The appeals centered on:

i.  whether the ELRC had jurisdiction over Meta, given the company’s foreign status and; 

ii. the nature of its operations in Kenya.

Analysis:

Civil Appeal No. 232 of 2023 - On the question of jurisdiction, the Court of Appeal found that the Appellants did not advance any arguments that contested the court’s power to hear and determine the matter, which is the ultimate definition of jurisdiction. They only stated that they are foreign companies who must not be subjected to the Constitution or laws of Kenya, hence ELRC has no jurisdiction over them. The Court of Appeal considered the 1st Respondents arguments that the alleged violations occurred in Kenya, he was employed by the Appellants as a content moderator and the Appellants have a virtual and physical presence in Kenya. The Court of Appeal found that all these arguments that were advanced by parties were issues of fact which could not be determined in an interlocutory application but were meant to be determined in a full hearing. Consequently, the question of jurisdiction that had been put forward by the Appellants, fails.

Civil Appeal No. 445 of 2023 - Here, the Appellants claimed that because there was no employer- employee relationship between them and the 3rd to 186th Respondents and that they were foreign companies, the ELRC cannot assume jurisdiction. The Court of Appeal found that there was no improper exercise of jurisdiction or misdirection by the ELRC.

Court’s Holding/Conclusion:

The Court of Appeal found that the ELRC indeed has the proper jurisdiction over foreign companies in view of the fact that the Respondents' rights were under threat and as such, the orders issued to maintain status quo were valid to the extent of preventing further infringement of the said rights. Additionally, it found no merit in both appeals and dismissed them with costs to the respondents.

Navigating Compliance in Company Name Registrations in Kenya (Case Law: HCCOMMM NO. E144 OF 2021 - Buupass Kenya Limited v Buspass Kenya Limited; Registrar of Companies (Interested Party) [2024] KEHC 9257 (KLR))

Introduction

The recent ruling in the High Court of Kenya at Nairobi in the case brought to light a critical issue in corporate law: the registration of companies with similar names and its impact on existing trademarks. This ruling serves as a crucial reminder for businesses to conduct thorough legal due diligence before selecting a name and further underscores the importance of conducting thorough trademark searches and considering potential conflicts before reserving a company name and registering an entity in Kenya.

In this case, Buupass Kenya Limited (the Plaintiff), a company registered on June 29, 2017, and the registered absolute proprietor of the Trade Mark number 97821 (Part A) for the word and device BuuPass raised concerns against Buspass Kenya Limited (the Defendant) which was registered on November 27, 2020, regarding the potential for confusion in the marketplace due to the similarity of their names.

Court’s Findings and Ruling

1. The name "Buspass" is not only similar in meaning to "Buupass," but it is also phonetically and visually alike, making it strikingly similar to the plaintiff’s trademark, which is likely to deceive or cause confusion in trade, thereby constituting an infringement of the plaintiff’s trademark.

2. This case represents a classic example of passing off, as the Defendant is portraying its services as those of the Plaintiff; the Defendant’s business name is indistinguishable from the Plaintiff’s trademark, making it likely that an average customer would not be able to differentiate between the two, especially since the Plaintiff's change of name did not alter its business model and it continues to operate in the same line of business as when it was known as Magic Bus Ticketing Kenya Limited, meaning that any goodwill or exposure associated with that name is also tied to Buupass Kenya Ltd.

3. The Defendant, Buspass Kenya Limited, was ordered to change its name within 30 days and all its directors and employees were barred from infringing on or passing off Buupass’s intellectual property, including the use of any attributes or designs of trade that were identical or strikingly similar to those of Buupass.

4. An accountant be appointed by the chairperson of the Institute of Certified Public Accountants of Kenya (ICPAK) to establish profits made by Buspass in its use of the trade name Buspass and the Plaintiff’s trademark Buupass, and for passing off the plaintiff’s goodwill and services. 

Credits: N.K.

Gratuity (Case Law - Muchiri v Security Guards Services Limited (Employment and Labour Relations Appeal E108 of 2021) [2024] KEELRC 1807 (KLR))

On gratuity, in Muchiri v Security Guards Services Limited (Employment and Labour Relations Appeal E108 of 2021) [2024] KEELRC 1807 (KLR) (8 July 2024) (Judgment), the Appellant argued that the trial court erred in denying him service gratuity on the basis of his pay slip which indicated contributions to the National Social Security Fund (NSSF), while the Regulation of Wages (Protective Security Services Order) stipulates that employees in the security services industry are entitled to gratuity. 

The appellate court reviewed the purpose of Section 35(6) of the Employment Act, which excludes employees who contribute to the NSSF from receiving service pay. This provision aims to prevent situations where an employee might receive what appears to be double compensation. 

The court ruled that requiring an employer to pay gratuity not provided in the employment contract when they are already contributing to the NSSF on behalf of the employee would be unreasonable. 

Since the Respondent was paying NSSF contributions for the Appellant, the court determined that the Appellant was not entitled to service gratuity by virtue of the Order.

Read Full Case Law

Compensation for unfair termination: The case of Khamala v Robinson Security Ltd (Appeal E024 of 2023) [2024] KEELRC 2076 (KLR)

Court: Employment and Labour Relations Court (Appellate Jurisdiction)

Date: 6 August 2024
Case Number: Appeal E024 of 2023
Citation: [2024] KEELRC 2076 (KLR)

Background

Mr. Khamala (the Appellant) was employed by Robinson Security Ltd. The Appellant's employment was terminated, and he claimed that the termination was unfair. He appealed the decision of the lower court that had dismissed his claim and upheld the termination as justified. The central issue on appeal was whether the termination was unfair and whether the Appellant was entitled to compensation under the Employment Act.

Mr. Khamala, the Appellant, was employed by Robinson Security Ltd. His employment was terminated, and he subsequently filed a claim alleging unfair dismissal. While the Appellant argued that his termination was unjustified, the trial court found in favor of the Respondent, ruling that the dismissal was fair.

On appeal, the Appellant contested the decision, asserting that the termination was indeed unfair. He further sought compensation for the loss of income he claimed to have incurred as a result of the dismissal. However, the appellate court found that while the dismissal was unfair, the Appellant’s actions after the termination—specifically his ability to secure alternative employment almost immediately—significantly impacted the court’s decision regarding compensation.

Issue

The key issue in this case was whether the termination was unfair, and if so, whether the Appellant was entitled to compensation, taking into consideration his efforts to mitigate the loss.

Simply put, the key legal issues raised in this case were:

• Whether the termination of the Appellant was unfair.
• Whether the Appellant was entitled to compensation for the unfair termination, considering the fact that he secured alternative employment quickly.

Held

The appellate court held that the termination was unfair, overturning the trial court's decision. However, the court declined to award compensation to the Appellant. The court noted that the Appellant had successfully mitigated his loss by securing new employment just one day after his termination from the Respondent.

Legal Principles and Reasoning

1. Unfair Termination: The court affirmed the trial court's finding that the termination was indeed unfair, albeit the Respondent had provided reasons for the dismissal. However, in its analysis, the appellate court focused on the fairness of the procedure and the substantive justification for dismissal.

2. Mitigation of Loss: The court relied heavily on Section 49(4)(f) and (g) of the Employment Act, which provides that when determining compensation for unfair termination, the court must consider the likelihood of the employee securing comparable or suitable employment with another employer. Additionally, the court must assess the employee's efforts in mitigating the loss.

   • Section 49(4)(f) requires the court to take into account the opportunity the employee had to secure alternative employment.

   • Section 49(4)(g) requires the court to consider the employee’s actions in mitigating the loss resulting from the unfair termination.

3. Compensation Decision: In this case, the court emphasized the Appellant's quick re-employment, securing a job only a day after his termination. The court concluded that, given the Appellant's prompt action to mitigate his loss, compensation was not warranted. This ruling underscores the importance of an employee’s responsibility to minimize the impact of an unfair termination.

Significance

• Mitigation of Loss: This case underscores the principle that an employee’s failure to mitigate losses may limit their entitlement to compensation. Courts will likely take a more cautious approach to awarding damages where there is evidence that the employee has quickly found alternative employment.

• Judicial Discretion in Compensation: The case highlights the discretionary nature of compensation in unfair termination claims. Courts are not bound to award compensation even when a termination is found to be unfair. The court’s decision is influenced by factors such as the employee’s conduct post-termination and their ability to secure alternative employment.

• Section 49(4) of the Employment Act: This case offers valuable guidance on how Section 49(4)(f) and (g) of the Employment Act is applied by the courts in determining whether to grant compensation following an unfair termination.

Conclusion

The appellate court’s decision in Khamala v Robinson Security Ltd serves as an important reminder of the obligation employees have to mitigate their losses after an unfair termination. While the Appellant was found to have been unfairly dismissed, the court did not grant compensation due to his swift re-employment. This ruling reinforces the principle of mitigating loss and the court’s discretionary power in awarding compensation.

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