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ELRCStruck OutCause No. 451 of 2016· [2021] KEELRC 2354 (KLR)

Jones N. Aunga v Master Quick Col Services Limited [2021] KEELRC 2354 (KLR)

Employment and Labour Relations Court of Kenya
4 March 2021
MMM. Mbaru
1,277 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 struck out a worker's unfair termination claim because commission-only payments, no salary and no statutory deductions made him an independent contractor.

What this practically means

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Executive summary

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The claimant sued the respondent claiming he was employed in 2006 as a recovery officer/debt collector on a monthly wage of Kshs.20,000 plus commission of 35% (later reduced to 30%), and that on 5th January 2016 the respondent's director orally dismissed him without a hearing or terminal dues. He sought a declaration of unfair termination, notice pay, service gratuity, unpaid commission, damages for unfair termination, leave allowance for ten years, salary arrears for 34 months (March 2013 to January 2016) and costs. The respondent denied any employment relationship, contending the claimant was an independent contractor engaged on a needs basis to recover debts and paid only commission on collections, with no salary, statutory deductions or contract of service. The respondent's director, Peter Nyaoga, testified to that effect. The court applied the established distinction between a contract of service and a contract for service, citing Kenya Hotels & Allied Workers Union v Alfajiri Villas (Magufa) Ltd and Joab Atte Okada v Bayer East Africa Limited. It found both accounts confirmed commission-based payment without statutory deductions. The court also noted the claimant's 34-month period without wages was inconsistent with employment, and that complaints over wages and statutory dues should have gone to the Labour Officer under section 16(5) of the Employment Act, 2007. Holding the claimant an independent contractor in a purely commercial relationship, the court found its jurisdiction ousted, struck out the claim, and ordered each party to bear their own costs.

Key legal issues

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01

Distinction between an employee and an independent contractor

Holding

The claimant, engaged on a needs basis and paid commission on collections without salary or statutory deductions, was an independent contractor, not an employee

Reasoning

The court applied the hallmarks of an independent contractor: payment by commission or invoice rather than salary, absence of PAYE, NSSF or NHIF deductions, freedom to work for others, and no leave or related benefits. Both parties' evidence confirmed commission-based payment without statutory deductions, placing the engagement outside the definition of employment.

p. 2
02

Consequence of a purely commercial relationship on the court's jurisdiction

Holding

The court's employment jurisdiction is ousted where the relationship is purely commercial between independent contracting parties

Reasoning

Having found the claimant was an independent contractor, the court held that his relationship with the respondent was commercial rather than one of employment. Employment and labour disputes fall within the court's mandate only where an employment relationship exists; accordingly, the claim fell outside the court's jurisdiction and was struck out rather than dismissed on the merits.

p. 2
03

Credibility of a wage-arrears claim where no wage was paid for 34 months

Holding

The claimant's continued engagement without wages from March 2013 to January 2016 contradicted the existence of an employment relationship

Reasoning

The court reasoned that a genuine employee would not remain in employment for 34 months without wages. The claimant should have reported the non-payment to the Labour Officer, who under section 16(5) of the Employment Act, 2007 is bound to address complaints of unpaid wages and unremitted statutory dues. The lapse undermined the claim of employment.

p. 2

Legal principles established

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  • A worker paid purely on commission on collections, without salary, statutory deductions or employee benefits, is an independent contractor and not an employee
  • An employer has a statutory duty to issue a written contract of service pursuant to section 10 of the Employment Act, 2007

Court orders

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  1. 1.The claim is struck out
  2. 2.Each party shall bear own costs
Jurisdiction invoked
Employment and labour relations jurisdiction under Article 162(2) of the Constitution (implied); the court held it was denied jurisdiction on finding the relationship purely commercial

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, "Jones N. Aunga v Master Quick Col Services Limited [2021] KEELRC 2354 (KLR)", Case Analysis (2021). Cause No. 451 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/2354/eng@2021-03-04

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