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ELRCOtherELRC Cause (Nairobi); Statement of Claim dated 4th September 2023

Namachanja v Jaldesa & another (Cause E749 of 2023) [2024] KEELRC 2099 (KLR)

Employment and Labour Relations Court
2 August 2024
JRJames Rika
946 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employment court ruled that KCB Group could not dodge a wrongful termination claim by pointing to its South Sudan subsidiary.

What this practically means

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Executive summary

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The Claimant, employed as Head of Internal Audit Department, Senior Manager Level D, at KCB Bank Limited in South Sudan, sued two Respondents alleging unfair and unlawful termination of his contract on 16th November 2022. He sought a declaration that termination was unfair, compensation equivalent to 12 months' salary, terminal benefits, costs and interest. The 2nd Respondent applied by Notice dated 29th January 2024 to strike out the Claim against it, arguing the Claimant was employed by KCB South Sudan Limited, a separate legal entity, supported by the affidavit of Robley Ngoje, Head-Employee Relations. The Claimant opposed, showing he was recruited at KCB Bank Kenya Limited's Kencom head office in Nairobi, his appointment was approved by the Group Human Resource Director, he reported to the Board Audit Committee Chairperson at Kencom, his salary was payable in Kenya, and his terminal dues were processed there. The Court declined the application. It held that the definition of 'employer' under Section 2 of the Employment Act is broad and not confined to legal structures; Salomon corporate separateness is of limited utility in employment claims; and employees should not be forced to unmask complex group structures to identify the most suable subsidiary. The employer's remedy, if improperly joined, is joinder of the correct subsidiary. The Claimant was granted 14 days to amend his Statement of Claim to clarify against whom the prayers are directed, with costs in the cause.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the Claim against the 2nd Respondent should be struck out on the ground that the Claimant was employed by KCB South Sudan Limited, a separate legal entity from the 2nd Respondent
  2. 2.Whether the 2nd Respondent can be said to be the Claimant's employer notwithstanding corporate separateness
  3. 3.Whether the Claimant should be directed to amend his Statement of Claim to clarify to which Respondent his prayers are directed

Key legal issues

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01

Whether the claim is properly maintainable against the 2nd Respondent despite employment being said to be with a sister subsidiary

Holding

The application to strike out was declined; the Employment Act defines 'employer' broadly and employment claims should not be defeated by corporate structuring

Reasoning

The Court held that employment law is not unduly concerned with legal separateness. The Claimant's contract was drawn, executed, administered and terminated by the KCB business, with decisional control vested at Kencom House, Nairobi. It would be wrong to expect an employee to unmask the intricate web of KCB Group legal structures to identify the most suable subsidiary. The proper course for the employer, if improperly joined, is to seek joinder of the relevant subsidiary.

p. 2
02

Whether the Statement of Claim required amendment

Holding

The Claimant was directed to amend his Statement of Claim to bring clarity as to which Respondent his prayers are directed

Reasoning

Although the Claim was against two Respondents, paragraphs 58, 59 and 61 were directed at one Respondent without clarity as to which. Rule 14 of the Court's Procedure Rules, 2016, permits the Court to call for further details through amendment of pleadings.

p. 3

Legal principles established

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  • The definition of 'employer' under Section 2 of the Employment Act is broad and not confined to legal structures or juridical persons
  • Salomon corporate separateness is of limited utility in employment claims
  • An employer improperly joined may seek joinder of the proper subsidiary rather than dismissal of the claim

Court orders

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  1. 1.The Application filed by the 2nd Respondent dated 29th January 2024 is declined
  2. 2.The Claimant is granted 14 days to file and serve an Amended Statement of Claim
  3. 3.Costs in the cause

The bench

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One judgment of the whole court — no separate or dissenting opinions.

JR
majority

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act; Employment and Labour Relations Court (Procedure) Rules, 2016, Rule 14

Relief refused

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Striking out the Claim against the 2nd Respondent with costs

Employment law is not unduly concerned with legal separateness; all factors pointed to an employer-employee relationship between the Claimant and the 2nd Respondent

p. 2

Costs

Costs in the cause.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

It is ordered: a. The Application filed by the 2nd Respondent dated 29th January 2024 is declined. b. The Claimant is granted 14 days to file and serve an Amended Statement of Claim. c. Costs in the cause.
p. 3Final orders - application declined; amendment directed
Employment Claims should not be defeated in the maze of these layers upon layers of business and legal structures, adopted by Employers, and the Employment Act therefore, deliberately defines the term ‘employer’ broadly
p. 2Broad statutory definition of employer
Incorporation often times, amounts to no more than a myth and a fiction, in dealing with the employer-employee relationship.
p. 2Corporate separateness in employment claims

Issues in the judgment

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minor

Paragraph 7 of the judgment contains a typographical error ('difierent') in the reproduced text

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, "Namachanja v Jaldesa & another (Cause E749 of 2023) [2024] KEELRC 2099 (KLR)", Case Analysis (2024). ELRC Cause (Nairobi); Statement of Claim dated 4th September 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2099/eng@2024-08-02

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