Kenya Union Of Domestic, Hotels, Educational Institutions, Hospitals & Allied Workers v African Tours & Hotels Ltd. (In Receivership) (Cause 84 of 2000) (Employment and Labour) [2003] KEIC 25 (KLR)
The bottom line
#Kenya's Industrial Court ruled that a company that runs a leased hotel and pays its workers is their true employer and must pay their terminal benefits, even in receivership.
What this practically means
#Executive summary
#Key legal issues
#Identity of the employer of the grievants following termination of the lease and AT&H's receivership
The grievants were employees of AT&H for the period the lease subsisted, and AT&H is liable to pay their outstanding terminal benefits.
Applying the four indicia of a contract of employment from Lord Thankerton in Short v Henderson Ltd, the court found AT&H had administrative control over the grievants, paid their wages and salaries, granted leave, and had power to dismiss and reinstate them. The lease clause 4(r) made the lessee liable for dues accruing during the demised term. Consequently AT&H, as the bona fide employer, was saddled with liability for terminal benefits for the lease period.
Effect of AT&H's receivership/liquidation on the award
The receivership/liquidation point, raised for the first time before the Court, could not be made the basis of the decision, and the award remains implementable.
The Court held that liquidation was a ground pressed for the first time at the hearing and could not found the decision. The grievants' position on payment of terminal benefits would be no better or worse than other employees similarly affected by any liquidation of AT&H, so the award was capable of implementation notwithstanding the receivership.
Legal principles established
#- The prima facie test for determining an employer-employee relationship is the employer's right to supervise and control the manner in which the work is done.
- Where a lessee engages employees for work he has taken, the lessor has no control or supervision over them and the employees are the employees of the lessee alone.
Court orders
#- 1.Issues Nos. 2 and 3 dismissed as withdrawn on the Union's application
- 2.AT&H declared liable to pay all the outstanding terminal benefits due and owing to the 124 grievants for the period the lease subsisted, as shown in the attached schedule
- Jurisdiction invoked
- Section 8 of the Trade Disputes Act, Cap. 234 (reference by the Minister for Labour), with statutory certificates under Section 14(9)(e) and (f)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Union Of Domestic, Hotels, Educational Institutions, Hospitals & Allied Workers v African Tours & Hotels Ltd. (In Receivership) (Cause 84 of 2000) (Employment and Labour) [2003] KEIC 25 (KLR)", Case Analysis (2003). Cause 84 of 2000. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2003/25/eng@2003-11-05
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.