LABOUR LAW CLASS NOTES

1. INTRODUCTION
1.1 Labour As A Factor of Production

The term factor of production describes the inputs that are used in the production of goods or
services in the attempt to make an economic profit.

The main factors of production are land, labour, capital, entrepreneurship and ICT.

Labour as a factor of production may thus be described as the exertion of physical and mental
effort for monetary benefit. It does not include leisure activities (for purposes of labour law).

1.2 Some Characteristics of Labour

• It is inseparable from the labourer – it is present and joined to the human being exerting
it and using it. But when people get paid when they work, they are paid for their services
and not for selling themselves

• No production is possible without labour – it is a necessary activation of the production

process. The activeness of it is based on the fact that unlike machines, human beings
have feelings, the ability to think and also have preferences

• Labour has imperfect mobility – it is not always easy for workers to move from one
occupation to another due to various limiting factors e.g. culture, language barriers,
education and technical skills needed, values, etc

• It is inherently perishable – it diminishes over time and cannot be stored – unemployed

workers cannot store their labour for future employment

• It is both a means to an end and an end in itself

• It is an immeasurable factor of production – it cannot be calculated based on units of

labour – one cannot determine the production cost of labour. It includes other expenses
incurred by and on the labourer since birth. These expenses cannot be accurately
determined.

• It is heterogeneous – no two workers can have the same quality of labour

 • Labour supply is generally inelastic – the supply of labour is dependent and determined
by many factors e.g. the population size of the society, sex composition, age, the desire
to work, quality of education, etc. Supply of labour is therefore not as changeable as the
changes in demand.

1.3 Foundations Of Labour Law

1.3.1 The Importance Of Considering The Foundations Of Labour Law

• To guide modernization efforts and reform agendas of labour law – considering the
foundations of labour law helps scholars to understand the REASONS for the existence
of Labour Law in the first place and helps them to identify the points of departure of
modern-day labour issues.
• It contributes to an understanding of the interrelationship between labour law and other
social and economic disciplines. Labour law must be understood in its context.
• Foundations lead to the explanation for the PURPOSES of labour law. It explores the
norms and values of a Labour Law. What is it intended to achieve? Has it achieved it?
What are the hindrances and challenges to its achieving its purpose?
• Labour Law was birthed as a result of the dissatisfaction of the working class (the
proletariat). It began from revolts in 17th century Europe but became organized in the 19th
century. Socialism was the ideal behind the rise of labour law.

Causes of the revolts:

• Increasing gap between the wealthy and the poor

• Declining incomes of the poor
• Rising inflation and taxation
• Famine, plagues and war
• Religious backlashes.

1.3.2 What are the Foundations Of Labor Law

• Human Dignity
The term “dignity” comes from the Latin word “dignitas” meaning “worthiness”, inherent
worth or inherent respect. From this notion comes the maxim that “Labour is not a
commodity but is also a commodity.” What does this mean?

Commodification should be broadly interpreted as the “practice of thinking about

interactions as if they were sale transactions” and applying market methodology to it.
Commodification involves the owning, pricing, and evaluating transactions in terms of
monetary benefit.

Proponents of universal commodification e.g. Richard Posner, argue that anything some
people are willing to sell, and others are willing to buy in principle should be subject to laissez
faire – the free market.

Proponents of universal non – commodification – argue that commodification gives the

worker an inferior kind of life due to the alienating of oneself as a piece of property.

(Read more on commodification)

• Social Justice

What is social justice? Can be seen as a dynamic exploration of equity and equality. It implies
fairness and mutual obligation in a society. There should be equal opportunities in life and
where life chances are not distributed equally, then it means that there should be a
distribution of those opportunities in a fair and just manner (distributive justice).

Social justice seeks to achieve fair distribution of wealth, power, and benefits in a society.
Examples of social justice in Labour Law – e.g. collective bargaining procedures, basis labour
standards e.g. minimum wage – these interventions are aimed at improving the position of
the weaker members of the labour market

The traditional view of social justice is that it is for welfare maximization. However, the
explanation of social justice as a justification for some of the mandatory and protective aspects
of labour law can also be based on two other aspects. 1) market failures in the labour market
and 2) behavioural economics where individuals do not make rational assessments of risks
in entering into contracts.

Proponent of social justice – John Rawls (1971)

Human dignity is not sufficient as a foundation without social justice.

According to Georg Wilhelm Friedrich Hegel’s philosophy, labour is not just an individual
activity but is also a social one. A man produces not merely to satisfy his own needs but also
on a reciprocal basis for others.

However, with this view, one cannot fail to see the tension between the concepts of human
dignity and social justice. Social justice has a component of egalitarianism/equality. Is it not
more important to focus on the real needs of individuals rather than constantly engaging in a
comparison of people’s lives with others??? A strict view of Egalitarianism/equality will
necessitate a comparison.

A different theory of egalitarianism – constitutive or relational egalitarianism – equality is

pursued on the basis of moral grounds. Equality has a value which is extrinsic because it
follows from a higher moral value of equal dignity and respect. This is different from
instrumental egalitarianism which sees the value of equality as an instrument to reach other
value.

How does this relate to labour law? Can be seen very well in the area of wages. Employees
need sufficiently high wages to live a decent life (DIGNITY) But also need wages that stand
in relation to the earnings of other employees or even in relation to their additional value to
the enterprise/institution (RELATIONAL EGALITARIANISM)

• The Market Economy – the free market as a (functional) foundation of labor law

The common view is that labour law is actually a reaction to the principles of the free market.
So how can the free market be a foundation for labour law?

The answer may lie in the view that if Labour Law is a corrigendum (correction) to the free
market, it cannot otherwise be, than that labour law is presupposing and built on the existence
of this free market.

Labour law is thus seen as a law that responds to the changing demands of a socially dynamic
aspect of modern capitalism. The free market principles give labour law its REASON FOR
EXISTENCE.

However, under the neo – classical economics theory, labour law operates as an exogenous
intervention in the operation of market forces. Wages and employment are influenced by
the forces of supply and demand for labour. The market forces are an implicit regulator of
decisions to be employed. Firms/employers who underpay are at risk of losing their
workforce or potential employees to employers who pay well.
In the same breath, workers who overdemand for wages risk exclusion from employment as
firms will substitute capital or ICT for labour or simply cease to employ.

Market forces are considered favourable because they promote equality. This means that
there is equal pay for an equal value of work. This also means that there will be a standard
wage for labour of comparable productivity regardless of the employer.

Labour law is thus seen as an interference. It is the source of imperfections in the market
equilibrium created by the market. Wage regulation actually lowers the demand for labour
and “results in the exclusion from the market of those it is designed to help, that is, the low
paid.”

• Freedom/Liberty as a Foundation for Labour Law

Freedom as Capability

The main proponent of this conception of freedom is Amartya Sen and Martha Nussbaum

Freedom is the possession of opportunities, options and powers and the actual exercise of
those powers

According to Sen – freedom is to be understood as capabilities – the opportunities that one

has to be what he or she desires to be.

Labour law should therefore enhance workers capabilities.

Real Freedom

This is freedom that is based on consent – there is no duress and no undue influence

The argument is that labour contracts are voluntary in nature and no one is forced into them.
However, what about economic duress? When an employee has no reasonable or acceptable
alternative to taking a hazardous job, he may be forced or coerced economically into taking
that job (According to Gerald Cohen)

Cohen argues that all job offers in a capitalistic society are actually coercive because
proletarians are not free to leave the working class and become private owners of capital.
Proletariat are forced to sell their labour to capitalists.
 However, Robert Nozick denies the concept of economic duress and insists that when a
worker accepts to work under less attractive conditions, he or she still has a choice. There is
still freedom.

Take his example of the 26 men and 26 women each wanting to be married.

He argues that labour contracts are still voluntary even if workers have no other palatable
alternatives.

• Paternalism

This is usually seen as an attack on individual autonomy and free choice. It is seen as an
attack on Liberalism. According to John Stuart Mill – people should be left legally free to
lead their lives as they see fit as long as they do not harm others.

However Stuart Mill also recognized that there are some forms of paternalism that can be
reconciled to the concept of liberalism. He acknowledged that some forms of government
intervention or interference are done for the good of individuals without necessarily being a
detriment to the liberty of the individual. For example placing legislation regulating maximum
hours of working.

Gerald Dworkin suggested that paternalism is necessary due to the limitations of our cognitive
and emotional capacities. See what he says:

“I suggest that since we are all aware of our irrational propensities – deficiencies in cognitive and
emotional capacities and avoidable and unavoidable ignorance – it is rational and prudent for us
to take out ‘social insurance policies’. We may argue for and against proposed paternalistic
measures in terms of what fully rational individuals would accept as forms of protection.”

Simon Deakin argues that paternalism can still be justified in the light of freedom of contract
doctrine. He argues that contractual freedom can be seen from a functional perspective i.e. what
is the function of contract?

The function of contract is to facilitate market based exchanges. Market based exchanges are
exchanges that are dependant on the forces of supply, demand and price

In performing this function, the law of contract DISCRIMINATES in terms of which contracts
it is to enforce. It is within this discriminative aspect that paternalism can be justified.
The exceptions or limitations to the laissez faire doctrine are all part of the paternalism argument.
E.g. Incapacity and public policy considerations.

Therefore paternalism can be justified where parties need to be protected from the negative
welfare implications of their decisions (the rare cases where parties do not display rationality in
their choices). This is the TRADITIONAL argument for paternalism.

However, in some forms of regulation which demonstrate paternalism e.g. labour law and
consumer protection law, the contractual regulation cannot simply be explained in terms of
traditional paternalism. When people enter into employment contracts or consumer-based
contracts which have welfare – reducing effects, they are not “irrational” per se. They may have
limited information or unequal bargaining power BUT NOT IRRATIONALITY.

The basis of intervention based on paternalism therefore is not to protect the parties from
themselves but to overcome externalities and to address information asymmetries (inequalities).
In so doing, the scope of the market is expanded and the general societal well-being is promoted.

NB – An externality is a consequence of an economic activity that is experienced by unrelated

third parties. It can be either positive or negative. Externalities are not reflected in the prices
charged for the goods or services being provided.

Paternalism can also be seen as a tool of efficiency. That is to correct market failures as a result
of transaction costs and assymetrical information, unequal bargaining power, etc. It would thus
promote competitiveness and wealth maximization.

In restraining freedom of contract in the labour market, certain protective measures may be put
in place. Protective labour legislation, distributive legislation and permissive legislation.

Protective legislation – e.g. legislation prohibiting child labour,

or prohibiting sexual harassment, non discrimination in
recruitment and promotion.

Distributive legislation – seeks to affect terms of exchange – e.g.

compulsory payment in proper legal tender, minimum wage laws,
control of wages and retirement security

Permissive legislation – this facilitates the creation of

institutions for collective action by workers, collective bargaining,
etc
 • Human Rights Theories as justification or foundation for Labour Law

This theory appeals to rights as an exclusionary reason why protection of workers interests should
be granted. By making labour rights fundamental rights, they override other conflicting policies
and considerations

The two aspects of the theory of rights:

On the one hand: rights are important for the achievement of certain goals. They are a Means
to an End e.g. the maximization of well being or the maximization of utility. However If one uses
this aspect of the theory as a foundation of labour law, then it is possible that labour law can be
discarded if those goals can be achieved more successfully by other means.

On the other hand – rights should be seen as fundamental rights or rights having some
Constitutional force – this is different from simply seeing labour rights as universal human rights.
They must be given constitutional force – the Constitutionalisation of Labour Law.

According to Deakin there is a reason why labour rights cannot fall in the category of universal
rights:

• The challenge to seeing labour rights as human rights is that they do not seem as
compelling as other rights e.g. liberty, security, etc. Indeed because labour rights are
socio-economic rights, these kinds of rights have traditionally been seen as lower in the
hierarchy of rights than civil and political rights. In fact, in some Constitutions and legal
systems, socio-economic rights are considered only as aspirations or statements of policy
rather than enforceable legal rights (the justiciability debate on socio – economic rights).
• Labour rights do not seem to be universal in nature. They are only applicable to a
particular group of human beings – i.e. those who are in employment or employment
like situations
• A labour right such as the right to fair or just remuneration depends on what each society
can afford at any given time. In other words, what is fair and just with respect to
remuneration is RELATIVE. However, some other universal rights for example the right
to dignity cannot be negotiated. There is no RELATIVISM when it comes to universal
rights
• Universal human rights are timeless and this means that they do not change over time.
They are not dynamic. This is unlike labour rights which seem to be dynamic. They
 change over time depending on various factors e.g. the systems of production, the forms
of work, the division of labour, etc

Thus the major distinctions between universal human rights and labour rights can be summarized
as:

i. The moral weight of their claims

ii. Their universal applicability

iii. The strictness of their standards

iv. Their variability over time.

Therefore it may be argued, that instead of viewing labour rights as universal human rights they
can be viewed as fundamental rights derived from the theory of justice. This is a Rawlsian Theory.

John Rawls (1972) asked the following question:

“What are the MINIMUM conditions in terms of rules and political institutions that a reasonable
person, who is ignorant of what goals and preferences he or she may have and how successful in
achieving them he or she will prove to be (a condition known as the veil of ignorance), would set
before agreeing to become a member of a society that had the power of coercion over its
citizens?”

These basic minimums are not owed to individuals by virtue of them being human but by virtue
of them consenting to be members of a society. Fundamental rights (or equal basic liberties) are
there to provide essential guarantees for the individual against misuse of power by the State.

Question for consideration – Are Labour Rights Human Rights?

1.4 Functions Of Labour Law

The organization of socio – economic conditions of a society will determine the nature of work
that is done in that society. This will subsequently determine the kind of labor laws that will
govern the work relations in that society. In other words, labor laws have been shaped and
moulded by the exigencies and circumstances that are peculiar to the socio – economic era within
which they operate. The function of labor law depends on the socio- economic conditions in
which it operates.
Let’s look at the different stages of human development:

The hunter – gatherer era

Very few in terms of population. Groups were 20 to 50 in number. They were nomadic in nature.
There were no storage mechanisms for food so they hunted and gathered at the time that they
needed to eat. There was little possibility of accumulation of wealth. There was no incentive to
work except for the mere purpose of survival. Therefore the only labor law that was needed was
that which separated roles. The labor was divided depending on gender. The men hunted and
the women gathered.

The agricultural era

Hunters and gatherers became more skilled and advanced. They required tools and weapons for
their activities. Population increased and they began competing for the existing resources i.e. land
as hunting ground. There was still scarcity of meat from hunting and therefore man turned to the
domestication of animals for meat and the cultivating of crops as an alternative to meat.

The direct result of the emergence of agriculture was the concept of land ownership. Permanent
housing structures began to be erected. Demarcations of ownership began to be made on land.
The nomadic lifestyle decreased.

There was incentive to work – it was now not merely working for survival but working to store
assets for future use.

Skills for hunting were replaced by specific skills which were dependent on someone else’s skill
to do something else. E.g. farmers and herders specialized in food (crops and meat). Potters
specialized in the containers that stored the food. Metal smiths and carpenters specialized in the
making of weapons and tools for cultivation. Priests prayed for the rain and good harvest.

The fact that assets could be acquired meant that there was an incentive to acquire through
violence or theft. It also meant the beginning of barter or trade.

There was the concept of “a closed” village – the households of closed villages joined together
to operate like a large family where all the economic transactions of the village were controlled
by the local landlord or his agents. The village as a whole would contract with the landlord usually
for payment in kind, usually a proportion of their crop. When they needed any crop for survival
they would provide cheap labor to the landlord. Hence the master – servant concept of labor
started. There was a proprietal relationship of master and servant during the agricultural era.

The Industrial Era

Most conventional historians place the industrial revolution at the middle of the 18th century
(around 1750).

Mechanical inventions – causing mass production of products – requirement for large numbers
of unskilled workers to work in the industries.

The height of the industrial era has been referred to as Fordism – this term is used to describe
the industrial strategy of the US and other countries in the period after the Second World War.
The strategy is that there is mass production of a particular product which is complemented by
a mass market to consume the goods produced. Henry Ford explained the logic behind the
strategy. Employ a worker and pay him highly. This worker will at the end of the day be the same
consumer of the goods that have been produced. In other words, highly paid unskilled workers
use their income to sustain high consumption of mass produced products.

Under fordism, workers were arranged in a hierarchical order. There was clear demarcation of
job – descriptions. There was strict control of employees and centralized management structures.

The legal conception of work and work relationships was transformed. The relationship changed
from that of master and servant to the contractual relationship of employer and employee.

Work became seen as a means of acquiring property and therefore began to individuate workers
in society. The worker was now seen as a free man (a person- independent, free, engaging with
others through intention and free will and choice) and not a servant (property).

Work was also seen as a way of getting full acceptance into the community (citizenship)

Work relationships became premised on Contract. Without a contract of employment, there

was no employee – employer relationship

The industrial era also created the factory worker who was able to join with others to make
demands on the employer hence the rise of collective action, trade unions.

Labor law therefore existed and was functional to the extent that it sought to formalize the status
quo. To formalize the relationship between the employer and the employee and to formalize the
creation and participation of workers in collective action (trade unions).
The Information Era (Post Fordism) – Gateism

Technology has changed the manner in which the economy operates and this has changed the
nature of work

The economy based on information is faster, more varied and there is easier communication.
This has changed the quality and content of jobs, the skills and competencies required, the
content and duration of contracts, the pay structures etc.

This age is the age of specialization rather than mass production

Companies and employers have had to restructure and decentralize their operations in order to
be more competitive for survival and to meet consumer demands (characteristics of companies
– smaller enterprises, smaller teams of workers, more skilled workers, more flexible tools,
outsourcing)

As a result of this, more workers are being locked out of employment due to lack of specialized
skills.

The role of trade unions is being compromised because there are fewer workers (high rate of
unemployment). There is less emphasis on the role of the trade union.

A new approach to labor law is needed in the information era. See the words of D’Adamo (1998)
in “The Eat Right Diet” what is required is “a labor law that is no longer identified with the nation
state (as political actor, normative power, or national community) and therefore realizes a
complex ‘decentralization’; that no longer has as its exclusive centre of gravity the labor relations
of stable, full time workers, and might, therefore be defined as “post – occupational”; and that
does not merely look after the material needs of a standardized worker, conceived abstractly as
the weaker party to the contract who is subject to the risks in face of the employer’s hierarchical
organization, but increasingly stresses the worker in flesh and bone, as a person bearing his or
her own identity, comprised not only of equality, but also of differences that call for respect and
that for this reason might be termed ‘post material.’”

SO WHAT ARE THE FUNCTIONS OF LABOUR LAW?...

• Ordering Function – based on the philosophical view of labor law

This function is based on the assumption that labor relations are power relations. The power
struggle is between the employees and the employers. There is an inequality in the power
equation. The inequality is both ACTUAL and LEGAL in nature. Actual inequality means that
the bargaining power of employees in the negotiation of working conditions is less than that of
their employers. Legal inequality means that there is legal dependence. This means that the
employee is subordinate to the authority of the employer by virtue of the contract of service freely
entered into.

The function of labor law in such a scenario is to serve as a balancer or a stabilizer. It orders the
outcome that would develop otherwise from the functioning of the free market. It does this by
providing a countervailing power to off – set the power position of the employer. See the words
of Kahn – Freud (1972): “The main object of labor law has always been, and I venture to say will
always be, to be a countervailing force to counteract the inequality of bargaining power which is
inherent and must be inherent in the employment relationship.” LABOUR LAW IS THUS
SEEN TO HAVE A PROTECTIVE FUNCTION.

An example of the ordering function – allowing collective labor law – allowing workers to
associate themselves in order to increase their power position in relation to their employers.

Another way the ordering function operates is to balance out all the possible interests in labor
relations. A balance needs to be struck between the interests of the employer and the employee.
It is possible sometimes that the employer is the one who is a weaker bargaining position. In such
a scenario, the law would also seek to protect the employer. The ordering function here would
seek to establish a cooperative relationship between workers and employers.

• The Well Being Function

What is meant by well being in this context is “the ability to do valuable acts or to reach valuable
states of being.” It is about the quality of one’s work and one’s life. It is the degree to which basic
needs as well as aspirations and desires are being met. What is envisioned is not only that minimal
living or health standards are being met, but also one’s personal integrity in terms of self –
development, protection of family and private life, is being preserved.

This function of labor law is seen from the “capabilities” approach of Amartya Sen – according
to Sen, individual well – being needs to be connected with someone’s capabilities in order to be
able to live as a person in dignity. Labor law is thus seen, not as merely protective in nature, but
is seen as providing possibilities for people. It is seen as enabling people with regard to work or
in the labor market. Labor law is seen as facilitating human capabilities and human capital. The
capability approach encompasses careers and professional lives including combinations of work
with personal/private lives.

• The integrative function

This function recognizes the fact that an individual belongs to a wider society. Labor is not merely
an individual activity but affects many others.

The integrative function allows for the concept of social inclusion – the inclusion of not just the
employee, but also of other stakeholders in labor law decision making. What is also known as
the democratic function of labor law by Guy Davidov (2004).

The integrative function facilitates rules on inclusion, work life balance, involvement of
employees in management, etc

This function reconciles the individual and the collective responsibility that this person has – it
refers to the notion of ‘social citizenship’. This implies rights – obligations relationship meaning
that social rights also suppose social (economic) obligations. See John Stuart Mill’s observations
that everyone who enjoys the protection of the society is at the same time supposed to make an
effort in return to take into account the interests of other people.

• The intermediary function of law

This requires that labor law be connected with its environment and context.

Labor law needs to mediate between reality, policy and aspirations. Labor laws definition and
function cannot be derived from itself. It is not just a set of rules which have no context. It is not
a pure idea. It goes hand in hand with the changes and dynamics of social reality.

The intermediary function of labor law sees labor law as a responsive law – it responds to the
social needs. It must therefore be open towards implicit values and policy choices that influence
the law.

It fulfills a gate keeping function where it mediates between the foundations of labor law and new
developments and insights.
Seeing labor law in its intermediary function enables the law to capture developments which are
not specifically in the domain of labor law but which are important in the development of labor
law. E.g. human rights and constitutional discourses.

• Enhancement of the competitiveness of business.

At the core of the competitiveness of business is the facilitation and stabilization of employment
relations.

Some scholars argue that the best way of achieving competitiveness is by way of deregulation as
this will increase efficiency while others argue that it is by way of government intervention. Collins
argues that neither deregulation nor mandatory rules enable this competitiveness in business. It
will require new techniques of regulating employment relations.

The theme of regulating employment relations for competitiveness came about in the 1990’s.
The objective is to improve the competitiveness of businesses so that they can compete in a
global economy. The question is how can labor law assist in the achievement of this objective?

Collins argues that the best way of attaining this objective is by way of creating “flexibility” and
that labor law should facilitate and reinforce this flexibility in work contracts.

Modern work conditions require flexibility because the nature of a lot of work mutates so rapidly
causing the distinct possibility that the job will disappear and another job will emerge. The
modern form of business organization has embraced technology more and more. And therefore
labor relations should embrace these new developments in the job market via the mechanism of
FLEXIBILITY. Flexibility thus enhances competitiveness and this promotes development of
the economy. Labor law should be seen as promoting this flexibility in work contracts and
conditions.

The function of labor laws depends on the socio–economic conditions in which those laws
operate at any given time.

Labour law is thus seen as an intervention to the rules of the free market. It is seen as performing
a redistributive function and enforcing equality e.g. throught collective bargaining, etc

The weakness however of seeing labour law as constantly an interventionist mechanism is that it
fails to take into account possible evolutions in socio – economic situations where the worker’s
position could be stronger than that of the employer.
2. THE CONTRACT OF EMPLOYMENT AND THE EMPLOYMENT RELATIONSHIP

2.1 Introduction

The employment relationship is as dynamic as the society in which it is negotiated and

formulated. Regulation thus should regulate both the employment contract and the employment
relationship.

The traditional view of the employment relationship and the boundaries of the employment
relationship are determined by the existence of a contract of employment. That is, if there is a
contract of employment, an employment relationship exists and vice versa. However according
to Honeyball and Pearce (2006) this view of the employment relationship is too simplistic.
Employment relationship and contract are not always contemporaneous. Employment
relationship may cover a wider period that is covered by the contract of employment.

Consider these two scenarios:

A. An employer terminates an employee’s contract of employment but the employee is still

bound by some restrictive covenants contained in his contract long after his contract has
ended. An employer may preserve an employee’s employment status even when the
former employee works for a new employer.
B. An employer and employee enter into a contract but work is to begin at a later date.
Employment may be assumed to begin on that later date even though there is a
contractual relationship between the parties prior to that date.

When is one deemed to be employed? The answer to this question is important as it will
determine whether certain rights and duties will accrue. The answer to this question is especially
pertinent given the dynamic/changing work patterns in modern society. E.g. self employed, shift
work, employment agencies, outsourced employees (see: Wrigley Company (EA) Ltd v The AG
& 2others and another (Petition No. 22 of 2012; Abbysinia Iron & Steel Limited v Kenya
Engineering Workers Union (Civil Appeal No. 67 of 2015, Court of Appeal at Kisumu).

Question: how can the contract of employment create rights and duties which operate outside
the period of employment?

Question: how can an employee remain bound to observe restrictive covenants even when the
contract of employment has ended?
One argument that has been propounded is that the contract of employment has two phases.
The pre – employment stage and the post employment stage.

In the pre-employment stage a contract has been signed but the employee is to take up
employment at a later date. The employment relationship is thought not to exist even when the
elements of a contract are all in place (contractual rights and obligations are applicable). BUT
DOES IT EXIST??

SEE: Sarkar v South Tees Acute Hospital NHS Trust [1997] 1 CR 673

Facts:
• Ms Sarkar was offered a job with the respondents as an ultrasound manager. She accepted
the offer on 22nd August 1995
• She was to commence work on 1 October 1995
• However the respondents changed their mind and on 11th September 1995, they wrote
to Ms S withdrawing their offer of employment
• S claimed for unfair and wrongful dismissal
• The Tribunal dismissed her claim for wrongful dismissal on the basis that it did not arise
out of termination of the employee’s employment and as such the Tribunal did not have
jurisdiction. In other words, there was no employment relationship
• The Employment had never began
• S appealed to the EAT which was not convinced by the 2 contract approach (the
argument for the respondent)
• The EAT held that there was only one contract which governed the pre – work and post
work phases.
• According to the Sarkar case therefore, the employee is employed once the contract is
made even though he may begin work several months later. It means that the employee
can enjoy much wider rights in the pre – work stage than that which is actually envisaged.

2.2 The Post employment stage

When a contract of employment is terminated is the whole contract dead or just the performance
of the contract? Can the performance be ended for some purposes and not for others? The
question is especially pertinent when there are terms restricting the activities of the employee
once the employment has come to an end. E.g. restrictive covenants. See the case of LG
Electronics Africa Logistics Fze v Charles Kimari (HCCC No. 346 of 2012) – dealing with the
Constitutionality of restrictive covenants.

2.3 Definition of Employer and Employee

2.3.1. Definition of employer

According to Simon Deakin (2001) – a purely contractual analysis of the employee/employer

relationship provides employers with strong incentives to avoid the application of protective
legislation.

The thrust of Deakin’s argument is that there are situations in which, simply considering who an
employer or employee is from a purely contractual point of view may cause a substantive
injustice, especially when the “employer” is seeking to evade liability or legal responsibility. He
asks the question: “How far is the law prepared to go in upsetting, after the event, the contractual
allocation of risks which the parties have made?” in other words, should the law intervene or
interfere with the freedom of contract where injustice may take place? Where the bargaining
power of the employee is at stake? Are there any justifications for overriding the contractual
allocation of risks?

This question is especially pertinent due to the nature of modern work arrangements e.g. the
presence of an intermediary personal service company. See: Abbey Life Assurance Co Ltd v
Tansell [2000] IRLR 387:

In this case, the complainant had set up his own personal service company for the supply of his
services as a complete consultant (intelligents). He had contracted with an employment agency
(MHC) to supply his services to the end user (Abbey Life). 5 months into the agreement Abbey
Life terminated the services of Tansell shortly after he had been diagnosed with diabetes. He
brought a claim against MHC and Abbey Life for disability discrimination. The Court of Appeal
held that it was Abbey Life and not MHC that was liable. The legislation concerned (the
Disability Discrimination Act) imposes equal treatment obligation on a “Principal” to whom the
labour of a contract worker is supplied under the terms of a contract entered into between the
Principal and another person.

According to Deakin, the test for “employer” is three fold:

a) The coordination test – the employer is the one who exercises the powers of
centralized management (managerial control). The firm (as an employer) is a
space within which managerial control is exercised.

b) The risk test – the focus on the employment relationship was as the conduit
through which payments are channeled and risks are pooled (risks of
unemployment, interruption to income and work related injury and disease).
How are these risks taken care of? For example through Income taxation and
National insurance contribution. Relationships which fall outside the
employment contract are subject to different tax and social insurance regimes.
The traditional labour conception was that the coordination and risk functions
were united. The law granted the employer wide managerial powers in return for
the imposition of social obligations of risk pooling. But note that the modern
fragmentation of the concept of the employer means that the supply of labour
through intermediaries implies that the coordination and risk functions are with
different entities. The coordination functions rests with the end user of the labour
but the risk function rests with the agency (or intermediary) or the individual
worker]

c) The equity test – this is where the enterprise is treated as a space in which equal
rights are protected. This entails treating all workers the same.

2.3.2. Who is an employee?

It is fundamental to understanding the relationship between an employee and employer, to

ascertain whether there is a contract of employment or a contract of service between the two
parties.

In order to also to ascertain whether the parties are bound by that contract, it is essential to
determine whether there is an employer and an employee. The definitions are important because
if there is an employment relationship in existence, then automatic duties/obligations and rights
are created by the law.

This question is important because many people work for others but are not employed and
therefore cannot enforce any contract of employment. An employee is not an employee simply
because he receives and obeys orders or is paid for his work.

Example 1

If one engages a building contractor to paint the house or to build a structure, the contractor will
come under strict supervision, will receive orders and will have to obey them and will also receive
payment for his work, but he cannot be termed as an employee.

Example 2

If one engages a taxi driver to take him to a particular place. The taxi driver may come under
strict instructions and will have to obey the instructions, and will also be paid for their services,
but cannot be termed as an employee of the customer.

In other words, from these two examples, it is clear that giving orders and receiving payments are
not by themselves proof of employment.

An employee is different from an independent contractor.

See the dicta of Denning LJ as he then was in Stevenson Jordan & Harrison v McDonnell &
Evans (1952) 69 RPC 10 (Court of Appeal) where he stated that:

"It is often easy to recognize a contract of service when you see it, but difficult to say where the
difference lies. A ship's master, a chauffeur, and a reporter on the staff of a newspaper are all
employed under a contract of service; but a ship's pilot, a taxi-man, and a newspaper contributor
are employed under a contract for services. One feature which seems to run through the
instances is that, under a contract of service, a man is employed as part of the business, and his
work is done as an integral part of the business; whereas, under a contract for services, his work,
although done for the business, is not integrated into it but is only accessory to it."
2.3.3 What are the tests of employment?

1. The Control Test

See: Yewens v Noakes (1880) L.R. 6 QBD 530, CA

This is sometimes called the “what to do and how to do it” test. In other words, a person can tell
another not only what job to do but how to do the job, when to do the job, where to do the job
then there is the element of control. The more control that A exercises over B’s work, the more
likely it is that B is an employee of A. it is then a question of the extent of power over the other
person.

The criticism to this test is that it is not a sufficient test when the worker was taken on because
they possess a certain skill or is expected to have discretion in their work. See: Walker v Crystal
Palace FC [1910] 1 KB 87 – Does the employer control the background arrangements for the
work to be done?

2. The Integration Test

Under this test, what is being considered is whether the person concerned is fully integrated into
the supposed employer’s organization or institution. If a person is employed, his work is done
as an integral part of the business of the organization but if one has simply been hired for a
purpose, then his work is not integral to the business of the organization but is only an accessory.
In other words, is the person part and parcel of the organization or institution?

A criticism of this test is that it does not take into account modern work arrangements such as
flexible employment arrangements or mixed contracts where one does work under both a
contract of service and a contract for services?

See: Stevenson Jordan and Harrison v McDonald & Evans (1952) 69 RPC 10, CA
A management engineer purported to assign to publishers the copyright in a book which was
based mainly on information acquired while he had been a servant and later an executive officer
in the plaintiff company. Part of that information was the text of lectures delivered publicly by
the author while working for the company and part was material acquired while on a particular
assignment for an individual client of the company.

Held, (1) the author had not betrayed any mystery of the plaintiff's business so as unlawfully to
disclose some particular trade secret, but had merely put together the "know-how" of his
profession; (2) the author's contract with the company had been a mixed contract, that is, partly
a contract of service and partly a contract for services outside the contract, and the work done by
him was severable; (3) the material based on public lectures was not made under the contract of
service and so was not covered by s. 5(1)(b) of the Copyright Act, 1911; (4) the material acquired
while working for an individual client of the company on a particular assignment was made under
a contract of service, and fell within the terms of s. 5(1)(b); (5) the material in (4) being severable
from the rest of the book, the publishers should be restrained from publishing that section;
consequently the appeal would be allowed in part.

3. The economic reality and the multiple test

This test takes an American approach at looking at multiple factors in order to determine
whether a contract of employment exists.

a) Independence – if the worker owns his or her own tools of work, then there is a high
chance that they are not employees but are independent contractors.

b) Is the person being paid wages and sick pay or are they being paid a lump sum? If they
are being paid a lump sum, it usually indicates that they are not employed but being hired
for a particular purpose.

c) Tax – deduction of tax and National Social Security contributions point to the element
of employment but are not conclusive factors.

d) Self – description – in some cases, the parties may describe themselves as to what they
really are and the nature of their relationship. However, even if the parties describe their
 relationship that is not conclusive because the courts still have to look at the
SUBSTANCE of their relationship and not simply the form of the relationship.

See: Investigations v Minister of Social Security (1969) 2 QB 173 per Cooke, J:

• Is the employee providing his own tools/equipment or is he using that which has been
provided by the “employer”

• Is he providing his own helpers/staff or is he using those provided by the employer?

• What is the degree of financial risk that this person takes?

• What is the degree of direct profit from the work?

See also: Ready Mixed Concrete v Minister of Pensions and National Insurance (1968) 1 All ER
433 per MacKenna, J:

• For one to be considered an employee, that person undertakes to provide his or her own
work/skill to the employer in return for a wage or other payment

• The employee agrees to be subject to the employer’s control to a sufficient degree to

make the other the master

• The other provisions in the contract are consistent with it being a contract of service.

An employee according to the Employment Act 2007 is “a person employed for wages or a salary
and includes an apprentice and indentured learner.”

An employer is “any person, public body, firm, corporation or company who or which has
entered into a contract of service to employ any individual and includes the agent, foreman,
manager or factor of such persons, public body, firm, corporation or company.”

The Courts in Kenya, are increasingly taking the position that the traditional tests are no longer
to be exclusively used as determinants of whether an employment relationship exists or not. They
will examine the facts and circumstances of each case.

See: Christine Adot Lopeiyo v Wycliffe Mwathi Pere (Cause No. 1688 of 2012) per Mbaru J

See: Charles Ojwang’ v Nyando County Council (Civil Appeal No 68 of 2013)

See: County Assembly of Kisumu & Others v Kisumu County Assembly Board & 6 others (KSM
Court of Appeal Civil Appeal Nos 17 and 18 of 2015)

See: Maurice Oduor Okech v The Chequered Flag Ltd (Cause No. 12 of 2011) – see dicta at
paras 12 to 15

2.4 Regulation of the Individual Contract of Service

Hugh Collins in his article “Legal Responses to the Standard Form Contract” [2007] Industrial
Law Journal states that there are two particular regulatory techniques that have been employed
to respond to the “standard form contract” which in practice is a UNILATERAL determination
of the obligations of the parties by the employer. Standard form contracts (even in the area of
consumer protection) tend to limit the employer’s liability or at least limit the employee’s rights.

One may argue that these “unfair” standard form contracts can be dealt with by market forces
i.e. competition amongst employers that would cause them to offer better terms in order to attract
and maintain employees. The disadvantage of taking such an approach is that some of the
“benefits” may be contained in documents which are not readily available to the employee at
the time of contracting e.g. some benefits and allowances.

Question: do the statutory requirements remedy this situation?

Thus Collins argues that there are two particular regulatory techniques that have been employed
to remedy the unequal bargaining power that employees have and the unfairness of the standard
form contract. These are:

• Terms implied by law into contracts of employment – these implied terms play a gap
filling role. Any gaps in the agreement can be filled by implying the intentions of the
parties or by reference to customs of the trade or the workplace or terms implied by law.
Collins sets out two main functions of implied terms: - firstly they assist in the
interpretation of express terms and secondly they assist in the control of the content of
express terms.

• Statutorily conferred powers for the invalidation of unfair terms in contracts.

2.5 The Contractual Basis of the employment relationship

The employment relationship is based on a contract OF services and not a contract FOR
services.

Under the Employment Act 2007, a contract of service means “an agreement, whether oral or
in writing, and whether expressed or implied, to employ of to serve as an employee for a period
of time, and includes a contract of apprenticeship and indentured learning but does not include
a foreign contract.”

2.5.1 Formation Of The Contract Of Service

Just like any contract, the basic ingredients of a valid contract have to be contained in the contract
of employment. These are a valid offer and acceptance; intention to enter into legal relations;
consideration passing between the parties; capacity to enter into contractual relations; consent of
the parties; legality of the subject matter and the objects of the contract. In general, there are no
special formalities that have to be entered into to form a contract of employment. That means
that they can be either oral or in writing. However under the Employment Act 2007 section
9(1)(a) and (b) any contract of service for a period of three months or more or a contract of
service which provides that a certain job or task needs to be performed which cannot be
reasonably expected to be completed within three months, MUST be in writing.

See the case of Miguna Miguna v Attorney General (Industrial Cause Number 473 of 2011)

The employer shall be responsible for drawing up the contract of service and setting out the
particulars of employment (section 9(2)). If the employee consents to the contract, then he/she
shall sign their name on the contract or imprint an impression of his thumb or one of his fingers
in the presence of a person other than the employer (section 9(3)).

If the employee is illiterate or cannot understand the language in which the contract is written,
then the employer has a duty to explain the contract to the employee in the language that he
understands. – section 9(4).

• Terms in a contract of service

Express terms

the Employment Act has made provision for those things which must be expressly stated in the
contract. These things that must be expressly in the contract are known as particulars of
employment. In section 10 of the Employment Act these particulars of employment can be given
in installments but no later than 2 months after the beginning of the employment.

What must be contained expressly? See section 10(2) and (3)

▪ Name, age, permanent address and sex of the employee

▪ The name of the employer
▪ The job description of the employment
▪ The date of the start of the employment
▪ The duration and the form of the contract
▪ The place of work
▪ The hours of work
▪ The remuneration or scale or rate of remuneration, the method of calculating the
remuneration and the details of any other benefits.
▪ Intervals at which the remuneration is to be paid
▪ Particulars of entitlement to annual leave including public holidays and holiday pay
▪ Terms and conditions with respect to incapacity to work due to sickness or injury,
including any provision for sick pay
▪ Pensions and pension schemes
▪ Length of notice which the employee is entitled to give and to receive to terminate his
contract of employment
▪ If the employment is for a fixed term, the date on which the employment is to end
▪ The place of work or where the employee is permitted to work at various places
▪ Any collective agreements which directly affect the terms and the conditions of
employment ( see the definition of a collective agreement in section 2 of the Employment
Act 2007)
▪ The specific disciplinary rules applicable to the employee or refer the employee to the
provisions of a document which is reasonably accessible to the employee which specifies
the rules Note section 12 (3) – this provision does not apply where as at the date of starting
work the employer has employed less than 50 employees.
▪ The person to whom the employee should apply if dissatisfied with any disciplinary
decisions of the employer and to get redress of any grievance relating to his employment
and the manner in which the application shall be made.
▪ Section 10(5) – revision of the contract terms
 ▪ Section 10(6) – the employer is required to keep the written particulars prescribed for a
period of 5 years after the termination of the employment.

Implied Terms

How can terms become implied into the contract?

a) The officious bystander test – this test is explained by MacKinnon LJ in Shirlaw v

Southern Foundries (1926) [1940] 2 All ER 445, HL “Prima facie that which in any
contract is left to be implied and need not be expressed is something so obvious that it
goes without saying; so that if, while the parties were making their bargain, an officious
bystander were to suggest some express provision for it in their agreement, they would
testily suppress him with a common ‘Oh of course!’”

These are terms which are so obvious that there is no need of expressly stating tem.
However see the case of Liverpool CC v Irwin [1976] 2 All ER 39:

In this case, Liverpool CC owned a block of flats in which Irwin was a tenant. The
common part of the flats had fallen into disrepair (the lifts, the staircases, rubbish chutes,
etc). the council sought to evict the defendant for non – payment of rent with no mention
of the obligations of the landlord. The defendant asked the court to imply a term that the
council had an obligation to repair the common parts of the block of flats. Per Lord
Wilberforce – in some instances, to construct the whole of complete contract, it would
require implications (the supplying of what is not expressed). The test is that for any term
to be implied it must be a matter of NECESSITY. It should be no more than the nature
of the contract requires. An absolute obligation to imply terms would be unreasonable.

See also: Courtlands Northern Spinning Ltd v Sibson & Ano (1988) IRLR 305, CA per
Slade, Glidewell and Russell, LJJ

In this case, the employee was a driver who had left his trade union after a dispute causing
a bad feeling among the other employees who were all members of the same trade union.
To avoid trouble his employer suggested that he move him to another depot a mile away.
The employee argued that this was a breach of contract as there was no mobility clause
in his contract. The CA held that there must have been some term about place of work
in the contract and if there was no express term, one would have to be implied because
 of the nature of the relationship in order to complete the contract and give it business
efficacy. If reasonable, the parties would probably have agreed to a term that the
employer should have power to direct the employee to work at a place within reasonable
daily reach of the employee’s home.

Note: it has been argued that while the courts are reluctant to imply terms into a contract,
they are more prepared to imply terms in order to control the employer’s express powers,
under the contract (Implied terms as a control mechanism).

See also: United Bank v Akhtar (1989) IRLR 507- The Bank in the contract of
employment had included an express mobility clause giving it the right to move
employees to any branch in the UK and discretion as to whether or not it would give
relocation allowances. The applicant was a bank clerk in the lowest grade, was given less
than a week notice to move permanently from the Leeds branch to the Birmingham
branch. His request for a 3 months’ notice in order to facilitate his moving (i.e. selling his
house and taking care of his sick wife) were rejected. The Tribunal held that although an
implied term could not contradict an express term that implied term could control its
exercise. There was an implied term that the bank would give reasonable notice so that
it would not be impossible for the employee to perform his contractual obligation.

b) Business Efficacy – these are terms which are necessary in the business sense to give
efficacy to the contract. These are default rules that are normal in business contracts. For
example duties by the employer of care and fidelity, duty of confidentiality.

c) Custom and practice – what exactly does this mean? Whose custom and practice? Is it a
connotation of managerial prerogative so that worker acquiescence means that they are
bound or is it or is it that workers do things their way without objection? To be a legally
recognized by the courts as an implied term by custom, the custom must be reasonable,
certain and notorious. Also policies of the organization which have been brought to the
attention of the employees and which has been followed without exception for a
substantial period of time. For a custom to be considered part of the contract it must pass
the test similar to customary law i.e. that it must be reasonable, it must be well known and
it must have existed for a long time.

The potential for the custom and practice test to be one sided in favour of the employee
was recognized in the case of Duke v Reliance Systems (1982) IRLR 347 where Browne
– Wilkinson, J stated that: “A policy adopted by management unilaterally cannot become
 a term of the employee’s contract on the grounds that it is an established custom and
practice unless it is at least shown that the policy had been drawn to the attention of the
employee or has been followed without exception for a substantial period.”

Other implied terms:

a) Cooperation and mutual trust and confidence – see: Ruth Gathoni Ngotho – Kariuki v
Presbyterian Church of Kenya & Presbyterian Foundation (Industrial Cause No. 509 of
2010)

See also: Malik v BCCI [1997] 3 All ER 1 – Per Lord Steyn “…the employer shall not
without reasonable and proper cause, conduct itself in a manner calculated or likely to
destroy or seriously damage the relationship of confidence and trust between employer
and employee.”

This implied term is especially relevant for professionals. They may be required to do
more than the contract requires.

b) There is an implied term of care and safety in the workplace

c) An implied term that the employee will be competent to perform his duties

d) An implied term of obedience to instructions – see the classic modern statement of the
duty of obedience to instructions as stated by Lord Evershed, MR in Laws v London
Chronicle (1959):

“Willful disobedience of a lawful and reasonable order shows a disregard – a complete

disregard – of a condition essential to the contract of service, namely the condition that
the servant must obey the proper orders of the master and that unless he does so the
relationship is so to speak, struck at fundamentally.” This does not mean unquestioning
obedience to every instruction e.g. when instructed to do something unlawful. Disputes
usually arise around whether a duty is within an employee’s job description. Does an
employee always have to work within the strict confines of the contract?

e) duty of fidelity – this means a duty to give good and faithful service. What does this entail?
 i. Secret profits – an employee is under an obligation not to make secret profits
from the employment relationship

ii. Disclosure of misconduct – an employee is not under a duty to disclose his or

her wrongdoing to the employer. It is a term imposing a duty of good faith and
not a contract of utmost good faith (uberrimae fidei). It is a duty to disclose the
misconduct of others especially if one is in a senior position.

iii. Competition – in the absence of an express agreement, competition per se is not

objectionable. However if by doing it, it is damaging to the employers business
then it is considered a breach of fidelity.

iv. Confidential information

v. Restrictive covenants – see: Lg Electronics Africa Logistics Fze v Charles Kimari

(HCCC No. 346 of 2012)

f) An implied term as to remuneration – see Article 41(2)(a) of the Constitution

g) There can be an implied term to provide work (on the part of the employer) – does the
employer simply have a duty to pay wages or is there a corresponding duty to provide the
employee with work? Is there an implied term that the employer must give the employee
work?

The classic view is that there is no duty to provide work. See the dicta of Asquith, J in
Collier v Sunday Referee [1940] 2 KB 647 – “Provided I pay my cook her wages
regularly, she cannot complain if I choose to take any or all my meals out.”

However there are two exceptions to this classical rule:

• Where the wages depend on commission for work actually done or if the worker is paid
per piece

• Where refusal to work denies the employee an opportunity to enhance their reputation
or build their career e.g. journalists, actors, etc.

3. SOURCES AND INSTITUTIONS OF LABOUR LAW

3.1 The Constitutional Provisions

• The Constitution is the supreme law of the land – Article 2 of the Constitution.
 • Constitutional protection of labor rights is contained in the Bill of Rights in Chapter 4 of
the Constitution
• Article 28 – every person has inherent dignity and the right to have that dignity respected
and protected. (see the discussion on the foundations and theories of labor law – the
theory of dignity)
• Article 27 – equality before the law, no discrimination by the State or any person against
another person either directly or indirectly on any ground including race, sex, pregnancy,
marital status, health status, ethnic or social origin, colour, age, disability, religion,
conscience, belief, culture, dress, language or birth; affirmative action provisions; no
more than two thirds of the same gender in elective and appointive bodies
• Article 30 – no person shall be held in slavery or servitude and no one shall be required
to perform forced labor
• Article 32(3) – no person shall be denied access to any institution, employment or facility
or the enjoyment of any right because of the person’s belief or religion. 32(4) – a person
shall not be compelled to act, or engage in any act, that is contrary to the person’s belief
or religion.
• Article 36 – protects the freedom of association which includes the right to form, join or
participate in the activities of an association of any kind.
• Article 37 – protects the right to peaceable and unarmed assembly, demonstration,
picketing and the presentation of petitions to public authorities.
• Article 41 – the main constitutional provision concerning labour relations. This provision
protects:

For every worker:

➢ The right to fair labor practices

➢ The right to Fair remuneration
➢ The right to Reasonable working conditions
➢ The right to form, join or participate in the activities and programmes of a trade
union
➢ The right to go on strike

For every employer:

 ➢ The right to form and join in an employers’ organization and to participate in
the activities of that organization

For every trade union and every employers’ organization:

➢ The right to determine its own administration, programmes and activities

➢ To organize and form and join a federation
➢ The right to engage in collective bargaining.

• Article 43(e) – protects the right to social security

• See also Article 232 – values and principles of public service – applicable to employees
in public service
• Chapter 6 of the Constitution – the leadership and integrity of state officers.

3.2 Categories

The law of Contract – a contract is a legal device that facilitates the exchange of both goods and
services between individuals and groups (in our case we are referring to a contract of service). It
is a legally binding and enforceable agreement between two parties whereby each party
undertakes specific obligations or enjoys specific rights conferred by that agreement. Contracts
can either be in writing or be oral although there are specific contracts that must be in writing for
them to be enforceable. With respect to contracts of employment, the Employment Act of 2007
gives further guidance as to whether and which contracts should be written. Section 8 of the Act
suggests that both written and oral contracts of employment are recognized but the following
(under section 9(1)) have to be in writing:

• A contract of service for a period of three months or more

• A contract of service for the performance of any specified work which could
not be reasonably expected to be completed within three months.

Common Law – this is what is derived from judicial decisions. These are the legal principles that
under the doctrine of stare decisis judges develop to form the common law

Labor Legislation (the main ones)

• The Employment Act 2007 – the purpose of this Act is to declare and define the
fundamental rights of employees, to provide basic conditions of employment of
employees, to regulate employment of children and to provide for other matters related
to these issues.
• The Work Injury Act 2007 – this provides for the compensation to employees for work
related injuries and diseases contracted in the course of their employment. This Act
repeals the Workman’s Compensation Act (Cap 236, Laws of Kenya)
• The Labor Relations Act 2007 – this provides for the consolidation of the law relating to
trade unions and trade disputes. It also provides for the registration, regulation,
management and democratization of trade unions and employers’ organizations or
federations, to promote sound labor relations through the protection and promotion of
freedom of association, to promote the encouragement of effective collective bargaining
and promotion of orderly and expeditious dispute settlement, conducive to social justice
and economic development.
• Labor Institutions Act 2007 – to provide regulation to establish labor institutions, to
provide for their functions, powers and duties.
• The Occupational Health and Safety and Health Act 2007 – the purpose of this Act is to
provide for the safety, health and welfare of workers and all persons lawfully present at
workplaces and to provide for the establishment of the National Council of Occupational
Safety and Health.
• Retirement Benefits Act 1997 (together with amendments) – establishes the retirement
benefits authority for the regulation and supervision of retirement benefits schemes and
for the development of the retirement benefits sector.
• The National Social Security Fund Act of 2013 – establishes the National Social Security
Fund and provides for contributions to and the payment of benefits out of the Fund
• The National Hospital Insurance Fund Act 1998 (see also the NHIF Amendment Bill
of 2016) – establishes the NHIF and provides for contributions to and the payment of
benefits out of the Fund as well as to establish the NHIF Management Board
• The Industrial Training Act (Cap 237, Laws of Kenya) – this Act provides for the
regulation of persons engaged in Industry
• The Employment and Labour Relations Court Act (Cap 234B together with the
Procedure Rules of 2016) – provides for the establishment of the Employment and
 Labour Relations Court as a superior court of record and confers jurisdiction on the
Court with respect to employment and labour relations and connected purposes.
• The Pensions Act Cap 189 Laws of Kenya – provides for the grant and regulating
pensions, gratuities and other allowances in respect of public service or officers under the
Government of Kenya
• the Bankruptcy Act (Cap 53, Laws of Kenya) – see especially section 38 and 39
• the HIV and AIDS Prevention and Control Act of 2006 – sections 7, 13, 31
• the Persons With Disabilities Act No 14 of 2003 – see sections 12 – 17

4. LABOUR LAW THEORIES

4.1. The Protective Philosophy

This philosophy starts from the premise that there is an inherent imbalance of power between
the employer – employee relationship. Bargaining power is in favor of the employer and thus
the employee is considered to be at a disadvantage vis - a - vis the employer in terms of resources
and bargaining skills. The employee is at the mercy of the whims of the employer. The function
of labor law under this philosophical view is to assist in redressing this imbalance of power so
that equity and fairness will prevail. It serves a protective function. This philosophy is based on
a pluralist approach to employment relations. This approach argues that an organization or
institution comprises of individuals and groups who have conflicting interests and goals. Despite
this conflict, they are interdependent on each other. These conflicts need to be managed so as
to avoid destructive and counterproductive effects. The conflict is managed and controlled by
collective bargaining. The employees acting jointly through trade unions can ensure that their
interests are taken into account. Labor law should therefore grant the right to form the trade
unions/organizations as well as give power to those trade unions to effectively advocate for and
enforce the interests of their members and finally to allow the workers the right to strike. In other
words, the aim is to protect employees by creating a system which is conducive to meaningful
collective bargaining.

See the words of Otto Khan – Freund (2000) – Khan Freund was of the view that the employee
had very little bargaining power. So he said that “The main object of labor law has always been
and we venture to say will always be, to be a countervailing force to counteract the inequality of
bargaining power which is inherent and must be inherent in the employment relationship.”

In other words, the function of labor law is t regulate, to support and to restrain the power of
management and the power of organized labor.

the main argument behind the pluralist approach is that these relationships cannot survive when
one party constantly gains at the expense of the other.

4.2 The market philosophy

This philosophy is based on the premise that market forces are preferable to state/government
intervention in the attainment of economic growth and development. It argues that the operation
of market forces is more conducive to the attainment of the efficient allocation of resources than
state intervention. It further argues that state intervention (e.g. in the form of legislation) results
in inefficiencies and consequently economic decline as a result of creating artificial distortions in
the market.

The function of labor law should therefore be not to interfere with market forces but rather to
work with them in order to ensure the well – being of the economy and in turn the well – being
of its employers and employees.

The market view of economic growth and development gained support in the early 1970’s( see
the approaches of Thatcher and Reagan)

5. GENERAL PRINCIPLES OF EMPLOYMENT IN KENYA

6. GENERAL PRINCIPLES – PART 2

(Check exercise book)

General Principles to be observed in Labour Law

Contained in Part II of the Employment Act 2007

a) Prohibition against forced labour – section 4

Section 2 of the Act defines forced or compulsory labour as any work or service which is
extracted from any person under the threat of any penalty including the threat of a loss of rights
or privileges which is not offered voluntarily by the person doing the work or performing the
service.
This derives from Article 28 of the Constitution (right to have dignity respected and protected);
Article 30(2) (no person shall be required to perform forced labour). With respect to children –
Article 53(1)) d)

b) Prohibition of discrimination and promotion of equality opportunity in employment –

section 5; see also Articles 27, 28, 41(2) (a); 54 of the Constitution.
VMK v CUEA
Jane Achieng & another v UON
DMV v Bank of Africa
c) Prohibition on Sexual Harassment – see section 6; and Article 28 of the Constitution
d) Prohibition of the worst forms of child labour – section 53 of the Employment Act

7. RIGHTS AND DUTIES OF EMPLOYMENT book)

8. Protection Of Rights, Wages, Care For Women And Children

8.1 Protection of Wages – Part IV

The main reason that people in society work is to get an income to support themselves and their
families. When people are able to provide for themselves and their families, there is a sense of
socio – economic development that takes place. Therefore, it is important that labour laws
provide for the payment of employees of their wages.

A wage is an amount of money paid periodically for work or service done. See the definition of
remuneration on section 2 of the EA 2007 – means the total value of all payments in money or
in kind, made or owing to an employee arising from the employment of that employee.

The Constitutional Provisions – Article 41 – right to fair remuneration

It is worth considering the meaning of what fair remuneration is. In Australia, a landmark ruling
known as the Harvester case ( Ex Parte H.V. McKay) gave some insights that had significant
implications on the meaning of this concept. Higgins, J stated that the employee was entitled to
wages that “met the normal needs of an average employee, regarded as a human being in a
civilized society.” It must be enough to support the wage earner in reasonable and frugal comfort.

ILO Convention (1951) 100 on Equal Remuneration for Work of Equal Value –

Defines the term “equal remuneration for men and women workers for work of equal value
refers to rates remuneration established without discrimination based on sex.”

The Convention states that Member states may apply the principle of equal pay for work of equal
value using nations laws or regulations, legally established machinery for wage determination,
collective agreements between employers and workers or even a combination of all these
methods.

The Convention goes on to provide that objective appraisal of the jobs performed should be
done in order to determine rates.

Note: The legislation that regulated the minimum wages and working hours was The Regulation
of Wages and Conditions of Employment Act Cap 229 of the Laws of Kenya. However, this was
repealed by virtue of section 63(1) of the Labour Institutions Act 2007. But Note Section 63(2)
of the LIA 2007, which provides that any regulations or instruments made or issued under the
Regulation of Wages and Condititons of Employment Act shall continue to have effect as if such
regulation or other instrument were made or issued under the LIA 2007.
Note: on every labour day holiday, the President has given a directive to increase the minimum
wage of workers in Kenya. The last such directive was given on 1st May 2013. President Uhuru
Kenyatta directed a 14 per cent pay rise for workers to be implemented with immediate effect.
The lowest paid worker in the agricultural sector had their salary move from Kshs. 4,258/= to
Kshs. 4,854/=. Domestic workers were to move to Kshs. 9,780.95 (in Nairobi, Mombasa and
Kisumu) - See the Regulations of Wages Order 2013

The Employment Act contains provisions (see s. 17) that protect the employee’s right to receive
wages. The employer has a duty to pay the ENTIRE amount that he owes the employee, in cash
or into a bank account designated by the employee, or by cheque, postal order or money order
in favour of the employee, or if the employee is absent, the employer should pay another person
who has been given authority by the employee to receive the payment on his behalf. Note, the
authority to receive payment on behalf of the employee must be in writing.

The employer must make payment on a working day and during working hours, at the place of
employment or near the place of employment or at any other place that is agreed upon between
the parties

The employer is not permitted to pay the wages at a place where intoxicating liquor is sold or
readily available for supply except where the work or employment of the employee is in such a
place

The Act also protects people from being given money or a promise of payment so that they or
their dependants can enter into employment.

The Act also provides for the payment of allowances IN KIND to the employee, but the
allowance can only be paid if it is for the personal use and benefit of the employee and it does
not consist of or include any intoxicating spirit or noxious drug.

There is further protection for the employees especially when the employer has been sued and
a decree has been made for the attachment of his property. Section 17(6) (with the exception of
an employer undergoing insolvency under Part VIII). After payment of the employee under
section 17(6), if there is any balance due to him, then he is still allowed to recover using the due
process of the law.

An employer who fails to make the payment of the wages in accordance of the law shall be liable
to an offence and will be fined Kshs. 100,000 or imprisonment for two years or both.
When the wages or salary is due – when the employee has been given a task or a piece of work
to be done, then the employer may pay, if the task is not completed, at the end of the day in
proportion to the amount of the task which has been done, or at the completion of the task
(section 18). In the case of a piece of work, the employee is entitled to be paid by his employer
at the end of each month in proportion to the amount of work which he has performed during
the month or on the completion of the work, whichever is earlier.

In the case of casual workers, the payment is deemed to be due at the end of the day, in the case
of an employee employed for a period of more than a day but less than a month, then at the end
of that period. In the case of an employee who is employed for a period of more than a month,
then the person shall be paid at the end of each month. In the case of an employee employed
for an indefinite period or who is on a journey, then payment shall be made at the end of each
month or that period whichever is earlier and on the completion of the journey.

It should be noted that if the employer and the employee enter into an agreement of if the court
makes an order that has more favourable terms to the employee than what the law provides, then
the law shall not interfere.

Even where the employee has been summarily dismissed or the contract of service has been
terminated, the employee still has a right to be paid all the money that is due to him up to the
date of dismissal. See section 18(4 and (5)

Under section 18(6) no wages are payable during the time when the employee is detained in
custody or in prison.

Deduction of wages – section 19 – despite the provisions of section 17(1) which provides for the
payment of the entire amount due, some legitimate deductions can be made.
 • The amount due as contribution to any provident fund or superannuation scheme or any
other scheme approved by the Commissioner for Labour to which the employee has
agreed to contribute
• A reasonable amount for damage done to or loss to any property caused by the willful
default of the employee
• If the employee absents himself from work without leave or other lawful cause, the
employer can deduct the day’s wages for each day that the employee absents himself
• If the employee has a contract of service that specifically entrusts him with the receipt,
custody and payment of money, then if there is loss of money through negligence or
dishonesty, the amount equal to the shortage can be deducted.
• Amount of money paid to the employee in error as wages in excess of the amount due
to him
• Any deduction authorized by law or a collective agreement or a court order or arbitration
award
• The employee has requested in writing that the employer makes a deduction and the
employer has no direct or indirect beneficial interest in the deduction
• Repayment or part repayment of a loan of money – the deduction should not exceed
50% of the wages payable to that employee.

See the penalties for breaching these provisions as to deduction of wages – section 19(4),(5) and
(6).

In as much as the employer has a right to make deductions of wages in certain situations, no
deduction shall be made in consideration of or as a reward of employment of that employee.

Under section 20 and 21 the employee has a right to receive a written statement of salary or
wages from the employer. The statement must contain the following details:

▪ Gross amount of wages or salary of the employee

▪ Any statutory deductions that are made
 ▪ Where the different parts of the net amount are paid, the amount of payment and the
method of payment

However, casual employees are not entitled to receive pay slips or statements of their wages.

The employees rights are also protected in the case of foreign employers – the employer may be
required by the Minister to pay a bond assessed at the equivalent of one month’s wages for all
employees who have been employed or who are to be employed by the employer – see section
23

What happens when the employee dies? – section 24

The employer has a duty to notify the labour officer or if there is no labor officer, the district
officer of the death of the employee. The legal representative of the employee shall be paid the
wages and any other remuneration and property due to the employee as at the date of death
within 30 days of proving that one is the legal representative.

Once the payment is made to the legal representative, the employer is under a duty within 7 days
to show proof of such payment to the labour officer or the district officer.

Also where an employee is killed during the course of his employment or is incapacitated by an
injury during the course of his employment for a period of more than three days, then the
employer must make a report to the labour officer or the district officer – section 24(4)

An employer who wrongfully deducts the salary of the employee shall be liable to a fine of not
more than Kshs. 100,000 or to imprisonment of not more than 2 years or to both, and also shall
be entitled to pay the amount of money that has wrongfully been deducted from the employee.
The employee who feels that their wages or salaries have been wrongfully deducted shall file a
complaint to a labour officer not later than three years after the unlawful deduction has been
made – section 25
There are other rights and duties that are set out in the Labour regulatory framework.

Note: Section 26 (1) of the EA 2007 provides that the provisions in Part V constitute the basic
minimum terms and conditions of a contract of service. One cannot contract below these terms
and conditions…but one can have BETTER terms and conditions. See section 26(2) which gives
validity to this.

1. Hours of work – Note: an employer has the power to regulate work hours but an
employee shall be entitled to at least one rest day in every period of seven days – section
27
There are regulations regarding the maximum number of working hours. The regulations
that were made under the Regulation of Wages and Conditions of Employment Act still
continue to have effect. The main subsidiary legislation that was made to regulate work
hours was the Regulations of Wages (General) Order. It should be noted that this Order
does not cover workers in the agricultural sector who are regulated under a different
subsidiary legislation. Rule 5 of the Order regulates the hours of work and Rule 6
regulates the manner in which overtime is calculated.
Under section 11 of the Repealed Act, the Minister was empowered to receive proposals
from various sectors of work on the remuneration and conditions of work for that
particular sector. There are therefore a number of subsidiary legislations covering for
instance, knitting mill workers, indentured learners and apprentices, baking and
confectionary and biscuit making industry, catering and hotel workers, security guards,
constructions workers, etc.

Case Law to show how the courts have dealt with working hours:

➢ Joseph Okindo & Ronald Barasa v Vapor Sports Ministries (Industrial Cause No
2018 of 2012) - With respect to working hours for security guards
➢ Esther Wanjiku Nderitu v African Quest Safaris Ltd ( Industrial Cause No 1569
of 2011) – this case also sets out how far the parties have autonomy to make their
own agreement with respect to work hours and overtime
➢ Julius Gicheru Gachahi & George Thiongo Ndirangu v The Board of Governors
Maragi Secondary School ( Indsutrial Cause No 1118 of 2010)
 ➢ Fredrick Adika Mugita v Appollo Onyango Signa T/A Mwandu En Kinda
Investments (Industrial Cause No 491 of 2012) – Calculation of overtime
2. annual leave – an employee shall be entitled to annual leave of not less than 21 working
days with full pay – section 28
3. Maternity leave – a female employee shall be entitled to three months maternity leave
with full pay. Once the three months are over, the female employee has the right to
return to the job which she held immediately prior to her maternity leave or to a
reasonably suitable job on the terms and conditions that are not less favourable than those
which applied to her before she went on maternity leave.

Note: Constitutional Provisions and EA 2007 provisions with respect to non

discrimination based on pregnancy.
See the case of Jane Wairimu Macharia v Mugo Waweru Associates (Industrial Cause
No 621 of 2012) – where the peititoners contract of service was terminated when she
applied for maternity leave.

The only condition to maternity leave is that the female employee gives not less than
seven days notice in advance of the leave in writing and also to produce a certificate as to
her medical condition from a qualified medical doctor or midwife. A male employee
shall be entitled to two weeks paternity leave with full pay – see section 29
4. Sick leave – if an employee has worked for his employer for two consecutive months, he
shall be entitled to sick leave of not less than 7 days with full pay and thereafter to sick
leave of 7 days with half pay, subject to the production of a valid medical certificate to
that effect. – section 30

See the case of Banking Insurance and Finance Union of Kenya v Barclays Bank of
Kenya Ltd (Industrial Cause No 1560 of 2013) – it was established in this case that if the
employee does not take steps to notify the employer as to his or her illness, then the
employer has justifiable cause summarily dismiss the employee on grounds of absconding
or absenteeism.
5. housing and house allowance – the employer has a duty at his own expense to provide
reasonable housing accommodation for each employee either at or near to the place of
employment or shall pay the employee an amount of money sufficient to the rent that
the employee would pay to obtain reasonable accommodation section 31
 6. provision of water – the employer has a duty to provide a sufficient supply of wholesome
water for the use of the employees at the place of employment and within a reasonable
distance of any housing accommodation provided for the employees by the employer –
section 32
7. Provision of food – where provision of food has been expressly agreed to in or at the
time of entering into the contract of service, the employer shall ensure that the employee
is property fed and supplied with enough and proper cooking utensils and means of
cooking, where the contract of service has a term and condition on the provision of food
– see section 33
8. Medical attention – the employer has a duty to ensure the provision of sufficient and
proper medicine for the employees’ illness and if possible medical attendance during
serious illness. The employer shall take all reasonable steps to ensure that he is notified
of the illness of an employee as soon as is reasonably practicable after the illness has
occurred the first time – section 34

See: Kenya Plantation and Agricultural Workers Union v James Finlay (K) Ltd
(Industrial Cause No 24 of 2013)

8.2 Legal protection of the interests of employees under other legislations

8.2.1 Under the Labour Relations Act 2007

1. Every employee has a right to participate in the forming of a trade union of join a trade
union or leave a trade union. A trade union is an association of employees whose
principal purpose is to regulate relations between employers and employees including
any employer’s organization. Once the employee has joined the trade union, they have a
right, subject to its constitution, to participate in its lawful activities, in the election of
officials and representatives, stand for election to be an officer or official of the trade
union and to seek appointment as a trade union representative
2. No person shall discriminate against an employee or any person seeking employment for
exercising his right to join or be part of a trade union.
3. Employers shall not require employees of persons seeking employment not to be or
become a member of a trade union or to give up membership of a trade union, they shall
also not dismiss employees or in any other way prejudice employees because they are
members of trade unions, or have been past members of trade unions.
8.2.2 Under the Work Injury Benefits Act, 2007

1. every employer has to obtain and maintain an insurance policy with an insurer approved
by the Minister, in respect of any liability that the employer may incur to the employees
under this law
2. an employee who is involved in an accident which results in the employee’s disablement
or death is entitled to the benefits that are provided for under this particular law
3. The employer is liable to pay compensation to the employee who has been injured while
at work. But if the accident or the death has been caused by the deliberate and willful
misconduct of the employee, then the employer is not liable to pay the compensation
The question that arises is what does course of employment mean? See section 10(4) of the
Act.

4. Where an employee is out of the Kenya and is injured in accident in the course of his
employment, he shall be compensated by his employer.
5. Compensation under this Act for the death of an employee shall not form part of his
estate.

8.2.3. Under the Occupational Safety and Health Act , 2007

This Act not only applies to employers, but to all OCCUPIERS. The law defines an occupier as
a person in actual occupation of a place whether they are the owner of that place or not and also
includes employers.

1. the employer has a duty to provide and maintain plants and systems and procedures of
work that are safe and without risks to health
2. the employer has a duty to make arrangements for the safety and absence of risks to
health in connection with the use, handling, storage and transport of articles and
substances
3. the employer has to provide information, instruction, training and supervision that is
necessary to ensure the safety and health at work of every employee
4. the employer has to maintain the workplace in a condition that is safe and poses no health
risks
 5. the employer has to provide facilities that are safe for the workers
6. The employer has to inform the employees of any risks from new technologies and any
imminent danger.
7. if an employee makes a complaint about a matter which the employee considers is not
safe or is a risk to his health, the employer shall not discriminate against that employee

8.3 More On The Legal Protection Of Employee Interests

Under the Employment Act, the employer is under a duty to keep employment records of all
the employees who are employed by him and with whom he has entered into a contract of
service. See section 74(1) of the Act

Any employer who makes or causes to be made false entries about the employee in the register
commits an offence and shall on conviction of the offence be liable to a fine not exceeding Kshs.
100,000/= or to imprisonment for a term not exceeding six months or both.

8.4 Protection of Children – Part VII of the Employment Act 2007

The Employment Act does not per se make it illegal to employ a child except in certain
situations. A child is defined as a person who has not attained the age of eighteen years.

Employment of a child means where a child provides labour as an assistant to another person
and his labour is deemed to be the labour of that person for the purposes of payment, or where
the child’s labour is used for gain by any person or institution, and where there is in existence a
contract for service where the party providing the service is a child whether the person using the
services does so directly or by an agent.

The Employment Act prohibits anyone from employing a child into any activity which constitutes
the worst form of child labour. The term “worst form of child labour” means employing children
or using children in all forms of slavery or practices that are similar to slavery for example the
sale and trafficking of children, debt bondage, forced or compulsory recruitment of children for
use in armed conflict, use or procuring the services of a child for prostitution or for the
production of pornography and pornographic performances, using a child for illegal activities
especially the trafficking of drugs and using the child to do activities which are likely to harm the
health, safety or morals of the child.
Any person who suspects or considers that a child is being employed in the worst form of child
labour may make a report or complaint to the labour officer or a police officer of the rank of an
inspector and above. Once the complaint has been received, the labour officer or the police
officer shall within 7 days of receiving the complaint, carry out the investigations and submit a
report to the person who made the complaint and also to the Minister for Labour. On the other
hand, if the labour officer or the police officer does not consider it advantageous or suitable to
conduct an investigation then he shall in writing inform the person who made the complaint and
also the Minister, the reasons for not carrying out the investigations.

Another way child employees are protected is that the labour officer may terminate any contract
of service regarding a child on the grounds that, in the opinion of the labour officer, the employer
is an undesirable person, or that the nature of the employment constitutes worst forms of child
labour or for any other cause which is allowed by law. The labour officer may also give a notice
preventing any employer from employing a child in any class or description of employment that
is specified in the notice.

Any employer who is aggrieved by the notice or the decision of the labour officer may within 30
days after the date of the service of the notice appeal in writing against that notice to the
INDUSTRIAL COURT. The court may confirm or set aside the notice. The decision of the
Court shall be FINAL.

No person is allowed to employ a child who has not yet attained the age of 13 years whether
gainfully or not.

A child between 13 and 16 years of age may be employed to perform LIGHT work which is not
likely to be harmful to their health or development and which will not prejudice the child’s
attendance at school or his participation in vocational orientation or training programmes that
have been approved by the Minister or his capacity to benefit from the instructions received.
The contract between an employer and a child, who is between the age of 13 and 16 years, shall
be ORAL. (Except contracts of apprenticeship or indentured leadership under the Industrial
Training Act). Any person who makes a written contract or causes the child to be employed
under a written contract shall be liable to a fine not exceeding Kshs. 100,000 of to imprisonment
for a term not exceeding 6 months or both.

Children between the ages of 13 and 16 shall not be allowed to be employed in an industry to
attend to machinery (except for contracts under the Industrial Training Act for contracts of
apprenticeship and indentured learning).

No person shall employ a child in an industrial undertaking between the hours of 6.30 pm and
6.30 am. The Minister in cases of a serious emergency and when the public interest allows it,
may by notice allow a child to be employed between those hours. A person may employ a male
young person (a person who has attained the age of 16 years but has not attained the age of 18
years) in cases of emergencies which could not have been controlled or foreseen and which
interfere with the normal working of the industrial undertaking and which are not of a periodical
nature.

The employer who employs the child shall keep and maintain a register containing the details of
the child with respect to the age and date of birth of the child, the date of entry and leaving the
employment and any other particulars which may be required by law.

A labour officer or an employment officer of a medical officer may require that a child in
employment to be medically examined at any time during the period of the child’s employment.

When there is an issue about the age of the child, the court after hearing the evidence, shall
determine the age of the child and that decision shall be final.

The penalty for employing a child outside the provisions of the law – see section 64
What if a child is killed dies or is injured as a result of the employer contravening the provisions
of the Act? The employer, in addition to any other penalty by law, shall be liable to a fine not
exceeding Kshs. 500,000 or to imprisonment for a term not exceeding twelve months or both
and the whole or part of the fine may be applied for the benefit of the injured child or his family.

LEGAL PROTECTION OF EMPLOYER INTERESTS

As mentioned earlier, the current Employment legislation seems to be more protective of

employee interests than it is of employer interests.

However there are some provisions which may be seen as being protective of employer interests.

▪ Under the wages provisions, an employer in certain situations is empowered by law to

make deductions from the salary of the employee
▪ Other rights and legal protections of the employers are contained in the termination and
dismissal section of the course which we shall examine later.
As a student, you need to consider the provisions which can be construed to provide protection
for the interests of employers.

Regulation of the Individual Contract of Service

Hugh Collins in his article “Legal Responses to the Standard Form Contract” [2007] Industrial
Law Journal states that there are two particular regulatory techniques that have been employed
to respond to the “standard form contract” which in practice is a UNILATERAL determination
of the obligations of the parties by the employer. Standard form contracts (even in the area of
consumer protection) tend to limit the employer’s liability or at least limit the employee’s rights.
One may argue that these “unfair” standard form contracts can be dealt with by market forces
i.e. competition amongst employers that would cause them to offer better terms in order to attract
and maintain employees. The disadvantage of taking such an approach is that some of the
“benefits” may be contained in documents which are not readily available to the employee at
the time of contracting e.g. some benefits and allowances.

Question: do the statutory requirements remedy this situation?

Thus Collins argues that there are two particular regulatory techniques that have been employed
to remedy the unequal bargaining power that employees have and the unfairness of the standard
form contract. These are:

• Terms implied by law into contracts of employment – these implied terms play a gap
filling role. Any gaps in the agreement can be filled by implying the intentions of the
parties or by reference to customs of the trade or the workplace or terms implied by law.
Collins sets out two main functions of implied terms: - firstly they assist in the
interpretation of express terms and secondly they assist in the control of the content of
express terms.

• Statutorily conferred powers for the invalidation of unfair terms in contracts.

The Contractual Basis of the employment relationship

The employment relationship is based on a contract OF services and not a contract FOR
services.

Under the Employment Act 2007, a contract of service means “an agreement, whether oral or
in writing, and whether expressed or implied, to employ of to serve as an employee for a period
of time, and includes a contract of apprenticeship and indentured learning but does not include
a foreign contract.”

FORMATION OF THE CONTRACT OF SERVICE

• Just like any contract, the basic ingredients of a valid contract have to be contained in the
contract of employment. These are a valid offer and acceptance; intention to enter into
legal relations; consideration passing between the parties; capacity to enter into
contractual relations; consent of the parties; legality of the subject matter and the objects
of the contract. In general, there are no special formalities that have to be entered into to
form a contract of employment. That means that they can be either oral or in writing.
However under the Employment Act 2007 section 9(1)(a) and (b) any contract of service
for a period of three months or more or a contract of service which provides that a certain
 job or task needs to be performed which cannot be reasonably expected to be completed
within three months, MUST be in writing.

See the case of Miguna Miguna v Attorney General (Industrial Cause Number 473 of 2011)

• The employer shall be responsible for drawing up the contract of service and setting out
the particulars of employment (section 9(2)). If the employee consents to the contract,
then he/she shall sign their name on the contract or imprint an impression of his thumb
or one of his fingers in the presence of a person other than the employer (section 9(3)).

If the employee is illiterate or cannot understand the language in which the contract is written,
then the employer has a duty to explain the contract to the employee in the language that he
understands. – section 9(4)

9. HEALTH AND SAFETY

(check exercise book)

10. TRADE UNUONS AND COLLECTIVE BARGAINING, INDUSTRIAL ACTION

10.1 Introduction

As we had discussed earlier, the labour market consists of two main players – the employer and
the employee. In every market there must be some bargaining power and in this market, the
trend has been that the employer has had higher bargaining power over and above the employee
when it comes to terms and conditions of service.

Therefore the importance of collective bargaining cannot be understated. Collective bargaining

is the method of carrying out negotiations between an employer and employees so as to
determine and agree upon the conditions of employment. Employees are usually represented in
collective bargaining by trade unions or other labour organizations. The result of collective
bargaining is a collective agreement.

A collective agreement is defined as – a written agreement concerning any terms and conditions
of employment made between a trade union and an employer or group of employers or an
organization of employers.
A trade union on the other hand is defined as – an association of employees whose principal
purpose is to regulate the relations between employees and employers including any employers’
organization.

10.2 History of Trade Unions in Kenya

In most of the developed countries in the west, trade unionism started around the 18th Century
after the industrialization period. However in Kenya, trade unionism started even before
industrialization, in the early 1900’s. The Unions were mainly used as vehicles of protest against
working conditions imposed by foreign employers. The trade unions developed as a result of
direct confrontation between workers and employers or because of collusion between workers
and politicians.

In as much as trade unionism started in the 1900’s, it took almost 50 years before the first real
trade union movement became a permanent feature of industrial relations in Kenya. The main
reasons being that:

▪ There was strong opposition from the white elite settlers

▪ The small number of wage earners did not have the technical knowledge on how to form
and run trade unions
▪ The colonial political system was not favourable
▪ The labour laws were restrictive
▪ There was high illiteracy among the wage earners in the country

Between 1900 and 1946, some changes took place that contributed to the emergence of trade
unions – the two world wars, the enlistment of soldiers from East Africa, their training in various
skills such as masonry, carpentry, etc. all these had an effect on workers. Their training and
exposure in other countries and their observation of how workers were treated in other countries
made them want the same for their fellow workers in this country.

The first trade union law was the Trade Union Registration Ordinance of 1949. This ordinance
gave the colonial power strong powers of control over the unions and workers. The colonial
government wanted to discourage the development of trade unions and limit their political
power, therefore in the early 1950’s the colonial government sponsored the establishment of staff
association and work committees among other measures that seemed to suggest that they
supported trade unionism, but actually they wanted to control their activities. The benefit to the
Kenyan workers was that at least they had some limited freedom of association and the right to
organize themselves. But as mentioned these staff association and work committees were weak
and easy to manipulate.

In spite of the restrictive labour laws, between 1949 and 1964, 4 trade unions were formed and
registered

1. East African Trade Unions Congress – 1949

2. Kenya Federation of Registered Trade Unions – 1952
3. Kenya Federation of Labour – 1955
4. Kenya Africa Workers Congress – 1964

In the 1940’s and 1950’s, there were many strikes and disturbances by workers because of the
highly restrictive labour laws which locked out many workers from being members of trade
unions. In 1950, many trade union leaders were arrested resulting in a big strike in Nairobi which
eventually spread to the whole country. The main demands of the workers were a general
increase in the minimum wage and that unions should be granted freedom of association and
the right to organize.

The struggle for independence was connected also to the fight for better working conditions.
Trade union officials worked closely with freedom fighting politicians. In 1952, the major
political party in Kenya, KAU (Kenya African Union) was banned. But trade unions were allowed
to continue functioning. Therefore the Kenya Federation of Labour (KFL) was used as a political
vessel in the place of KAU.
In 1958, the Federation of Kenya Employers and the KFL entered into a recognition agreement
whereby FKE agreed to recognize and bargain with unions and KFL agreed to an industrial basis
of organization.

1960 – At an annual conference of KFL the union leaders agreed that the trade union movement
must have a right to comment on political issues and to take action in the struggle for
independence

1962 – The government, the employers and unions met and drew and Industrial Charter where
the Management reaffirmed that it would recognize and bargain with the unions and the unions
again agreed to adhere to the established mechanisms of operations.

In the same year, rivalry intensified within KFL. There were those who were opposed to it being
affiliated with the International Confederation of Free Trade Unions (ICFTU) which was a pro
– west movement. This rivalry led to the formation of the Kenyan African Workers Congress in
1964. The rivalry between the two organizations became too much and the two organizations
were finally de registered in 1965. In their place the Government established s single organization
COTU (Central Organization of Trade Unions). The basic functions of COTU were to assist
service and coordinate the activities of its affiliates and to represent its member’s interests to
government and other outside bodies. See the objectives and principles of COTU today. See the
website www.cotu-kenya.org

10.3 Formation And Membership Of Trade Unions

10.3.1 Introduction

The general principles that underlie the formation and membership of trade unions are the same
ones that are mentioned in the Employment Act and that we have already discussed, mainly, the
freedom of association. Sections 4 to 11 of the Labour Relations Act, 2007 sets out these
principles:

10.3.2 Rights of Employees

• Every employee has a right to participate in the forming of a trade union, to join a trade
union and to leave a trade union.
• Once that person has become a member of a trade union, they have a right to participate
in its lawful activities, to participate in the election of its officials and representatives and
to stand for election and to be appointed an official or officer of the trade union and as
a trade union representative. This is subject to the constitution of each trade union.
 • No person shall give an advantage or promise to give an advantage to an employee or
person seeking employment in exchange for the person not joining or participating in a
trade union.

10.3.3 Rights of Employers

• Employers also have the right to participate in the formation of an employer’s

organization or a federation of employers’ organization and also to join these
organizations or federations, participate in their lawful activities, participated in the
elections, stand for election or seek appointment as an office bearer or official.
• No person shall discriminate against an employer for exercising their rights to form and
participate and join an employer’s organization.

10.3.4 Rights of Trade Unions, employers’ organizations or federations

• They have a right to determine their own constitution and rules

• They have a right to hold elections and to elect its officers
• Right to plan and organise their administration and lawful activities
• To participate in the formation of a federation of trade unions or federation of
employers’ organizations
• Right to join a federation of trade unions or employers organizations and to participate
in their lawful activities
• Right to affiliate with and participate in the activities of international organizations
If any contract was made between an employer and an employee that contradicts the rights that
have been given by the Act, then the contract shall be invalid, unless the contractual provision
has been permitted by the Act.

10.4 Establishment And Registration Of Trade Unions And Employers Organisations

In order to recruit members to form a trade union or an employer’s organization, the person
must first obtain a certificate from the Registrar of trade unions. That means that an application
must be made and be signed by two persons who are promoting the establishment of the trade
union or employers organization, it shall specify the name of the proposed trade union or
employers organization and any other information that is required by law.

The Registrar shall issue a certificate within three days unless the application is defective or the
name of the proposed trade union is the same as that of an already existing trade union or
employers organization or even if not the same, it is sufficiently similar so as to mislead or cause
confusion.

The certificate shall contain the following information:

• That the promoters may undertake lawful activities in order to establish a trade union or
employers organization
• An application for the registration of the trade union or employers’ organization shall be
made to the Registrar within 6 months of the issue of the certificate.

10.4.1 Registration of trade Union

The trade union must apply for registration according to the Act – the application form is FORM
A in the Second Schedule of the Act. Once this form is filled, it is lodged together with the
prescribed fee, a certified copy of the constitution of the trade union or employers’ organization,
a certified copy of the attendance register and minutes of the meeting at which the union or
organization was established. The application must be signed by seven members. Note: the
Registrar may call for further information in order to evaluate an application for registration and
also may give the applicant an opportunity to rectify the application within a period that he
specifies.

If the Registrar is satisfied that a trade union or employers organization has complied with the
requirements of the Act, he shall register the trade union, employers organization or federation
and shall issued a certificate of registration (see Form B in the Second Schedule), enter the name
and details of the union, organization or federation in the appropriate register (see Form C in
the Second Schedule). The certificate of registration is CONCLUSIVE EVIDENCE that the
union, organization or federation has been duly registered unless it is proved that it was
withdrawn or cancelled. If the Registrar is not satisfied that the trade union, organization or
federation has complied with the requirements of the Act, he may refuse to register it and give
reasons for the refusal (see Form D in the Second Schedule).
 ▪ It must have adopted a constitution that complies with the requirements of the Act
▪ It must have an office and a postal address within Kenya
▪ There should be no other trade union registered which represents the same interests as
the ones that the trade union which is seeking registration has.

Registration of an employer’s organization – the requirements are the same as those of

registration of a trade union

Registration of federation of trade unions or federation of employers

▪ It must have applied for registration according to the provisions of the Act
▪ It must have adopted a constitution that complies with the requirements of the Act
▪ It has an office and a postal address in Kenya
▪ The constitution specifies that its members are registered trade unions only
▪ It was established at a meeting attended by the representatives of at least three registered
unions or employers organizations who had the mandate of their respective executive
boards
▪ They are independent from the control either directly or indirectly of, in the case of trade
unions, any employers organization or federation of employers, and in the case of
employers organizations, any trade unions or federation of trade unions.

The Effect of Registration

▪ It shall be a body corporate

▪ It shall have perpetual succession and a common seal
▪ It shall have the capacity to sue and be sued in its own name and to enter into contracts
▪ It shall have the capacity to hold, purchase, acquire and dispose of moveable and
immoveable property.

Cancellation or suspension of registration

The Registrar shall cancel or suspend the registration of a trade union, employers organization
or federation if the any of them is dissolved or if the Registrar is satisfied that any of them has
ceased to exist, they were registered as a result of fraud, misrepresentation or mistake, is operating
against the provisions of the Act, is being used for an unlawful purpose, has failed to concoct
their elections according to the requirements of the Act, is not independent. The registrar shall
give the union, organization or federation at least two months notice of the intention to suspend
or cancel the registration and the registrar shall consider any representations made by the trade
union, employers’ organization or federation within that two month period.

If any person is not happy with the decision of the Registrar, they are free to appeal to the
Industrial Court within thirty days of the decision of the Registrar.

10.5 Membership And Officials Of Trade Unions And Employers Organisations

The membership is subject to the constitution of each particular constitution

A minor (one who has not attained the age of eighteen) who is an employee but appears to be
above 16 years, may be a member of a trade union unless the constitution of that trade union
does not allow it, and they shall enjoy all the rights of a member. However, the minor cannot be
a member of the executive board or a trustee of that trade union.

To be an official of either a trade union or employer’s organization, one must be engaged or

employed in the sector for which the union or organization is formed. No person can be an
official of more than one union but may be an official of more than one employer’s organization.
An official of a trade union may also be an official of a federation of trade unions to which the
trade union is affiliated. No person who has been convicted of a criminal offence involving fraud
or dishonesty shall be an official of a trade union or employer’s organization.

10.6 Collective Agreements And Collective Bargaining

The first step in establishing the relationship between a trade union and an employer’s
organization is to have a recognition agreement. According to the Act, a recognition agreement
is an agreement in writing made between a trade union and an employer, a group of employers
or an employer’s organization regulating the recognition of the trade union as the representative
of the interests of unionisable employees employed by the employer or by the members of an
employer’s organization.

The aim of the recognition agreement is to ensure that employers are able to recgonise and
negotiate with the trade unions that they have recognized.

To this end, an employer’s organization shall recognize a trade union for the purposes of
collective bargaining if the trade union represents a simple majority of unionisable employees
employed by the group of employers or the employers who are members of the employers’
organization within a sector. A recognition agreement shall then be made in writing between the
employer/employers organization and the trade union. This will show that the
employer/employers organization recognizes the trade union. If the two parties want to terminate
or revoke the agreement, they must apply to the Trade Board to terminate it. One of the things
that the recognition agreement provides for is the reasonable access by authorized trade union
representatives or officials to pursue some lawful interests of the trade union for example,
recruiting members for the trade union, holding meetings with members of the trade union and
other employees after working hours, representing members in dealings with the employer. The
employer has the right to impose reasonable conditions on the time and place of the carrying out
of these activities and also have the right to request the officials to provide proof of their identity
and credentials before being granted access.

Any dispute involving the right of a trade union to be recognized will be treated like a trade
dispute and will be dealt with like all the other trade disputes using the method of conciliation
(see Part VIII). We shall examine these trade dispute mechanisms later. If conciliation does not
work, then the trade union may refer the matter to the Industrial Court. The employers and the
trade union can agree using a collective agreement that the conciliation should be conducted by
an independent and impartial conciliator or by an independent and impartial arbitrator who are
both appointed by agreement by the parties.

The trade union members in a particular workplace shall be entitled to elect trade union
representatives who will represent them in grievances and disciplinary hearings in the workplace
and will do all other things that are specified in the recognition agreement or the constitution of
the trade union.
Collective bargaining can only take place once the recognition agreement has been signed by
both parties. The collective bargaining will result in a collective agreement which will set out the
terms and conditions of service for all the unionisable employees covered by the agreement.
During the negotiations to come up with a collective agreement, the employer is required to
disclose to the trade union all the relevant information that will allow the trade union to effectively
negotiate on behalf of employees. All the information that is disclosed to the trade union is
confidential and no one else is supposed to know that information apart from those in the
negotiations. The employer is not entitled to disclose information that is legally privileged, or any
information that the court has prohibited, or that will cause substantial harm to the employer or
employees, or is private personal information relating to an employee, unless the employee
consents.

Once the agreement is concluded, it shall be put in writing and shall be signed by the chief
executive officer of any employer or employers organization AND the general secretary of any
trade union that is party to the agreement

Once it has been concluded and signed, it shall be submitted to the Industrial Court for
registration within 14 days of its conclusion. The Industrial Court may request the parties to
submit any further information that is needed. The court may then register the agreement either
in its original form as presented by the parties or together with any amendments or modifications
that are agreed upon by the parties.

The collective agreement between the parties is binding between the parties for the period of the
agreement, all unionisable employees who are employed by the employers and the employers
who are part of the organization that is party to the agreement are party to the agreement. The
terms of the collective agreement shall be part of the contract of employment of every employee
covered by the collective agreement.

10.6.1 Employees in the Public Sector

The Minister may make regulations determining the terms and conditions of employment for
any category of employees in the public sector. Once this happens, it means that these employees
cannot engage in collective bargaining (this means that they cannot form and be part of trade
unions) BUT the terms and conditions of service shall have the same effect as that of a collective
agreement and shall be enforced as though they were a collective agreement.

10.6.2 Strikes And Lock Outs

Definitions

A strike is defined as the cessation of work by employees acting in combination, or a concerted

refusal under a common understanding or employees to continue to work for the purpose of
compelling their employer or an employer’s organization of which their employer is a member
to accede to any demand in respect of a trade dispute.

Types of strikes

1. Wild – cat strikes – these are strikes which are illegal. All the laid down procedures are
ignored and the employees withdraw their labour.
2. Lawful strikes – these are strikes which follow the laid down procedure on how to carry
and when to have a strike.

A lock out on the other hand is defined as the closing of a place of employment, the suspension
of work, or the refusal by an employer to continue to employ any number of employees for the
purpose of compelling any employees of the employer to accept any demand in respect of a
trade dispute but not for the purpose of finally terminating employment.

10.6.3 Lawful strikes

The Labour Relations Act, 2007 provides that a person may participate in a lawful strike or
lockout if the trade dispute concerns terms and conditions of employment or the recognition of
a trade union, the trade dispute has not been resolved after conciliation and seven (7) days notice
of the strike or lockout has been given to the other parties and to the Minister by the authorized
representative of the trade union and the employers organization.

A party to a dispute that has received notice of the strike or lockout may apply to the Industrial
Court under a certificate of urgency if the strike or lockout is prohibited under the Act or if the
party that has issued the notice has failed to participate in conciliation in good faith in order to
resolve the dispute.
10.6.4 Prohibited strikes and lockouts – see section 78(1)

The strikes and lockouts that are not allowed are where:

▪ any law, or court award, or collective agreement prohibits the strike or lockout in respect
of the dispute at hand
▪ the subject matter of the strike or lockout is regulated by a collective agreement
▪ the parties have agreed to refer the trade dispute to the Industrial Court or to arbitration
▪ if the matter concerns a dispute regarding the recognition of a trade union, the matter has
been referred to the Industrial Court
▪ The employer and employees are engaged in an essential service – an essential service is
a service which if interrupted would most likely endanger the life of a person or the health
of the population or of any part of the population. Examples are contained in the Fourth
Schedule. They include: water supply services, hospital services, air traffic control
services, civil aviation telecommunications services, fire services of government or public
institutions, ports authority and local government authorities, ferry services.
▪ the strike or lockout is not furthering a trade dispute
▪ Where the strike or lockout constitutes a sympathetic strike or lockout – this is where
the strike or lockout is with the respect to a dispute where the employer or employee
concerned is not a party to the dispute or is not represented by an employer’s
organization or trade union that is party to the dispute.
If a person participates in a lawful (protected) strike or lockout, they will not be committing a
breach of contract. An employer may not dismiss an employee or take disciplinary action against
an employee who takes part in a protected strike. But an employer is not under an obligation to
remunerate the employee for services that the employee did not provide during the duration of
the strike or lockout. Civil proceedings may not be brought against any person for participating
in a protected strike or lockout.

However an employee who takes part in, calls for or instigates or incites others to take part in an
unlawful strike shall be taken to have breached the contract of employment, is subject to
disciplinary action and is not entitled to any payment or any other benefit under the Employment
Act 2007 during the period the employee participates in the strike.
10.7 Dispute Resolution

Disputes are bound to occur in every work place between employers and employees. It is the
easiest thing that can take place and it is important that the proper mechanisms are in place so
as to solve trade disputes in order to ensure the continued productivity of all industry players.
There should be impartiality and fairness in dealing with trade disputes.

A trade dispute is defined as: a dispute or difference or an apprehended dispute or difference

between employers and employees, between employers and trade unions or between an
employer organization and employees or trade unions, concerning any employment matter and
includes disputes regarding the dismissal, suspension or redundancy of employees, allocation of
work or the recognition of a trade union.

Trade disputes can be solved using either machinery within the organization or outside the
organization.

Machinery within the organization is where the aggrieved employee uses the already existing
mechanisms within the organization to get a solution to his problem. He may first approach his
immediate supervisor and then follow any laid-out procedure that the organization has provided.

Machinery outside the organization is used when the machinery within the organization has failed
to work or has not produced the desired results. This machinery involves conciliation, arbitration
and reference to the Industrial court.

When there is a trade dispute it may be reported to the Minister in the prescribed manner by or
on behalf of a trade union or employer or employer’s organization that is a party to the dispute
or by their authorized representatives. The person reporting the trade dispute must serve the
notification of a trade dispute by hand or by registered post on each party to the dispute and any
other person who has a direct interest in the dispute. They must satisfy the Minister that the copy
of the notice has been served on each party.

If the trade dispute concerns the dismissal or termination or employment of an employee, the
dispute shall be reported to the Minister, within 90 days of the dismissal unless the Minister has
extended this period for good reasons.

If the trade dispute concerns the redundancy of the employees, then the trade union may report
a trade dispute to the Minister at any stage after the employer has given notice of its intention to
terminate the employment on grounds of redundancy.

The party to the trade dispute who has been served with a copy of the report that has been
referred to the Minister is entitled to make a replying affidavit within 14 days of receiving the
copy of the referral. Other interested parties who also have been served with the referral, may
file a statement with the Minister within 14 days of receiving the referral.

Once the Minister has received a copy of the report of the trade dispute, he shall, within 21 days
of receiving the report, appoint a conciliator who shall attempt to resolve the dispute. The
conciliator shall not be appointed if, the conciliation procedures in the collective agreement have
not been exhausted or the law or the collective agreement between the parties prohibits
negotiation on the dispute in question.

The conciliator or the conciliation committee shall attempt to resolve the dispute within 30 days
of their appointment or any extended period agreed to by the parties to the trade dispute.

During the conciliation sessions, the conciliator/committee may mediate between the parties,
conduct fact finding activities and make recommendations or proposals to the parties for settling
the dispute. The conciliator shall also have the power to summon witnesses to the conciliation
session.
Once the conciliation has been concluded, the terms of the agreement shall be put in writing and
the parties and the conciliator shall sign.

If the trade dispute is not resolved under the conciliation mechanism, then any party to the
dispute may refer the trade dispute to the Industrial Court. The Industrial Court is established
by section 4 of the Industrial Court Act 2011. The Industrial Court was established for the
purpose of settling employment and industrial relations disputes and the furtherance, securing
and maintaining good labour relations and employment conditions in Kenya.

The dispute may only be referred to the Industrial Court by the authorized representative of an
employer’s organization or a trade union.

10.8 Social Security Law In Kenya

Introduction

The concept of social security

This is a social insurance programme that provides social protection or protection against social
conditions such as poverty, old age, disability, unemployment. Social security may refer to social
insurance, income maintenance or social protection. Social insurance is a government –
sponsored programme which is created and established by law, and which serves a defined
population. The program is funded through premiums or taxes paid by or on behalf of
participants. Income maintenance is a policy which is usually applied using various programmes.
It is designed at providing the population with income at times when they are unable to care for
themselves. Social protection refers to a set of benefits available from the state or the market or
civil society or through a combination of these agencies, to the individual in order to reduce
multi- dimensional deprivation.

See separate presentation on social security.

11. TERMINATION OF CONTRACT OF SERVICE AND DISMISSAL FROM
EMPLOYMENT – Part VI of the Employment Act 2007

See Article 47 of the Constitution – the right to fair administrative action – that is expeditious,
efficient, lawful, reasonable and procedurally fair and a right to be given reasons for the action.

11.1 Introduction

The contract of service or employment is a contract like any other and the ways that other normal
contracts are terminated, ideally should be the way that a contract of employment should be
terminated. However, the common law rules that were used in terminating employment
contracts, favoured the employers more than the employees. The Employment Act 2007
contains statutory provisions that govern the termination of the contract of employment and the
dismissal of employees from employment (statutory protection of employee rights????)

The common law situations where a contract could be terminated were:

1. Where the contract is terminated by giving notice – if there was no provision, custom or
agreement as to the amount of notice that should be given, then the notice to be given
should be reasonable. What is reasonable is then a question of fact depending on the
various surrounding circumstances, for example, the employee’s position, the seniority
of the employee, the length of service, the rate of pay and the frequency of the pay.
2. Where the contract is frustrated – this is where the original nature of the contract has
gone through a fundamental change. The original form of the contract becomes
impossible to perform. For example, if the employee becomes ill or is imprisoned, etc.
3. In situations concerning partnership and company employees – in partnerships, when a
partner retires and the business is subsequently transferred to the other partners, the
contract of employment of the partnership employee will come to an end automatically.
Similarly, in companies, if a receiver is appointed, then the contract of employment of
the employees comes to an end. Also when the company is under compulsory winding
up, then this amounts to automatic dismissal of the existing employees.
4. Where the employee is claiming wrongful dismissal. Here the employer has breached
the contract by not giving the required period of notice.
The Employment Act 2007, still has some echoes of the common law, but has provided for rules
of termination and dismissal which are strict and which seek to protect the interests of the
employee.

Where the contract is not one to perform a specific work or to undertake a journey, then if the
contract is to be performed in Kenya, the following rules as to termination shall be used (note:
the rules depend on the type of contract):

▪ A contract where wages are paid daily – the contract can be terminated by either party at
the close of any day without giving notice
▪ A contract to pay wages periodically at intervals of less than one month – the contract can
be terminated by either party at the end of the period next following the giving of notice
in writing – for example: if A has been employed by B and is paid at the end of every two
weeks, then either A or B can terminated the contract by giving a two week notice in
writing of termination
▪ A contract to pay wages or salary at intervals of one month or more than one month –
the contract can be terminated by either party by giving 28 day notice. However if the
contract between the parties requires giving notice of more than 28 days, then it shall still
be valid and not against the law. An employee whose contract has been terminated in this
way shall be entitled to service pay for every year worked but not if the employee is a
member of a registered provident fund scheme under the RBA, or a gratuity or service
pay scheme established under a collective agreement, or any other scheme established
and operated by the employer whose terms are more favourable than those under the
Act or the National Social Security Fund.

The employer must ensure that the employee understands the notice of termination. If the
employee does not understand, then the employer shall ensure that the notice is explained orally
to the employee in a language that he (the employee) understands.

The Employment Act allows both parties to terminate the contract without notice on the
condition that the party terminating will pay the other the remuneration which would have been
earned by him or paid by him in respect of the period of notice to be given. It should also be
noted that the employer may waive the whole part or a part of the notice. In such a case the
employer shall pay the employee remuneration equivalent to the period of notice that is not
served by the employee.
11.2 Protection of casual employees

The Employment Act gives protection to casual employees who work for a continuous period
of working days which amount to a month or more. In such cases, the contract of the causal
employee is converted to one where wages/salary is paid monthly and shall be treated
accordingly. See the case of Harrison Meshack Lusimbo & Gilfrine Noah Masio v Mareba
Enterprises Limited (Industrial Cause Number 2007 of 2011).The casual employee shall then
be entitled to the same rights as a salaried worker when it comes to rest days within the week and
sick leave.

Also another protection of casual employees is that where there is a dispute between the
employer and the casual employee, the Industrial Court shall have the power to vary the terms
of service of the casual employee and declare the employee to be employed on terms and
conditions of service that are consistent with the Employment Act.

Also, if a casual employee is aggrieved by the treatment of his employer he may file a complaint
with the labour officer. See section 88 also (penalty for not complying with the law)

Where the period of the contract expires or where there was no express agreement as to the
period of the contract and where the employee is on a journey, the employer may, for the
purpose of the employee completing the journey, extend the period of service of the notice for
a sufficient period which is not more than one month in order to enable the employee to come
back from the journey.

11.3 Termination on account of redundancy

The term redundancy means – the loss of employment, occupation, job, or career by involuntary
means through no fault of an employee, involving the termination of employment at the initiative
of the employer, where the services of the employee are superfluous and the practices commonly
known as abolition of office, job or occupation and loss of employment.

Basically, redundancy usually occurs where the labour of the employee is no longer necessary.
Where the employer wants to terminate the contract of the employee due to redundancy, he first
must comply with certain conditions:
 ▪ If the employee is a member of a trade union then the employer must notify the union
and the labour officer of the area where the employee is in charge the reasons for and
the extent of the intended redundancy not less than a month before the date of the
intended termination.
▪ If the employee is not a member of a trade union, then the employer will notify the
employee personally in writing and also inform the labour officer
▪ The employer must show that he considered the following factors; the seniority in time,
skill, ability and reliability of each employee in the class of employees that are to be
affected by the redundancy
▪ Where there is a collective agreement between an employer and a trade union that sets
out the terminal benefits that are payable on redundancy, the employer has not placed
the employee at a disadvantage for not being a member of the trade union.
▪ Where leave is due, the employer has to have paid the leave dues in cash
▪ The employer must have paid the employee who has been declared redundant, not less
than one month’s notice or one month’s wages in lieu of notice
▪ The employer must pay to the employee who has been declared redundant a severance
pay. This pay is calculated at the rate of not less than 15 days for each completed year of
service.

Note: Where the employee services are terminated because the employer’s business has come
to an end due to Insolvency of the employer, then the redundancy provisions do not apply to
the employer and the employee, but they are governed by different provisions of the Act.

11.4 Termination on grounds of misconduct, poor performance or physical disability

Misconduct is the most common ground that employers use to terminate the contract of
employment. Misconduct implies a situation whereby there is a code of conduct or rules that the
employee is supposed to follow but has failed to do so. Earlier we saw that where one of the
provisions of the contract of service should be a statement containing the disciplinary rules that
are applicable to the employee and the person to whom the employee should apply if they are
not satisfied with any disciplinary decision relating to them. If the disciplinary panel decides that
the employee is guilty of misconduct, then the employer has a right to terminate their contract
on that ground.
If the employer wishes to terminate the contract of an employee on the grounds of misconduct,
poor performance or physical incapacity, he must first explain to the employee in a language that
the employee understands the reasons why the employer is considering terminating the contract.
The employee is entitled to have another employee or a shop floor union representative of his
choice during this explanation. Before the employer terminates the contract, the employer shall
listen to any representations which the employee may make on the grounds of misconduct or
poor performance and also any representations that the person who is accompanying the
employee may make.

11.5 Probationary contracts

Definition – this is a contract of employment which is of duration of not more than 12 months
or part of that period and is in writing and specifically states that it is a probationary contract.

A probationary contract shall not be for more than 6 months, but the probationary contract can
be extended for a further period of not more than 6 months with the agreement of the employee.
An employer cannot employ an employee on a probationary period for more than a year.

If any of the parties (that is the employer or the employee) wishes to terminate the probationary
contract, then they may terminate by giving not less than 7 days notice of termination of the
contract, or by paying the equivalent of seven day’s wages instead of the notice.

11.6 Summary Dismissal

Summary dismissal takes place when the employer terminates the employment of the employee
without notice or with less notice than the employee is entitled to under the employment Act or
the contract. An employee may be summarily dismissed from employment if he has committed
a gross misconduct that indicates that he has fundamentally breached his duties and obligations
under the contract for service.

What actions amount to gross misconduct?

▪ When the employee absents himself from the place he has been appointed to work
without leave or any other lawful excuse
 ▪ When an employee becomes unwilling or incapable of performing his work properly
during working hours due to intoxication
▪ When the employee neglects to do the work which he was under a duty to perform OR
if he carelessly and improperly performs any work which by its nature, he was under a
duty to perform carefully and properly.
▪ Where an employee uses abusive or insulting language or behaves in a manner that is
insulting to his employer or a person placed in authority over him by his employer
▪ Where an employee knowingly fails or refuses to obey a lawful and proper command
that was within his duty to obey which has been issued by his employer or by someone
who has been placed in authority over him by his employer
▪ Where an employee is arrested for a cognizable offence that is punishable by
imprisonment and is not within 14 days either released on bail or on bond or otherwise
lawfully set at liberty (a cognizable offence is an offence which a police officer may arrest
without a warrant; a non – cognizable offence is where the police officer may arrest with
a warrant)
▪ Where the employee has committed or is reasonably suspected to have committed a
criminal offence against the employer or the property of the employer.

When an employee is summarily dismissed, the employee has a right to dispute whether the
action he committed constitutes lawful and justifiable grounds for summary dismissal.

11.7 Unfair termination of employment

The general rule is that no employer shall terminate the employment of his employee unfairly.

What amounts to unfairness?

▪ If the employer fails to give reasons for termination of the employment of the employee,
it shall be deemed to be unfair
▪ If the employer fails to prove that the reason for termination is valid
▪ If the employer fails to prove that the reason is a fair reason that is related to the
employee’s conduct, capacity, or compatibility or based on the operational requirements
of the employer
 ▪ If the employer fails to prove that the employment was terminated according to fair
procedure
▪ If the employer did not act according to justice and equity in terminating the employment
of the employee

Question: what is justice and equity?

The Act states that in order to determine whether an employer has acted in justice and equity
in terminating the employment of the employee, there are certain factors that it shall consider.

▪ The procedure that the employer used in reaching the decision to dismiss the employee,
the way the decision was communicated to the employee and any appeal against that
decision
▪ The conduct and capability of the employee up to the date of termination
▪ The extent that the employer has complied with the statutory provisions connected with
termination
▪ The practice of the employer in dealing with the type of circumstances which led to the
termination
▪ The existence of any previous warning letters issued to the employee

See the situations under section 46 which do not amount to fair reasons for dismissal or for
disciplinary actions.

What can an employee do when summarily dismissed or where the contract has been unfairly
terminated?

Within three months of the date of the dismissal, the employee may make a complaint to the
labour officer. The labour officer will give an opportunity to all the parties to state their case and
will give his opinion as to the best way of settling the matter. At the time of making the complaint
before the labour office, the employee is not entitled to have an advocate to represent him but
he may be assisted by an official of a trade union or of an employer’s organization even if the
official is an advocate. It should be noted that in addition to the making of a complaint to the
labour officer, the employee can bring a case against the employer in the Industrial Court. The
employee also may have a right under a collective agreement, if there is any. The burden of
proving the unfair termination or wrongful dismissal from employment shall rest on the
employee and the burden of justifying the grounds shall rest on the employer.

Note: those employees under a probationary contract do not have the right to complain under
these provisions of the Act.

Question: What are the (statutory) remedies for wrongful dismissal or unfair termination of
employment?

The burden of proving that an unfair termination of employment or wrongful dismissal has
occurred rests on the employee. The burden of justifying the grounds for the termination of
employment or wrongful dismissal shall rest on the employer