Blog

• Introduction

Probation period is the period of time at the start of an employment when an employer evaluates and assesses the ability, competence and suitability of the employee for the role. Probation period can also be seen as a coaching or training opportunity where the new recruit learns the new job.

The employee on probation may be dismissed with little notice if they’re found to be unsuitable for the role allowing the employer to take action more quickly if they feel that the new recruit is not suitable for the role.

• What is a Probationary Contract?

The Employment Act defines a probationary contract as a contract of employment, which is of not more than twelve months’ duration or part thereof, is in writing and expressly states that it is for a probationary period.

• Probationary Period

The probationary period should not be more than six months but it may be extended for a further period of not more than six months with the agreement of the employee. A probationary contract should not exceed twelve months.

A probationary contract can only be extended on grounds of non-performance or unsuitability for the job. The court in the case of Wilson Simiyu Vs Chairman B.O.G Friends School Bokoli & Another (2016) (eKLR) stated that extension of a probationary period can only be for grounds of non-performance or non-suitability for the job, both of which cannot be presumed, but must be brought to the attention of the employee who must agree to the extension as provided under section 42 of the Employment Act.

• Termination of a Probationary Contract

A probationary contract may be terminated by giving not less than seven days’ notice of termination, or by payment of seven days’ wages in lieu of notice. The employer does not have to give reasons for the termination.

• Employment Benefits during Probationary Period

During the probation period, person is not entitled to the usual legal rights and benefits of employment such as leave and off days.

However, statutory deductions such as the National Social Security Fund (NSSF), National Hospital Insurance Fund (NHIF) and Pay as You Earn (PAYE) should be deducted and remitted.

 

The following are the powers of the Labour Officer as proscribed by Section 35 of the Labour Institutions Act:

• To require the production of wage sheets or other employment records kept by an employer, and records of payments made to outworkers by persons giving out work, and any other such records as are required by any labour law or wages order to be kept by employers, and to inspect and examine those sheets or records and copy any material part thereof;
• To require any person giving out work and any out-worker to give any information which is in that person’s power to give with respect to the names and addresses of the persons to whom the work is given or from whom the work is received and with respect to the payments to be made for the work;
• To inspect and copy any material part of any list of outworkers kept by an employer or other person giving out work to outworkers; and
• To examine, either alone or in the presence of any other person, with respect to any matter under Part VI of the Act, any person whom the labour officer has reasonable cause to believe to be or to have been an employee to whom a wages order applies or applied or the employer of any such person or a servant or agent of the employer employed in the employer’s business, and to require every such person to be so examined and to sign a declaration of the truth of the matters in respect of which he is so examined: Provided that no person shall be required to give any information that incriminates him;
• At all reasonable times, enter, inspect and examine any land or building, other structure, whether permanent or temporary on or in which the labour officer has reasonable ground to believe that an employee is residing or is employed, and may make such inquiry, inspection or examination as may be necessary to enable the labour officer to determine whether the provisions of the Act or any other labour law are being complied with;
• At all reasonable times, require an employer to produce an employee employed by him and a document relating to the employment of any employee, and may require an employee to produce any document relating to the employee’s employment;
• To examine and make copies of a register, record, book or other document relating or appearing to relate to employment, and seize any register, record, book or other document which he has reasonable ground to believe to be or to contain evidence of an offence under the Act or any other labour law;
• To enter, inspect and examine all latrines and other sanitary arrangement or water supply;
• To inspect and examine all food provided or appearing to be provided for the employees, and take samples thereof in duplicate, in the presence of the employer or the employers representative which samples shall be sealed and one sample so sealed shall be left with the employer;
• To order that all buildings and premises where employees are housed or employed be kept in a clean and sanitary condition;
• To institute proceedings in respect of any contravention of any provision of the Act or for any offence committed by an employer under the Act or any other labour law;
• To institute an appeal on behalf of any employee in any civil proceedings by an employee against his employer in respect of any matter, thing or cause of action arising out of or in the course of the employment, whether such civil proceedings are contemplated or instituted by the employee himself or are civil proceedings ordered by a magistrate;
• To take into custody and return to his parent or guardian, or other person whom he is satisfied has for the time being the charge of or control over him, any child whom he reasonably suspects to be employed in contravention of any of the provisions of the law relating to employment.

Performance evaluation are not mandatory and are largely dependent on the internal policies of a company as opposed to strict provisions of employment law. The relevant legal provisions that govern this as well as any other administrative processes are the laws relating to fair administration of justice and more specifically:

• The Constitution
• Article 41 (1): Every person has the right to fair labour practices.
• Article 47:

Fair administrative action

• Every person has the right to administrative action that is expeditious, efficient, lawful, reasonable and procedurally fair.
• If a right or fundamental freedom of a person has been or is likely to be adversely affected by administrative action, the person has the right to be given written reasons for the action.
• Article 50 (1):

Every person has the right to have any dispute that can be resolved by the application of law decided in a fair and public hearing before a court or, if appropriate, another independent and impartial tribunal or body.

• Employment Act

Section 5(2): An employer shall promote equal opportunity in employment and strive to eliminate discrimination in any employment policy or practice. Employment policies are defined in this section to include performance evaluation systems, promotion, transfer, demotion, termination of employment on disciplinary measures.

Employers are encouraged to formulate effective performance evaluation tools and to incorporate best human resource management practices that best suit their firms. Such evaluation tools must be understandable by the employees and implemented in a manner that adheres to the highlighted legal provisions. Many firms employ the use of peer review mechanisms, self-evaluation mechanisms and quantitative mechanisms which would include evaluating sales made by an employee or clients acquired and critical incident feedback amongst other mechanisms.

The employer must endeavour to train the employees on the performance evaluation tool to ensure that the employee is not measured against a yardstick he is not aware of or does not adequately understood. The purpose and anticipated results of the evaluation exercise must also be disclosed to the employee to ensure that the employee has full knowledge of any adverse action that may be taken against them as a result of the evaluation exercise. The evaluation tool must clearly:

• set the specific goals to be achieved or lay out the employer’s expectations and performance standards to be achieved;
• assign the relevant member of staff undertaking the evaluation;
• detail the time, place and nature of evaluation to provide the employee with ample time to prepare for the exercise;
• provide the consequences resulting from the employee’s performance; and
• allow for a conversation between the employee and the evaluator of performance.

Below are some steps employers can follow when setting up employee performance evaluation tools:

• Develop an evaluation form.
• Identify performance measures.
• Set guidelines for feedback.
• Create disciplinary and termination procedures.
• Set an evaluation schedule.

It is highly advisable for all employers to seek the advice of an employment lawyer after developing the tool to ensure that there are no illegalities that may leave the employer vulnerable to a suit from an employee evaluated under the tool. Bearing in mind that some employee’s may challenge the results of an evaluation tool especially in cases where it may lead to a termination of the employment contract or other disciplinary measure, the employer must be careful to ensure that the evaluation tool is drafted in clear and concise language leaving little room for ambiguity or misinterpretation. In the case Banking Insurance & Finance Union (Kenya) v Barclays Bank of Kenya Ltd & another [2016] eKLR, the court held that “an employer has the prerogative to set out management tools in support of productivity within its business. However, such tools should not negate agreed terms and conditions of employment between the parties with reference to the Recognition Agreement or Collective Bargaining Agreement and or replace the set legal requirements that address termination of employment due to poor performance or any other ground”.

This exercise should also be undertaken in a confidential manner so as to avoid any backlash that may result on the employee or any fall out depending on the information disclosed during the exercise. The same should also be done in an environment that ensures that the employees are not victimized. Records of such exercises should also be maintained by the employer and employee as the same may be used to evidence a trend especially in cases of disciplinary actions against employees.

Evaluation of employees helps an employer to receive feedback from one’s staff and in various instances is used to reward or otherwise monitor the performance of employees. Actions like promotions and salary increments when undertaken pursuant to evaluation of performance are readily accepted and eliminates any antagonism that would have otherwise arisen if the actions were undertaken in an arbitrary manner.

 

Use of Forced Labour

Section 4 of the Employment Act prohibits the use of forced labour and makes it an offence for anyone to use or assist another person in recruiting, trafficking or using forced labour. An employer who commits this offence is liable upon conviction, to pay a maximum fine of five hundred thousand shillings or to imprisonment for a maximum of two years or both. The law however exempts from forced labour any work/service by virtue of compulsory military service, except where it involves recruitment of children. The law also exempts any work or service which is a normal civic obligation of any Kenyan citizen, work done as a consequence of a conviction in a court of law, work or service demanded in cases of an emergency and minor communal services performed by the members of the community in the direct interest of their community, provided the members of the community or their representatives are consulted.

Discrimination

Employee discrimination is an offence under the Employment Act. Section 5 prohibits discrimination based on race, colour, sex, language, religion, political or other opinion, nationality, ethnic or social origin, disability, pregnancy, mental status or HIV status.

It also prohibits discrimination in respect of recruitment, training, promotion, terms and conditions of employment, termination of employment or other matters arising out of the employment. For this offence, the employer bears the burden of proving that the discrimination did not take place, and that the discrimination is not based on any of the grounds listed above.

Failure to give statements prescribed by law

Failure to give an employee a statement of employment particulars, a statement of disciplinary rules and changes and an itemized pay statement is an offence under Section 16(4) of the Employment Act. The offence attracts, on conviction, a maximum fine of one hundred thousand shillings or imprisonment for a maximum of two years or both.

Failure to pay an employee

Under Section 18, it is an offence for an employer to willfully fail to make payment of or to tender the wages earned or payable to an employee or failing to tender the payment in a manner prescribed by law. On conviction, such an employer is liable to a maximum fine of one hundred thousand shillings or to imprisonment for a maximum of two years or both.

 Failure to pay deducted amounts.

An employer is allowed to make statutory deductions and remit them on behalf of the employee. Failure to pay such deducted amounts in accordance with the period and other requirements specified in the law, agreement, court order or arbitration is an offence under Section 19 of the Employment Act, which attracts on conviction, a maximum fine of one hundred thousand shillings or imprisonment for a maximum of two years, or both.

 Failure to pay wrongfully deducted amounts

Under Section 25 of the Employment Act, failing to pay an employee amounts wrongfully deducted from his remuneration is an offence and an employer who commits this offence is liable to a maximum fine of one hundred thousand shillings or to imprisonment for a maximum of two years or both on conviction. Additionally, such an employer is required to repay any remuneration wrongfully withheld or wrongfully deducted from the employee’s wages.

 Refusal to give a certificate of service

Under Section 51 of the Employment Act, it is an offence for an employer to willfully fail or neglect to give an employee a certificate of service or include a false statement in the certificate of service. Such an employer is liable on conviction, to a maximum fine of one hundred thousand shillings or to imprisonment for a maximum of six months or both.

Employment by written contract for a child aged between 13 and 16 years

Under Section 57 of the Act, it is an offence for a person to employ a child aged between thirteen and sixteen years or to cause such a child to be employed by a written contract. The offence is punishable by a maximum fine of one hundred thousand shillings or imprisonment for a maximum of six months or both. This also applies to parents, guardians or people in charge of the child and is subject to the provisions of the Industrial Training Act relating to contracts of apprenticeship for children of the 13-16 age bracket.

Employment of a child

Under Section 64, it is an offence for a person to employ, engage, or use a child in an industrial undertaking in contravention of the Act or use a child in any activity that is considered worst form of child labour. Such a person, on conviction is liable to a maximum fine of two hundred thousand shillings or to imprisonment for a maximum of twelve months or both. It is a defence if the accused person proves that he genuinely believed that the child was above the age limit.

Making false entries in employment records

Under Section 75 of the Act, it is an offence for a person to knowingly make false entries into records required to be kept under the Employment Act, or to knowingly produce such false entries to an authorised officer. On conviction such a person is liable to a maximum fine of one hundred thousand shillings or imprisonment for a maximum of six months or both.

 Failure to provide employment management information to the Director of Employment.

Under Section 76 of the Act, an employer who employs twenty-five employees or more is required to notify the Director of employment when a vacancy arises and when an employee is terminated. Failure to provide this information constitutes an offence, which attracts a maximum fine of one hundred thousand shillings or imprisonment for a maximum of six months or both.

Prompting a foreign informal employment contract.

It is an offence to induce a person to go abroad under informal contract or to employ or knowingly help in the employment of a person with the intention that when he is employed, that person shall go outside Kenya. It is also an offence to induce or attempt to induce an employee to go outside Kenya. On conviction, this offence attracts a maximum fine of two hundred thousand shillings or imprisonment for a maximum of six months or both.

Human Resource (HR) Managers participate in the identification and development of the organization’s strategies. Participating in the organization planning allows them to gain profound understanding of the organizational activities needed to aid in sustainable growth of the company.

The obligations of HR managers in a company are as below: –

1. Develop and implement HR strategies and initiatives aligned with the overall business strategy.

HR managers are tasked with creation of goals to help meet key business objectives. They are involved in determining the organization’s long-term objectives and establishing the goals necessary to achieve them. They conduct in-depth analysis of current and anticipated conditions that may affect the company’s ability to achieve its mission.

2. Oversee the recruitment, selection and hiring process

HR managers who monitor the recruitment process of the company. They are tasked with hiring responsible employees who can invest their skills and abilities in the overall development of the company. It is essential to have a knowledgeable and responsible HR manager because without resourceful manpower the company cannot move in the right direction of success.

HR managers also draw up, negotiate, and administer labor contracts that cover issues such as grievances, wages, benefits, and union and management practices.

HR managers defining roles in the organization or assisting their client define roles in their business to avoid duplication of duties. Defining roles helps in accountability and performance evaluation.

3. Bridge management and employee relations by addressing demands, grievances or other issues

HR managers handle labor complaints between employees and management, and they coordinate grievance procedures.

4. Training and training programs

Employee training and development includes new hire orientation, leadership training and professional development. HR managers conduct periodic needs assessments to determine when training is necessary, and the type of training necessary to improve performance and productivity. They examine employee performance records to identify areas where employees could improve through job skills training or employee development, such as seminars or workshops on leadership techniques.

They also play an integral role in implementing employee development strategy and succession planning based on training and professional development. Succession planning draws on the manager’s knowledge of employee development, training and future business needs to devise career tracks for employees who demonstrate the aptitude and desire for upward mobility.

5. Organization structure and performance

HR managers are tasked with building organizational structure. They help in laying the foundation for the organization. They participate to form different pillars in an organization that is responsible for its development. They develop different strategies to meet the goals of the organization and contribute their support to all the departments of their company. HR managers should dedicate their existence by developing ideas to improve the company’s performance.

6. Formulation and implementation of policies

HR managers develop and update policies to govern the work environment. They keep track of whether the implemented policies are effective, and if not, take necessary action to ensure they are efficient. The policies they develop include HR policy and code of conduct, sexual harassment policy, anti-corruption and bribery policy, data protection policy, maternity and paternity policy among others.

7. Rewards and Recognition

It is a human resource manager’s key task to recognize their employees and reward them for their performance and contribution to the organization. According to their grading or rating, they will collect the information from the department managers and recognize the employees as per their performance. They make sure that this process underlies with organizational policies.

8. Employee support and Welfare

It is the duty of HR managers to ensure that there is a conducive work environment for the employees. They should nurture a positive work environment. HR managers act as a medium of communication between the management and employees. They should inform employees of their rights. They should conduct regular surveys on employee satisfaction and improve on areas pointed out by employees.

In a unionized organization, HR managers may be tasked with negotiating collective bargaining agreements, developing management response to union organizing campaigns and interpretation of labour union contract issues.

9. Effective Employee Relations

HR managers have the ultimate responsibility for preserving the employer-employee relationship through effective employee relations strategies. An effective employee relations strategy contains specific steps for ensuring the overall well-being of employees. It also ensures that employees have a safe working environment, free from discrimination and harassment.

10. Ensuring statutory and regulatory compliance

HR managers are tasked with ensuring that a company has complied with the set statutory and regulatory requirements. To this end, they should keep abreast with laws, regulations and policies that govern the operation of the company. They can seek the assistance of professionals such as financial and legal experts.

11. Adherence to work ethics and professionalism

HR managers are required to observe strict adherence to work ethics and code of conduct. They should avoid negative work practices such as discrimination, bias in decision making, nepotism and tribalism in discharge of their professional functions.

HR managers should not participate in activities that put them in conflict with the interests company and the business of the company. They should also not engage in activities that are contrary to those that they are registered as human resource professionals.

12. Custodian for company documents

HR managers are the custodians of extremely crucial company documents such as registration documents, contracts, strategies, financial documents and employee information. They should keep the documents confidential during and after their subsistence in the company, unless authorised or required to disclose the information by the company and the law.

 

1. To repeal the Employment Act Cap 226, declare and define the fundamental rights of employees;
2. To provide for basic conditions of employment of employees;
3. To regulate employment of children and to provide for matters connected thereto.

Employment Relationship & Contracts

All Contracts of Service are to be governed by the Employment Act, 2007 (Section 7). Provisions of the Act apply to both oral and written contracts (Section 8).

Contracts to be in writing if: –

• It is for a period of, or that amounts to, three (3) or more months;
• It provides for the performance of specified work which cannot be accomplished within a period of, or that amounts to, three or more months;

It is the duty of employer to reduce the contract into writing. Signification by the employee of acceptance of contract is by signing or imprint of finger and witnessed by another person other than the employer (Section 9).

Employment Contracts Particulars (Section 10)

The details required include: –

• The name, age, sex and permanent address of the employee;
• Name of employer, job description, commencement date, place of work and hours of work;
• Form and duration of the contract;
• Remuneration scale and rate including calculation method and payment intervals;
• Other particulars include; leave entitlement, public holidays, sick leave, pensions and pension schemes, length of notice and any existing CBA which affect the employee;
• Any assignment outside Kenya for more than one month –the terms, currency of benefits and terms on return.

Employment Changes

All changes to contracts of service must be in writing. The employment records are to be maintained for 5 years after termination of employment. The burden of proving or disproving an alleged term of employment stipulated in the contract shall be on the employer.

Disciplinary Policy (Section 12)

Where an employer employs at least 50 employees, the employer must provide written disciplinary policy and procedure.

• Employer to set out an appeal system;
• Avail rules or make accessible the Collective Bargaining Agreement;
• Display statement of employee’s rights.

Exclusion from Application of the Employment Act, 2007 (Section 3)

• Armed Forces or Reserve
• Kenya Police, Kenya Prisons Service, Administrative Police
• National Youth Service
• An employer and employer’s dependants if the latter are the only employees in a family undertaking

Any persons excluded by the Minister after consultation with the National Labour Board, taking into account international instruments.

Any persons excluded by the Minister because their employment terms and conditions are governed by special arrangements which are similar or better than the Act’s provisions.

 

The Employment Act, the Labour Institutions Act 2007 and Wage Regulations constitute minimum statutory standards. An Employer cannot offer, and an Employee cannot legally accept, and be bound by an offer, of terms and conditions of service, below the statutory minimum standards.

Section 26 of the Employment Act provides that where the terms and conditions of a contract of service are regulated by any regulations, as agreed in any collective agreement or contract between the parties or enacted by any other written law, decreed by any judgment award or order of the Industrial Court are more favourable to an employee than the terms provided in Part V and Part VI of the Act, then such favourable terms and conditions of service shall apply.

• Working hours

Section 27 of the Employment Act provides that an employer shall regulate the working hours of each employee in accordance with the provisions of the Act and any other written law. Notwithstanding the foregoing an employee shall be entitled to at least one rest day in every period of seven days.

The Employment Act does not specifically set out a maximum limit on working hours. Limits on working hours are instead regulated on an industry-by-industry basis (i.e. general workers, agricultural etc.), and are set out in the various regulation of wages orders (the Wage Orders). A number of wages orders have been gazetted that regulate different working hour requirements for different industries. Flexible arrangements on working hours are possible provided the maximum number of hours is not surpassed.

Order 5 (1) (2) of the Regulation of Wages (General) Order (the General Order), which regulates general workers (who are a majority of the workforce), provides that the normal working hours should not be more than 52 hours spread over six days a week, and not more than 60 hours of work per week for a person employed on night work.

Order 5 (3) of the General Order further provides that no person under the age of 16 years is required to work for more than six hours in any day. Additionally, persons under the age of 18 years can only work as interns for training purposes. Where an employee works for more than the maximum number of hours, payment of overtime is required to be made.

Order 7 of the General Order provides that every employee shall be entitled to one whole rest day in each week. An employer and his employee may, by mutual consent, agree to the deferment of the employee’s rest day and the rest day so deferred may be taken by the employee on a subsequent day or may, subject to a maximum accumulation of fourteen such rest days at any one time, be accumulated and taken, as leave with full pay in addition to the employee’s entitlement to annual leave with full pay.

The weekly rest day of a person under the age of sixteen years shall not be so deferred.

There are no specific working hours or other terms specifically required for part-time workers. Other than their hours of work, all other rights and obligations of the employee that apply to full-time contracts apply to them.

• Overtime

Overtime is regulated in the same way that the maximum number of hours is regulated: on an industry-by-industry basis. Order 5 (1) (2) of the General Order limits normal working hours to 52 hours per week for day workers and 60 hours a week for night workers, meaning that any time worked beyond these limits will amount to overtime. There is, however, a limit to overtime. Overtime worked, together with the normal working hours per week, should not exceed 144 hours for employees engaged in night work. Overtime for all other adult employees in any period of two consecutive weeks should not exceed 116 hours.

Order 6 (1) (a) (b) of the General Order provides that overtime is payable at the following rates: for time worked in excess of the normal number of hours per week, 1.5 times the normal hourly rate, and for time worked on the employee’s normal rest day or public holiday, twice the normal hourly rate.

The Order provides that in calculating payments for overtime, the basic hourly rate shall, where the employees are not employed by the hour, be deemed to be not less than 1/225 of the employee’s basic minimum monthly wage.

• Keeping records

Section 48(1) as read with section 53(1) of the Labour Institutions Act require employers to keep records for 3 years after the date of last entry thereof with respect to minimum rates of remuneration or conditions of employment established in a wages order.

• Remuneration

Section 48(1)(b) of the Labour Institutions Act states where a contract of employment provides for less remuneration than the statutory minimum remuneration, remuneration and conditions of employment established by the Wages Order shall be inserted in the contract, in substitution of those terms.

• Allowances

Order 10 provides for Acting allowance where an employee is required to work for a period of not less than one month in an occupation or grade for which the basic minimum wage prescribed under paragraph 3 is higher than the basic wage normally earned by the employee. The employee shall be paid an acting allowance at a rate not less than the difference between that higher basic minimum wage and his basic wage.

Order 14 provides for Safari allowance for an employee who is required to work away from his principal area of employment. The subsistence and accommodation allowance payable shall cease to be payable to an employee after thirty consecutive days’ absence on duty from his principal area of employment and thereafter the employee shall be treated as permanently transferred.

The Employment and Labour Relations Court  derives its jurisdiction from the Constitution and the provisions of the Employment and Labour Relations Court  Act, which gives the Court   exclusive original and appellate jurisdiction to hear and determine all disputes referred to it in accordance with Article 162(2) of the constitution or any other written law which extends jurisdiction to the Employment Court relating to employment and labour relations and  including disputes relating to or arising out of: –

• employment between an employer and an employee;
• trade unions and their members, employer organizations, federations, disputes concerning the registration and election of trade union officials; and
• disputes relating to the registration and enforcement of collective agreements.

The Court also has jurisdiction to hear and determine appeals arising from: –

• decisions of the Registrar of Trade Unions; and
• decisions of any other local tribunal or commission as may be prescribed under any written law.

The exclusive jurisdiction given to the Employment Courts with regards to all matters relating to Employment and Labour Relations disputes includes the power of the court to interpret the constitution and enforce fundamental rights and freedoms in disputes arising in the context of employment and labour relations.

Geographical Jurisdiction

Globalization allows for the operation of foreign and multinational companies, and with that the issue of multiple jurisdiction results.

In finding whether the Kenyan Employment and Labour Relations Court is the proper forum to redress employment issues in cases that involve multinational and foreign companies, the Court in Kenya has held that certain connecting factors may preponderantly favour the Kenyan Courts as the proper place for trial.

Therefore, the court employs prescriptive jurisdiction in favour of corporate separation, especially where there are sufficient factors connecting the parties to Kenya. The interest of the parties is best served by the Kenyan Jurisdiction, an example being where the principal witnesses who give evidence are resident in Kenya.

Temporal Jurisdiction/Limitation of Time

The Employment Act[1] places a statute limitation of three years from the time a course of action arises, within which a litigant can bring the matter before the court. The time can only be extended for 12 more months where there is a continuing injury or damage, after the lapse of the years. The section is coached in a mandatory term, meaning that the court may not have the jurisdiction to extend the period for bringing an action where the same has lapsed.

[1] Section 90

In today’s ever changing employment market, it is important to distinguish between employees and other labour relationships. New and emerging forms of ‘non-standard’ employment are coming to dominate young people’s early labour market experiences. Amongst these, internships are increasingly becoming an integral part of the school-to-work transition

The employment act defines an employee as “a person employed for wages or a salary and includes an apprentice and indentured learner;”

An internship as defined by the International Labour Organisation, Employment Policy Department Working Paper No. 240 of 2018 as “any arrangement for the profit of work within a business or organisation, a primary purpose of which is to gain experience, skills, and/or contacts that will assist the worker to gain employment and or other work opportunities in the future.”

On a narrow view, the willingness of a person to work without pay maybe treated as an indication that they are volunteering their services with no intention to enter an employment contract. But it is also possible that a contract may be inferred whenever an intern makes a commitment to undertake productive work that benefits the organisation hosting them in the return for opportunity to gain experience and enhance their employability.

In order to identify whether an intern can be termed as an employee, it is first necessary to identify the factors that are taken into consideration when the courts are looking to establish a contract of employment. The case of Christine Adot Lopeyio v Wycliffe Mwathi Pere [2013] eKLR established the different criteria that need to be taken into consideration.

• The control test whereby a servant is a person who is subject to the command of the master as to the manner in which he or she shall do the work.
• The integration test in which the worker is subjected to the rules and procedures of the employer rather than personal command.  The employee is part of the business and his or her work is primarily part of the business.
• The test of economic or business reality which takes into account whether the worker is in business on his or her own account, as an entrepreneur, or works for another person, the employer, who takes the ultimate risk of loss or chance of profit.
• Mutuality of obligation in which the parties make commitments to maintain the employment relationship over a period of time.  That a contract of service entails service in return for wages, and, secondly, mutual promises for future performance.  The arrangement creates a sense of stability between the parties.  The challenge is that where there is absence of mutual promises for stable future performance, the worker thereby ceases to be classified as an employee as may be the case for casual workers.

The courts in the Case of Bernard Wanjohi Muriuki v Kirinyaga Water And Sanitation Company Limited & another [2012] eKLR consolidated the criteria to form a “four – fold test and established the “The Multi-factor test combines aspects of the first two tests: it considers the power of control of the employee with regard to the means and methods of work; and the underlying economic realities of the activity or relationship.”

The courts have recognised that these tests are insufficient to establish an employment relationship and held in the case of Everret Aviation Limited V Kenya Revenue Authority (Through The Commissioner of Domestic Taxes) [2013] Eklr which quote the “Halsbury’s Laws of England Vol I 26, 4^th edition paragraph 3”  as instructive:

There is no single test for determining whether a person is an employee, the test that used to be considered sufficient, that is to say the control test, can no longer be considered sufficient, especially in the case of the employment of highly skilled individuals, and is now only one of the particular factors which may assist a court or tribunal in deciding the point. The question whether the person was integrated into the enterprise or remained apart from and independent of it has been suggested as an appropriate test, but is likewise only one of the relevant factors, for the modern approach is to balance all of those factors in deciding on the overall classification of the individual. The factors relevant in a particular case may include, in addition to control and integration: the method of payment; any obligation to work only for that employer, stipulations as to hours; overtime, holidays etc; arrangements for payment of income tax and national insurance contribution; how the contract may be terminated; whether the individual may delegate work; who provides tools and equipment; and who, ultimately, bears the risk of loss and the chance of profit. In some cases the nature of the work itself may be an important consideration”.

James Onduko v Computer For School Kenya [2014] eKLR, the court  after defining what an employee is in accordance with S2 of the Employment Act ruled as follows:

An intern, being either an apprentice or indentured learner, is by definition an employee.  The Claimant was therefore an employee from the time he started earning wages or salary.”

This was further reiterated in the decision in Mary Wanjiru Ndwiga & 913 Others v Principal Secretary, Ministry Of Health & another [2015] Eklr

The drafters of the Employment Act addressed such a scenario under section 2 of the Employment Act and indeed Parliament passed it with approval when an ‘employee’ was defined to include such an intern, learner, bonded or a salaried person;

 Such a definition did not stop at a person who receives ‘wages or a salary’ this is expanded to include those in apprenticeship and indentured learners. Such are persons in training, preparation or assist in the means of production or assist in the business development and earn a wage, a salary, allowance or token as they are indentured or bonded and in agreement that upon completion of such internship they full acquire full status of qualification and receive confirmation in their profession. Such is the case for all professionals in the health sector, legal sector and fiancé sectors just to list a few. Learners in apprentice and indenture are thus placed at a high responsibility to prove their worth by undertaking such duties under the tutelage of mentors or peers before the regulatory body approval and confirmation to the required status. For the role their play, such Interns such as the Petitioners were, they enjoy rights and benefits as they serve their master, employer or as the case might be.

From the foregoing it can also be said that highly skilled professionals will almost always be held to be employees irrespective of being termed as interns.

Questions with regards to an explicit Employment Contract may also arise. Under Kenyan Law, the onus to formulate a contract of employment lies on the employer. “An employer who is a party to a written contract of service shall be responsible for causing the contract to be drawn up stating particulars of employment and that the contract is consented to by the employee”

However, The case of Agnes Wanjiku &10; others v Chief Registrar of the Judiciary & another [2014] Eklr held that “The relationship between the parties, howsoever described or defined – attachment, clerk, student clerk, secretary, casual, intern, archive clerk et al does not to me amount to a relationship of employment. This is because ordinarily, employment relationships are established by mutuality of agreement inter-parties. This incorporates the agreement of terms and conditions of service. The law, vide section 9 of the Employment Act, 2007 requires that this be in writing whereas section 10 of the Employment Act mandates the employer to reduce this into writing. However, this need not necessary be the case in real life. Courts have inferred, interpreted and discerned employment even in the absence of written contracts of employment.”

According to the ILO Employment Policy Department Working Paper No. 240 of 2018,  It also depends on whether internships are paid or unpaid as well as whether internships are real productive work or limited mostly to observation or mock tasks. An internship is a paid internship if the intern receives financial compensation. This can be in the form of a wage or a stipend though not if they have a very limited range of expenses such as travel costs being reimbursed. There may be little concern with internships that involve remuneration that atleast makes the minimum wage that would otherwise apply to employees performing the same work. It’s quite likely that in this situation the interns will be treated as employees.

 

• Independent Contractor

An employee is engaged under a “contract of service” while an independent contractor or consultant is engaged under a “contract for service”.

An employee is a person employed for wages or a salary and includes an apprentice and indentured learner.

An independent contractor is a person who exercises an independent employment and contracts to do specific work according to his own judgment and methods, and without being subject to the control of his employer except as to the results of the work. An independent contractor also has the right to employ and direct the action of the workmen, independently of such employer and freed from any superior authority in him to say how the specified work shall be done, or what the laborers shall do as it progresses.

• What is the difference between an Independent Contractor and an Employee?

The difference turns on the degree of control exercised. Courts have developed the test to determine whether one is an employee or an independent contractor. The court in the case of Stanley Mungai Muchai Vs National Oil Corporation [2012] eKLR discusses the tests for determining employee and independent contractor. This include;

• Control Test – An employee is subject to the command of the employer as to the manner in which he or she shall do the work. An independent contractor has the discretion to determine the manner in which the work is done.
• Integration Test – Am employee is subjected to the rules and procedures of the employer rather than personal command. The employee is part of the business and his or her work is primarily part of the business. However, an independent contractor is not part of the business.
• The test of economic or business reality – which takes into account whether the worker is in business on his or her own account, as an entrepreneur, or works for another person, the employer, who takes the ultimate risk of loss or chance of profit.
• Mutuality of obligation – in which the parties make commitments to maintain the employment relationship over a period of time. That a contract of service entails service in return for wages, and, secondly, mutual promises for future performance. The arrangement creates a sense of stability between the parties.

In addition, an independent contractor will have his own tools to perform the work and will not rely on the employer to provide the equipment. An independent contractor is not entitled to the rights and benefits that an employee is entitled to. For example, an employee is entitled to statutory protection that applies to employees under the Employment Act, the employers’ liabilities for acts committed by employees, compensation for work injury damages, right to join trade unions, minimum wages, annual leave, paternity/maternity leave, and redundancy payments.

The payment to an independent contractor is not subject to statutory deductions such as PAYE, NSSF and NHIF. An independent contractor pays their own taxes and are responsible for actions in tort.

An independent contractor is a person who is self-employed and agrees to offer services to another for a fixed price while an employee is a person employed for wages or a salary and includes an apprentice and indentured learner.

• Conclusion

An independent contractor is, therefore, someone who is a registered tax payer, runs his own business, determines his own working hours, employs his own tools and invoices for work done.

In order to determine whether a person is an employee or an independent contractor the courts will consider the substance of the agreement, the facts which show the manner in which the employer and the employee or independent contractor have been operating. The courts are generally of the view that the tests are to be considered jointly and are not to be used exclusively by themselves as they only serve as guides based on the facts of each case.