Adero v Eastern Africa Kenya (Cause E055 of 2025) [2026] KEELRC 2266 (KLR) (30 July 2026) (Ruling)

 **REPUBLIC OF KENYA** **IN THE EMPLOYMENT *&* LABOUR RELATIONS** **COURT OF KENYA AT KISUMU** **CAUSE NO. E055 OF 2025** MERCY AKOTH ADERO............................................................**CLAIMANT** **VERSUS** GERMAN SPARKASSENSTIFTUNG EASTERN AFRICA KENYA.....................................………**RESPONDENT** **RULING** 1. Through an application dated 10th July 2026, The Respondent/Applicant seeks orders that this Court declines jurisdiction to hear and determine the Claim dated 1st July 2026, strikes it out for want of jurisdiction, and awards the costs of the application and the suit to the Respondent. 2. The application is supported by the affidavit of Stefanie Pfeil, the Respondent’s Country Director, who depones that the Claimant was engaged in January 2026 as Key Expert 3 – Financial Literacy Expert under the IYBA SEED Project pursuant to an Independent Contractor Agreement dated 19th January 2026. The Applicant contends that the engagement was a commercial consultancy arrangement and not a contract of employment, as the Claimant was never employed by the Respondent, placed on its payroll, integrated into its staff establishment, or entitled to employee benefits, and was remunerated through invoices and approved timesheets in accordance with the consultancy agreement. 3. The Applicant further contends that the reporting, coordination, and performance monitoring arrangements relied upon by the Claimant were project governance mechanisms prescribed by the donor and applicable to all consultants, and did not establish an employer–employee relationship. It is also averred that the Respondent did not control the Claimant’s daily working hours, attendance, or place of work 4. According to the Applicant, the dispute concerns the interpretation, performance, and alleged breach of the Independent Contractor Agreement, including payment of consultancy fees, contractual deliverables, intellectual property, and alleged repudiation of the agreement, and is therefore a contractual dispute falling outside the jurisdiction of the Employment and Labour Relations Court under Article 162(2)(a) of the Constitution and section 12 of the Employment and Labour Relations Court Act. The Applicant further relies on the arbitration clause contained in Article 10 of the Agreement and urges the Court to strike out the suit to enable the Claimant pursue her remedies before the appropriate forum. 5. The Claimant opposes the application through a Replying Affidavit sworn on 17th July 2026. She avers that she was personally engaged as Key Expert 3 – Financial Literacy Expert and was required to provide her own labour and professional expertise within the Respondent’s project structure, without the right to subcontract the work. She further depones that the project guidelines described members of the project team as “staff members” and required them to report to the Team Leader and Deputy Team Leader, attend regular meetings, prepare work plans, obtain approval of deliverables and timesheets, and follow prescribed reporting and supervision procedures. The Claimant asserts that these arrangements demonstrate that her work was performed within a structured hierarchy and under continuous supervision, monitoring and direction. She argues that the Respondent’s own acknowledgment that the Team Leader and Deputy Team Leader supervised her constitutes an admission of a material fact, and that whether those features created a contract of service can only be determined after hearing evidence at trial. 6. She further contends that the use of invoices, timesheets, eTIMS invoicing, and a project-specific title does not conclusively determine her legal status, and that the Court must examine the substance and practical operation of the relationship as a whole. The Claimant also argues that the dispute resolution clause in Article 10 of the agreement does not oust the jurisdiction of this Court, that no application has been made under section 6 of the Arbitration Act for stay and referral to arbitration, and that the existence of an arbitration agreement does not determine whether the parties were in an employment relationship. She therefore urges the Court to dismiss the application with costs and allow the matter to proceed to full hearing. 7. In rejoinder vide a further affidavit sworn on 21st July 2026, by Stefanie Pfeil, it is deponed that the Claimant’s LinkedIn profile demonstrates that the Claimant remained free to undertake multiple consultancy engagements during the material period, which is consistent with an independent contractor relationship and inconsistent with a contract of service, where an employee is ordinarily integrated into the employer’s organisation and is subject to a degree of control. She highlights the fact that it indicates that she was simultaneously engaged in several other consultancies during the period she was engaged with the Respondent as listed therein. The Respondent therefore urges the court to take this into consideration in determining jurisdiction. Respondent/Claimant’s Submissions 1. The Respondent identifies the issues for determination as: * + 1. Whether there existed an employer-employee relationship between the Claimant and the Respondent; and 2. Whether this Court has jurisdiction to entertain the claim as presented. 2. On the employment relationship, the Respondent reiterates that there was none. It asserts that the Claimant was engaged under an Independent Contractor Agreement for a fixed-term donor-funded consultancy project and was remunerated through consultancy fees upon submission of approved deliverables, timesheets and eTIMS invoices, rather than wages or salary. Relying on **Kenya Pipeline Company Ltd *v* Ndegwa *&* another [2023] KECA 226 (KLR)**, the Respondent submits that a contract of service is distinct from a contract for services, and that an independent contractor is engaged to achieve a specified result while retaining autonomy over the manner of performance. The Respondent further relies on **Stein *v* Rising Tide Productions [2002] 23 ILJ 2017**, which held that the dominant impression test requires the Court to consider the totality of the relationship, including control, supervision, integration, manner of payment, exclusivity, provision of tools and the parties’ intention. The Respondent maintains that the Claimant was not recruited as an employee, was never placed on the Respondent’s payroll, was not integrated into its organisational structure, was not entitled to employee benefits, and remained free to undertake other consultancy engagements concurrently. It contends that the reporting, coordination and quality assurance mechanisms relied upon by the Claimant were donor-prescribed project governance requirements applicable to all consultants and did not create an employment relationship. 3. The Respondent further submits that the Court should apply the tests identified in **Christine Adot Lopeyio *v* Wycliffe Mwathi Pere [2013] KEELRC 244 (KLR)**, namely the control test, integration test, economic reality test, and mutuality of obligation test. On the control test, the Respondent submits that it did not control the Claimant’s daily working hours, attendance, place of work or method of performing her assignments, and that oversight of deliverables amounted only to contractual quality assurance. It relies on **Samuel Wambugu Ndirangu *v* 2NK Sacco Society Ltd [2019] KEELRC 2546 (KLR),** which held that an employment relationship is indicated where the employer controls not only the result of the work but also the manner in which it is performed. On the integration test, the Respondent argues that the Claimant remained an external consultant and was never integrated into its staff establishment. Reliance is placed on **Omusamia *v* Upperhill Springs Restaurant [2021] KEELRC 3 (KLR)**, which explains that the relevant inquiry is whether the worker became part of the employer’s organisational structure or merely rendered specialised services while remaining independent. On the economic reality test, the Respondent submits that the Claimant operated as an independent professional undertaking work on her own account, bore the commercial risks associated with the consultancy, and was paid only upon completion of contractual deliverables. It relies on **Kenya Pipeline Company Ltd *v* Ndegwa *&* another [2023] KECA 226 (KLR)**, which recognised that an independent contractor ordinarily operates an independent commercial undertaking and is remunerated for specific outputs rather than wages. On the mutuality of obligation test, the Respondent asserts that the consultancy agreement was limited to a specific project and period, and that neither party was under any obligation to provide or accept further work upon completion of the project. It submits that the absence of reciprocal obligations for continued engagement is inconsistent with a contract of service. 4. On the second issue, The Respondent submits that, having established that the parties were in a principal independent contractor relationship, this Court lacks jurisdiction to entertain the claim. It asserts that the Employment and Labour Relations Court has jurisdiction only over disputes arising from or incidental to an employer–employee relationship, whereas the present dispute concerns the performance and alleged breach of a commercial consultancy agreement. The Respondent further submits that jurisdiction is determined by the true nature and substance of the dispute rather than the terminology employed in the pleadings. It contends that the Claimant cannot confer jurisdiction upon this Court by couching what is essentially a contractual dispute in the language of employment law. In support of this submission, the Respondent relies on **Samuel Kamau Macharia *&* another *v* Kenya Commercial Bank Ltd *&* 2 others [2012] KESC 8 (KLR),** in which the Supreme Court held that a court’s jurisdiction flows only from the Constitution or statute and cannot be expanded through judicial innovation or the parties’ pleadings. The Respondent also relies on **Owners of the Motor Vessel “Lillian S” *v* Caltex Oil (Kenya) Ltd [1989] KECA 48 (KLR),** where the Court of Appeal held that jurisdiction is everything and that once a court finds it lacks jurisdiction, it must immediately down its tools. Accordingly, the Respondent urges the court to strike out the suit with costs. Claimant’s Submissions 1. On her part the Claimant identifies the issues for determination as: * + 1. Whether the Court should strike out the Claim where employee status is factually contested; and 2. Whether Article 10 of the agreement supports the orders sought 2. On the first issue the Claimant emphasizes that this Court has jurisdiction under Article 162(2)(a) of the Constitution and section 12(1)(a) of the Employment and Labour Relations Court Act to determine disputes arising from employment, including disputes as to whether a relationship labelled as a consultancy was in substance a contract of service. She asserts that the issue of employee status cannot be determined merely from the contractual label adopted by the Respondent but requires an examination of both the written agreement and the actual conduct of the parties. The Claimant relies on **Kenya Pipeline Company Ltd *v* Ndegwa *&* another [2023] KECA 226 (KLR)**, in which the Court of Appeal held that the distinction between a contract of service and a contract for services is determined by considering factors such as control, integration, economic reality and mutuality of obligation, and that the inquiry is dependent on the facts of each case. She submits that the facts in that case, where the contractor retained control over its workforce, tools and operations, are materially different from the present matter. The Claimant further relies on **Everret Aviation Limited *v* Kenya Revenue Authority (Through the Commissioner of Domestic Taxes) [2013] eKLR**, where the High Court held that workers described as freelance pilots were engaged under contracts of service after examining the practical operation of the relationship. She submits that the authority demonstrates that nomenclature, duration of engagement and the mode of payment are not decisive, and that the Court must objectively assess the relationship as a whole. The Claimant submits that the Respondent’s own documents raise triable issues requiring evidence at a full hearing. In particular, she points to project guidelines requiring technical reporting to the Team Leader and Deputy Team Leader, regular meetings, work plans, monitoring of work days, approval of timesheets and deliverables, and a structured reporting and quality assurance process. She further notes that the Respondent admits that the Team Leader and Deputy Team Leader supervised her work and that the Respondent reviewed and approved her timesheets before payment. According to the Claimant, these matters go to the substance of the relationship and cannot properly be resolved summarily at the jurisdictional stage. She contends that the matters relied upon by the Respondent, including invoicing, eTIMS, tax obligations, the fixed project term and the consultancy label, are evidentiary factors to be weighed at trial and do not justify striking out a claim that raises a *bona fide* question whether the engagement was in reality employment. 3. On the second issue, the Claimant submits that Article 10 of the agreement, which provides that disputes should first be resolved amicably and, failing that, may be referred to arbitration, does not support the orders sought by the Respondent. She asserts that the Respondent has not made an application for stay of proceedings and referral to arbitration under section 6(1) of the Arbitration Act, but instead seeks a declaration that this Court lacks jurisdiction and an order striking out the suit. The Claimant further submits that section 6(1) of the Arbitration Act provides a specific statutory procedure for referral to arbitration and that an arbitration clause does not, of itself, oust the jurisdiction of this Court or determine whether the parties were in an employment relationship. In support of this proposition, she relies on **Mathew Ekisa Ekirapa *v* Oku Kaunya *&* another [2022] KEELRC 343 (KLR)**. Accordingly, the Claimant urges the Court to dismiss the application, hold that the question of employee status is a contested factual issue requiring a full hearing, and allow the claim to proceed on its merits. Disposition 1. The Respondent asserts there is no employee employer relationship between it and the Claimant. It asserts that the Court therefore has no jurisdiction to entertain the suit. It seeks the same be struck out. 2. Jurisdiction is everything. So said Nyarangi JA in the case of **Owners of the Motor Vessel “Lillian S” *v* Caltex Oil (Kenya) Ltd [1989] KECA 48 (KLR)**. I am in total agreement with this surmise. 3. When the Court assesses the agreement, the documents for the Respondent and those of the Claimant, it is my finding there is need to sift the relationship through the tests which reveal whether there was employment or not. The dominant impression test requires the Court to consider the totality of the relationship, including control, supervision, integration, manner of payment, exclusivity, provision of tools and the parties’ intention. The control test, integration test, economic reality test, and mutuality of obligation test must be applied as well to determine the precise nature of the relationship. On the control test, the Respondent asserts that it did not control the Claimant’s daily working hours, attendance, place of work or method of performing her assignments, and that oversight of deliverables amounted only to contractual quality assurance. On the integration test, the Respondent argues that the Claimant remained an external consultant and was never integrated into its staff establishment. On the economic reality test, the Respondent asserts that the Claimant operated as an independent professional undertaking work on her own account, bore the commercial risks associated with the consultancy, and was paid only upon completion of contractual deliverables. On the mutuality of obligation test, the Respondent asserts that the consultancy agreement was limited to a specific project and period, and that neither party was under any obligation to provide or accept further work upon completion of the project. It submits that the absence of reciprocal obligations for continued engagement is inconsistent with a contract of service. 4. These are issues that are hardly appropriate for the Court to determine *in limine*. There would be need to receive evidence on the various aspects of the relationship between the parties in order for the Court to ascertain whether there was a contract of service which is distinct from a contract for services, or whether the elements of engagement clearly show there was an independent contractor engaged to achieve a specified result while retaining autonomy over the manner of performance. 5. I decline to make conclusive determination of these issues at interlocutory stage. Application is dismissed albeit with no order as to costs. Directions will issue on the suit after this Ruling. It is so ordered. **Dated and delivered at Kisumu this 30th day of July 2026** **Nzioki wa Makau, MCIArb.** **JUDGE**