https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1711

Waymaker Investment Ltd & another v Onyango (Appeal E074 of 2025) [2026] KEELRC 1711 (KLR) (22 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1711 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Kisumu Appeal E074 of 2025 Nzioki wa Makau, J June 22, 2026 Between Waymaker Investment Limited 1st Appellant Jumbo Steel Mills Limited 2nd Appellant and Maurice Otieno Onyango Respondent (Being an appeal from the judgment and decree of Hon. Maureen Nyigei (SPM) in Kisumu CMELRC No. E207 of 2024 delivered on 22nd September 2025) Judgment 1.The appeal arises from a claim instituted by Maurice Otieno Onyango (the Respondent) against Waymaker Investments Ltd (the 1st Appellant) and Jumbo Steel Ltd (the 2nd Appellant) before the Magistrate’s Court at Kisumu through a Memorandum of Claim dated 15th April 2024. The Respondent alleged that his employment had been unlawfully and unfairly terminated and further sought payment of his terminal dues. In response, the 1st Appellant filed a Response to the Memorandum of Claim dated 9th October 2024, it admitted having employed the Respondent but contended that he had deserted duty. It further averred that all statutory NSSF contributions had been duly remitted and that no gratuity was payable as there was no contractual or statutory provision providing for the same. The 2nd Appellant, in its Response to the Memorandum of Claim also dated 9th October 2024 denied the existence of an employment relationship between itself and the Respondent. It maintained that its human resource functions had been outsourced to the 1st Appellant and that the Respondent was therefore a stranger to it. Consequently, both Appellants urged the Trial Court to dismiss the claim. 2.Upon hearing the matter, the Trial Magistrate, in a judgment delivered on 22nd September 2025, found that the Respondent had been unfairly terminated from employment. The Court consequently awarded him compensation equivalent to eight months’ salary, one month’s salary in lieu of notice, a certificate of service, together with costs and interest. 3.Aggrieved by that judgment, the Appellants lodged this appeal via a Memorandum of Appeal dated 1st October 2025 and filed on 6th October 2025 contending that:1.The Learned Magistrate erred in law and fact in failing to analyse all the issues before the court for determination.2.The Learned Magistrate erred in law and fact in awarding the Respondent 8 months salary as compensation for unlawful termination.3.The Learned Magistrate erred in law in failing to consider the period the Respondent worked in computation of the compensation for unlawful termination.4.The Learned Magistrate erred in law by awarding the Respondent excessive compensation for unlawful termination contrary to provisions of the law.5.The Learned Magistrate erred in failing to make a finding that the matter was a duplicity.6.The Learned Magistrate erred in law and fact in failing to make a direct finding on who should pay the judgment amount.7.The Learned Magistrate erred in law and fact in making a finding that there was unlawful termination contrary to the evidence on record.8.The Learned Magistrate erred in law and fact in failing to take into consideration the evidence on record and the Appellants submissions thus arriving at a wrong conclusion.9.The Learned Magistrate erred by allowing the Respondent's claim contrary to the evidence on record. 4.On the strength of these grounds, the Appellants urge this Court to allow the appeal, set aside the judgment of the Trial Court and dismiss the Respondent’s claim. They further seek costs of both the appeal and the proceedings before the Trial Court. 5.The appeal was canvassed by way of written submissions. Appellants’ Submissions 6.In support of the appeal, the Appellants condensed their arguments into three broad issues, namely:1.Whether the Learned Magistrate failed to analyse all the issues arising for determination;2.Whether the award of compensation equivalent to eight months’ salary was excessive in the circumstances; and3.Whether the Learned Magistrate failed to make a clear determination regarding the party liable to satisfy the decretal sum. 7.On the first issue, the Appellants submitted that the Trial Magistrate failed to take into account the existence of Kisumu CMELRC No. E112 of 2024, filed with regard to the issue of his termination. They asserted that failure to address the existence of the said suit exposed the Appellants to the risk of the Respondent recovering twice in respect of the same cause of action. In this regard, they referred the Court to the Memorandum of Claim in the said suit appearing at pages 46 and 47 of the Record of Appeal, which, according to them, was never controverted. In view of the foregoing, the Appellants therefore contended that having found that the 2nd Appellant was not the Respondent’s employee, the Magistrate should have made a finding that his claim lay in Kisumu CMELRC E112 OF 2024. 8.With regard to the award of compensation, the Appellants submitted that the award of eight months’ salary was manifestly excessive considering that the Respondent had only served for approximately one year. They asserted that an award equivalent to one month’s salary would have been reasonable and consistent with the factors set out under section 49(4) of the Employment Act, including the circumstances surrounding the termination, the extent to which the employee may have contributed thereto, the employee’s length of service, his legitimate expectation of continued employment, and the availability of alternative employment opportunities. In support of this argument, reliance was placed on the cases of German School Society v Helga Ohany [2017] KECA 112 (KLR) and Hema Hospital v Wilson Makongo Marwa [2015] KECA 190 (KLR). 9.On the final issue, the Appellants submitted that the Learned Magistrate failed to make a clear determination as to which of the Appellants was liable to satisfy the judgment. They contended that although the Trial Court found that the 1st Appellant was the employer, it failed to make a corresponding determination regarding the position of the 2nd Appellant. Consequently, they urged this Court to interfere with the award and substitute the compensation granted with an award equivalent to one month’s salary payable by the 1st Appellant. Respondent’s Submissions 10.The Respondent, for his part, urged the Court to be guided by the well-settled duty of a first appellate court as articulated in Imanyara & 2 others v Attorney General [2016] KECA 557 (KLR) and Odera t/a AJ Odera & Associates v Machira t/a Machira & Co Advocates [2013] KECA 208 (KLR), which is to re-evaluate, re-assess and re-analyze the evidence and arrive at its own conclusion, bearing in mind that it did not hear the witnesses first hand. 11.The Respondent submitted that the judgment of the Trial Court was sound in both fact and law and therefore ought not to be disturbed. He submitted that the findings reached by the Learned Magistrate were firmly grounded on the pleadings, the evidence tendered, the parties’ submissions and the applicable provisions of the Employment Act. In support of the appeal, He urged the Court to be guided by its entire case before the trial court, including the pleadings, the evidence as well as the submissions. He maintained that a proper re-evaluation of the evidence could only lead to the conclusion that the appeal is devoid of merit. He therefore prayed that the appeal be dismissed with costs. Disposition 12.The dispute in this case revolves around something known as outsourcing. Outsourcing may take any of the 4 main forms – outsourcing of manufacturing processes, outsourcing of professional services, outsourcing IT services, or business process outsourcing. Outsourcing is therefore the practice of hiring an external party or individual to perform tasks, provide services or manage operations that were previously handled internally. Companies may outsource in order to reduce costs, save time and focus on the core business activities. This however must meet strict legal requirements. 13.In the case of Phillip Ateng Oguk & 27 others v Westmont Power [Kenya] Limited & another [2015] KEELRC 118 (KLR) my brother Rika J. held as follows:-…unregulated outsourcing is inimical to a fair labour regime as it tends to be used as a means of evading labour laws. 14.It is therefore critical to affirm that in any contract between companies that results in outsourcing, the mere fact the employee is outsourced does not affect the labour rights of the employee. In this case the Respondent was employed by the 1st Appellant on behalf of the 2nd Appellant. The Respondent’s services were terminated and the Learned Magistrate held there was unlawful termination and proceeded to award damages. The 2nd Appellant denied the existence of an employment relationship between itself and the Respondent. It asserted that its human resource functions had been outsourced to the 1st Appellant and that the Respondent was therefore a stranger to it. This is the fallacy of the arguments of the 2nd Appellant. How could it state with gusto and confidence that the Respondent was a stranger to it yet he worked on the 2nd Appellant’s premises? The finding of this Court is that the Respondent was not an employee of the 1st Appellant strictu sensu as he rendered his services at the behest of the 2nd Appellant. In his daily performance of duties, he was not subject to the control of the 1st Appellant but rather the 2nd Appellant. The Respondent worked for the 2nd Appellant though the 1st Appellant was responsible, through the arrangement between the parties, for the salary payments. The application of the control test to the service of the Respondent reveals the 2nd Appellant as employer dictated not only what work the Respondent did, but also how, when, and where it was performed. Using this foundational legal principle, I determine the worker was an employee of the 2nd Appellant and that it was therefore the primary employer with the 1st Appellant merely making periodic payments to the Respondent on its behalf. 15.The Trial Court was correct in its surmise that there was an unlawful termination of the contract of employment. Granted it was not clear who precisely was liable, the Appeal before me seeks to have clarity on this issue. The axe fell on both the Appellants to meet the judgment of the Court and there is nothing, absolutely nothing wrong with this determination. The Learned Magistrate did not clarify that the judgment was to be met jointly and severally by the Appellants. As such this Judgment only clarifies the 2 Appellants are jointly and severally liable to pay the sums ordered by the Learned Trial Magistrate. The Appeal is dismissed with the judgment of the Trial Court being upheld save for the addition that the judgment is entered against the Appellants before me jointly and severally. This appeal being unsuccessful, the Respondent will have the costs for the Appeal before me.It is so ordered. DATED AND DELIVERED AT KISUMU THIS 22ND DAY OF JUNE 2026NZIOKI WA MAKAU, MCIArb.JUDGE