Foundations of Kenya’s Company Law With Cases and Materials

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The 3 rd Claimant forfeited her annual leave, and does not merit unauthorized traveling allowance. Further claims of annual leave pay dating back to the year , and leave traveling allowance, are statute-barred. It is statute- barred. Mbinya had a Bank Loan and Sacco loan, totaling Kshs.

This should be offset against her terminal dues admitted by the Respondent to comprise notice pay at Kshs. Offset, the result is that Mbinya owes the Respondent Kshs. Lastly the Respondent submits Parties should meet their costs of the Claim. The Respondent has always been willing to settle the Claim. The Claimants rejected the terms of settlement. The Respondent is a Charity taking care of needy Children. The 1 st Claimant worked from 24 th June It was stated his contract was for 6 months, which was renewable.

The Court presumes this was renewed, and the 1 st Claimant left employment on 1 st June He had worked for about 3 years. It is not clear why he bases his Claim on 4 years of service. He last earned a monthly salary of Kshs. The 2 nd Claimant, Sese was employed on 1 st January , leaving on 1 st June He had completed 8 years in employment, not 9.

His Witness Statement indicates he last earned a monthly salary of Kshs. The 3 rd Claimant, Chenye joined the Respondent on the 28 th June , and left 1 st June , having completed 8 years in employment. Her last monthly salary is indicated to be Kshs.

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The 4 th Claimant Kilio was appointed as a Nursery School Teacher, with effect from 8 th January , and left alongside her Colleagues, on the 1 st June She had worked for 22 complete years. She earned a monthly salary of Kshs. The last Claimant Mbinya, worked from 2 nd June to 1 st June She had a neat, complete 3 years of service.

All the Claimants left employment on 1 st June , upon the Respondent declaring their positions redundant.


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Termination was therefore under Section 40 of the Employment Act , as read together with Section 43 [proof of termination reason] and Section 45 [termination for operational reasons]. Termination was not based on Sections 35 and 36 as submitted by the Claimants. The Respondent is a Charity, funded by Donors from Sweden, and whose only supplemental income is from small scale poultry farming and minimal commitment fees charged on the Pupils. The Claimants themselves testified they have been agitating for pay increment and sometime in boycotted work demanding for pay rise. This led into termination of their contracts of employment, but the Respondent was compelled to reinstate the Claimants through political pressure exerted by local leaders.

These disturbances portrayed an Employer with perennial financial inability, to meet its wage bill.

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Redundancy was genuine, the next question being whether it was in conformity with the procedure set under Section 40 of the Employment Act The law under Section 40 requires the Employer gives a notice of not less than 30 days prior to the date of the intended termination, to the Trade Union where the Employee is a Member of the Trade Union, and to the Local Labour Office.

If the Employee is not unionized, he is to be notified in Person, and the Labour Office similarly notified.

CA Foundation Law by CA Ankita Patni (Lecture 1)

The notice must reveal the reasons for, and extent of redundancy. Other requirements involve clear information from the Employer to the Employees on the selection criteria. Non-union Employees, who do not enjoy the presence of a CBA, are not to be disadvantaged in payment of terminal benefits. The Employee is to be issued 1 month notice, or one month salary in lieu of notice. There are 2 notices contemplated under Section The first is under Section 40 [1] [a] of the Employment Act , which by its wording contemplates there is subsequent tripartite consultation on the reasons and extent of redundancy; and the second notice under Section 40 [1] [f] which is a notice in the mould of the notice under Section 36 of the Employment Act The first notice is not merely informative, it is supposed to open the door for a 3 way dialogue, involving the Parties in whose names the notice is issued and addressed.

The last notice assumes the processes under the previous notice have been undertaken and finalized. Outstanding leave days must be paid off. The payments of severance pay, notice pay, and outstanding annual leave days, must be made before termination. Redundancy dues must be paid before termination. What most Employers do, as did the Respondent herein, is tabulate redundancy dues, terminate and advise Employees when to collect their dues at a later date.

Failure to meet any of the conditions under Section 40, which includes payment of all terminal dues before termination, would result in an unfair and unlawful termination. Termination was effective the following day. There was an attached letter to the notice, advising the Employees how and when they would collect their dues at a date subsequent to the termination. In the view of the Court and relying on the law as discussed above, the procedure was flawed.

Termination was unfair on account of procedure. On the rates of pay, it is clear to this Court the 4 th and 5 th Claimants were Teachers, employed by a Private Institution, and who negotiated their own packages with their Employer. Kilio testified she was demanding a higher rate of pay, based on her market research. Both Teachers feel they were undercut, based on the comparable rates paid to Teachers in the public service. There are instruments and mechanisms for wage review in different sectors.

The Teachers in public service have their structures of wage adjustment. Teachers have the option of seeking employment in the private or public sectors. Once in the private sector, they are not guided by the structures in the public sector. They do not have a Trade Union which negotiates collectively.

They are not covered under a specific wage order. They negotiate their own terms and conditions of employment with their Employers, and provided what they have agreed does not breach the minimum wage law set by the Government across the industries, they cannot be heard to lament that what they are earning is too little. The two Claimants do not say they were paid below the general minimum wage; they allege they should have been earning a certain amount as Nursery School Teachers.

They did not focus the attention of the Court on any specific wage instrument, affording them the higher rate they demand. The Court understood this to mean that the two Claimants were paid below the general wage floor, as General Labourers occupy the bottom of the pile. Their claims for underpayment of wages; their adoption of Kshs. The 4th Claimant, Kilio, shall be paid 1 month salary in lieu of notice at Kshs. In total the 4 th Claimant shall be paid Kshs. The 5 th Claimant, Mbinya, shall be paid 1 month salary in lieu of notice at Kshs.

Textbook of Company Law in Kenya | Text Book Centre

In total the 5 th Claimant shall be paid Kshs. The 3 rd Claimant Chenye was described as a Book- Keeper in her letter of appointment. Chenye confirmed in her evidence she was a Book-Keeper, earning as of the last day of employment, a monthly salary of Kshs. The term Book-Keeper is not captured in the Wage Order of In the view of Court, Chenye was in the position equivalent to that of a General Clerk, answerable to the Accounts Clerk and the Chairman. She ought to have been earning a minimum salary of Kshs.

They Claimants quite reasonably, have all restricted their claims for underpayment to 3 years preceding termination. There is no merit in the argument raised by the Respondent on limitation of time. This Court has taken the position in its past decisions that all terminal dues must be paid to an Employee upon exit.


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  • Claims for underpayments, arrears of salary, or accrued annual leave, are not defeated by the passage of time. The Employer in effect renews the date of accrual of action, each time the specific claim remains unpaid. Tracing back the actual underpayments from the date of their accrual would have the result of crippling the work being carried out by the Respondent.

    The Director Ochieng, to his credit conceded Employees were underpaid. The 4 th Claimant was able to show she did not take annual leave for 4 years. The Respondent did not buy off her annual leave entitlement. The Court is similarly persuaded her claim for traveling allowance is merited. Employers do not confer benefits on Employees, and later withdrawal such benefits citing lack of authorization. Unless the benefit is shown to be illegally conferred, the Court cannot sanction its withdrawal.

    Traveling allowance in the case of the 3 rd Claimant was included in her contract through a letter issued by the Respondent. It was a benefit legally conferred, and which should not have been unilaterally recalled. The 3 rd Claimant shall be paid underpayment of salary for 3 years, calculated as follows: She is to be paid 1 month salary in lieu of notice at Kshs.

    In total the 3 rd Claimant shall be paid Kshs. The 2 nd Claimant, Sese, worked as a Guard. He was granted additional duties of gardening. In his Witness Statement, he gives his monthly salary as Kshs. He was not clear on the last salary earned. The Court agrees with the submission of the Respondent that under the Wage Order of , the 2 nd Claimant should have been earning Kshs. Assuming he was paid Kshs. He is granted 1 month salary in lieu of notice at Kshs. His severance pay is granted at [Kshs. In total, the 2 nd Claimant shall be paid Kshs. The Respondent testified the 1 st Claimant is an ex-convict, employed on the recommendation of the Prisons.

    The Respondent employs many such other ex-convicts. Legal System and Judicial Independence. The following subordinate courts also remain in place: Magistrates, Khadis Muslim succession and inheritance , Courts Martial, and the Employment and Labor Relations Court formerly the Industrial Court as well as the Milimani Commercial Courts which both have jurisdiction over economic and commercial matters. The courts are nevertheless plagued by frequent allegations of corruption and long delays in rendering judgments.

    The Foreign Judgments Reciprocal Enforcement Act provides for the enforcement of judgments given in other countries that accord reciprocal treatment to judgments given in Kenya. Outside of such an agreement, a foreign judgment is not enforceable in the Kenyan courts except by filing a suit on the judgment. Foreign advocates are not entitled to practice in Kenya unless a Kenyan advocate instructs and accompanies them, although a foreign advocate may practice as an advocate for the purposes of a specified suit or matter if appointed to do so by the Attorney General.

    Laws and Regulations on Foreign Direct Investment. Competition and Anti-Trust Laws. Company takeovers are possible if the share buy-out is more than 90 percent, although such takeovers are rarely seen in practice.

    The constitution guarantees safety from expropriation except in cases of eminent domain or security concerns. All cases are subject to the payment of prompt and fair compensation. The Land Acquisition Act governs compensation and due process in acquiring land, although land rights issues in Kenya remain contentious and can cause significant delays in projects. For more issue on land issues, see the section on real property.

    Textbook of Company Law in Kenya

    However, the growth in the number of students has far outstripped the supply of housing on campus. By the way, where the private sector is currently providing student housing, it ends up being substandard, even for students. Normally, you would expect that they would first start there; they would house both the faculty members and then the students, and then find a way to increase the academic rooms. But when we discuss students, please also remember that faculty members are also forgotten, and tertiary staff members.

    They have the same housing problem. Because now, what we have is a distribution of the educational institutions outside of the main urban areas. And they have the same issue. What are the short-term and long-term ways to fix that problem? I mean, obviously, part of it has to involve private sector in companies like yours that can find ways to be able to build out some of this housing, correct? Some governments have tried public-private partnerships with some limited measure of success, partly because the other angle to this issue regards the realities of the capital markets.

    And what I mean by that is the governments in my region pay a fairly high interest rate on their debts…. What ends up happening, though, for an investor, is that they look at the yield from the property investment. What that effectively means to a developer is that you lose money, not just in student housing, but across the board when you make these developments, if you are going for rental. Which is why initially, we focused on where we build to sell these units. How big of a piece of the housing market is rental housing in Ghana and Kenya in that part of the world?

    And the reason for that — by way of illustration — is that generally speaking, we are observing that the cost of rent is about a third to a quarter of the cost of a mortgage for similarly situated, similarly sized housing opportunities. That means that the solution has got to be that you increase a higher supply of good quality, well-situated rental products. But there are solutions, which we are here to learn, actually — to investigate and understand.

    How is it done in the U. Do the governments realize the level of the issue? As you said, they are willing to contribute up to a certain point. Yes, the governments realize it. Some governments are realizing and putting in place incentives. However, very few people can do this. Sometimes far away from where they work, because they want to be able to build their own house.

    They tend to cost a lot more than buying a built house. But from the perspective of what income I have now, that seems to be the most affordable way to go about it.