Weathering the Storm: Steps an Employer Can Take to Mitigate the Effects of the COVID-19

Posted on April 1st, 2020

The emergence of the COVID-19 pandemic has created unprecedented instability in the employment sector with employers currently faced with the difficult balancing act of ensuring business continuity and sustainability while at the same time ensuring the safety and well-being of employees.

Many businesses are undergoing massive financial challenges during this period and are being forced to take drastic measures such as termination of employment by declaring redundancies, in a bid to remain afloat. Declaring redundancy is a drastic and last-line measure, and an employer should consider other measures which might serve to keep the business in operation and keep the staff component intact, before resorting to declaring redundancies. Whichever measure one takes, employers are encouraged to abide by the present legal frameworks governing the employment regime in Kenya which are heavily weighted towards the protection of fair labour practices in accordance with Article 41 of the Constitution.

Below is a discussion on the measures an employer can put in place to mitigate the effects of the COVID-19 pandemic:

a) Annual leave

Section 28 of the Employment Act, 2007 (the Act) provides for paid annual leave for not less than twenty-one (21) working days for every twelve (12) consecutive months of service.

The question that arises is whether an employer can compel an employee to go on annual leave during this period especially for employees who cannot work remotely. This can be effected with the consent of the employee.

b) Unpaid leave

An employment relationship is governed by the general principles of contract law as much as it is regulated by the Constitution and statute. There are no statutory or constitutional provisions on unpaid leave. It is, however, possible to have such provisions included in contracts of employment and/or an employer’s internal policies.

Section 10(5) of the Act requires consultation with the employee before any change or amendment of the terms of employment. These changes must thereafter be captured in writing and the employee notified of the same. Where the contract of employment and/or employer’s internal policies do not provide for unpaid leave, an employer may send an employee on unpaid leave upon consultation with the employee and the employee consenting to the same. This must be made expressly in writing.

c) Sick leave

Section 30 of the Act provides for sick leave of not less than seven (7) days with full pay and thereafter seven (7) days with half pay. The Regulation of Wages (General) Order provides that an employee is entitled to a maximum of thirty (30) days sick leave with full pay and thereafter to a maximum of fifteen (15) days sick leave with half pay in each period on twelve (12) months consecutive service.

The courts have held that employers should apply the provisions in the Order since they are more advantageous to employees than those in the Act.

If employees fall sick during this period, they are entitled to sick leave in line with the foregoing provisions or any internal policies the employer might have and that may have more advantageous terms on sick leave.

d) Reduction in working hours

As a mechanism to deal with lower demand in production during this period, an employer may consider a reduction in working hours for employees. This will require employees to only work for specified shorter periods with duties spread out across the workforce as a sustainability measure. Like any other alteration to the employment contract, the same should be done in consultation with and written consent by the employee.

Furthermore, on 25th March 2020, the President through a presidential address on state interventions to cushion Kenyans against economic effects of COVID-19 issued a directive on the coming into force of a daily curfew from 7 p.m. to 5 a.m. from 27th March 2020. The directive exempted those offering specified essential services, and the same was formally gazetted through Legal Notice No. 36 issued under the Public Order Act (Cap 56).

Following skirmishes which broke out between law enforcement officers and members of the public on the first few days of the curfew, it was further directed that employers should release their employees from work earlier than usual, so that those who use public transport are able to beat rush-hour traffic and get home in good time.

Therefore, employers might be forced to adjust the working hours and have more flexible working arrangements for their employees who do not offer essential services to ensure that they are in a position to adhere to the curfew.

Any measures to facilitate the above must be in consultation with the employee.

e) Reduction in remuneration

Across both the public and private sector various organisations are using pay-cuts as an alternative to declaring redundancies. Some of the pay-cuts are voluntary and others have been proposals at various rates through certain levels or grades of employment. As with any other change in the terms of employment, a reduction in remuneration can only be done upon consultation with an employee and obtaining his or her consent on the same. Again, this must be done in writing.

If parties consult and agree to salary cuts or unpaid leave, the employee will not be able to recover such underpaid on unpaid salaries when normal business operations resume, unless it is a specific term in the agreement.

f) Working from home

Employers can have their employees working from home or working remotely if it is possible, except where those employees are working in critical and essential services. Employees who cannot work remotely can take annual leave during this period. However, the consent of the employees should be sought.

g) Working in shifts

Employers can employ a shift system to reduce the number of employees who are in the workplace at any given time. With a reduced number of staff present in the office during any given shift, this will also go towards ensuring compliance with the directives on social distancing in the workplace.

h) Redundancies

Some employers may be forced to declare some employees redundant if circumstances become unsustainably dire. In such eventuality, employers will be required to strictly adhere to the provisions of redundancy under the Act, which include issuing a mandatory notice of intention to terminate employment on account of redundancy and consultation with the employees before ultimately terminating employment. Both these mandatory processes take no less than one (1) month and in certain cases may take up to three (3) months based on terms of employment and Collective Bargaining Agreement (if any). More importantly, under the Act, it is clear that employees have to be paid all dues owing to them before the redundancy can be deemed to have taken effect, thus serious financial consideration must be taken before taking this route. This might prove difficult to employers due to the prevailing financial times.

i) Insolvency

The COVID-19 pandemic has significantly affected business operations across the world resulting in cases where an employer is unable to meet its financial obligations to its employees and therefore gets into an insolvency situation. The options available in such circumstances are provided for in the Act and the Insolvency Act No. 18 of 2015 (the Insolvency Act).

The Act provides under sections 43 and 45 that for termination of an employment relationship to be fair and lawful the employer must prove that the reasons for the same are fair and valid. The current slumped business environment would constitute valid and fair reasons for termination of an employment relationship if the employer is able to show that it is unable to meet its financial obligations as a result of the COVID-19 pandemic.

Section 66 of the Act provides that where an employee or his representative makes an application to the Minister in writing and the Minister is satisfied among other reasons that the employer is insolvent, then the Minister shall, subject to the provisions of section 69 of the Act, pay the employee out of the National Social Security Fund the amount which in the opinion of the Minister the employee is entitled to in respect to the debt.

Section 68 of the Act then sets out the debts which apply when an employer is insolvent, and these include:

  1. Any arrears of wages in respect of one (1) or more months, but not more than six (6) months or part thereof
  2. An amount equivalent to the period of notice that the employer would be required to give to the employee in case of termination in accordance to the Act
  3. Any pay in lieu of annual leave days earned by the employee but not taken

Section 69 of the Act to which section 66 is subject to limits the total amount payable to an employee in respect of any debt in case of insolvency to KES. 10,000 or one half of the monthly remuneration whichever is greater in respect of any one month payable.

The Insolvency Act caters to payment of wages by the employer in an insolvency situation. The Second Schedule of the Insolvency Act sets out the order of priority of debts where the secured creditors get first priority and dues payable to employees are second priority claims as set out at paragraph 2 thereof “all wages or salaries payable to employees in respect of services provided to the bankrupt or company during the four months before the commencement of the bankruptcy or liquidation” to the extent that they remain unpaid.

Paragraph 3 (2) of the Second Schedule to the Insolvency Act then limits the amount payable to any one employee to not more than KES 200,000 as at the commencement of the bankruptcy or liquidation, as the case may be.

Therefore, employees claiming unpaid benefits will be ranked as second priority claims if the claim is merited and accrues before or because of the commencement of the insolvency proceedings and any payments made to the employees by the employer are limited to four (4) months before the commencement of the insolvency proceedings and further limited to not more than KES 200,000 in relation to an amount payable to any one (1) employee.

j) Compliance with directives by Government

On 14th March 2020, the Ministry of Labour through the Directorate of Occupational Safety and Health Services issued an advisory following the COVID-19 outbreak. The directive states that employers should formulate policies on infection control plans that should guide the organization. The directive outlines that such a policy should include:

  • Steps that the organization will take in the promotion and practice of hygiene
  • Modalities of holding meetings and travel control mechanisms both business travel and commute to and from work for the employees
  • Safe food handling in the workplace
  • Possible mechanisms of working from home
  • Channels of reporting any suspected COVID-19 cases

From the above, it is clear that more obligations are placed on employers in the health sector as they are expected to provide their employees with effective personal protective equipment, the maintenance of the protective gear and training of the employees. However, it is key that every employer takes the necessary step of coming up with a relevant policy as outlined above and they may consult the Directorate of Occupational, Safety and Health Services on the same.

The Ministry of Health has been at the forefront in issuing directives that apply to all citizens within the country. The directives are not specifically directed to employers or employees however they are complementary of the directives issued by the Ministry of Labour and Social Protection. Therefore, employers have an obligation to ensure that they are up to date with the directives and the same is implemented in the workplace.

Working together during the storm

Employers are encouraged to work towards remaining in operation during these uncertain times, to the extent possible. This may be achieved through co-operation with government guidelines aimed at reducing the spread of COVID-19 and in consultation and consent with employees on workable amendments to the terms and conditions of employment. Together, the storm can be weathered.


This alert is for informational purposes only and should not be taken as or construed to be legal advice. If you have any queries or need clarifications, please do not hesitate to contact Chacha Odera, Managing Partner, Georgina Ogalo-Omondi, Partner, Sandra Kavagi, Associate, Anne Kadima, Associate, Rosemary Sossion, Associate, or your usual contact at our firm for legal advice relating to the COVID-19 pandemic and how the same might affect you.

George Oraro SC Ranked ‘Star Individual’ Top Dispute Resolution Lawyer in Kenya

Posted on February 17th, 2020

17th February, 2020

Chambers Global Guide which ranks the most outstanding law firms and top lawyers across the world has released its 2020 rankings.

We are delighted to announce that our Senior Partner, George Oraro SC has surpassed the Band 1 ranking receiving the prestigious ‘Star Individual’ accolade in Dispute Resolution. The accolade is awarded to lawyers with exceptional recommendations in their field and George is the only lawyer ranked in this category in Kenya. Acclaimed by sources as "a man of integrity and humility", and regarded as being "wise, patient, extremely brilliant in all respects and very client-focused”, Chambers Global noted that multiple interviewees affirm his stature as a "litigation powerhouse" and "one of the best lawyers Kenya has ever produced."  George whose practice cuts across the full spectrum of contentious mandates and arbitration has also been ranked Band 1 among leading Arbitrators in Kenya. George has decades of experience which have seen him feature in some of Kenya's most eminent cases.

Chambers Global has also highly ranked other lawyers from the firm. Chacha Odera, Managing Partner, was ranked Band 1 in both Dispute Resolution and Employment practice areas. Chacha was commended for his expertise in land, employment and constitutional disputes with market commentators highlighting that he has a "very sharp mind," and other sources saying he is “a man full of wisdom; courteous, respectful, hard-working and a team player.”

Our Employment & Labour law Partner, Georgina Ogalo-Omondi, continues to excel in the Employment practice area. Georgina received praise from the interviewees for being “ambitious, very hard-working and a team player," also adding that “she is fearless.

Moving up the ranking, our Partners Noella Lubano and Jacob Ochieng were also ranked in Dispute Resolution and Corporate/M&A respectively. Chambers Global commended Noella for her in-depth understanding of financial and commercial disputes, covering banking, insolvency and asset tracing mandates. Noella was lauded for having a “very determined” approach and “outstanding client handling skills.” Jacob Ochieng is well regarded in the Corporate & Commercial space and his peers noted that he “is commercially astute and always looks out for his clients in any transaction.

In general, the firm continues to maintain its position as a market leader. Ranked Band 1, our Dispute Resolution team was lauded for routinely appearing in high quantum and sensitive matters and its representation of regional and international clients in complex cases. The firm was also well ranked in Employment and Banking & Finance categories.

Chacha Odera, Managing Partner, commented on the awards saying “It is such a great honour for me and the firm to receive such commendable rankings. I congratulate everyone in the firm for their unrelenting efforts. Our clients, thank you for your valuable feedback, unwavering support and trust over the years.” These accolades reinforce the firm’s leading position in the region and its standing globally.

Chambers Global rankings are based on extensive research and one-on-one client interviews. The Guide assesses the quality and magnitude of cases or transactions handled by each firm, technical ability, professional conduct, client service, commercial awareness/astuteness and commitment to providing solutions to clients, among other qualities.

###

Profile

Established 43 years ago by George Oraro SC (one of Kenya’s top litigators), Oraro & Company Advocates is a top-tier, full-service Kenyan law firm providing specialist legal services both locally and regionally with a focus on Arbitration, Banking & Finance, Conveyancing & Real Estate, Corporate & Commercial, Dispute Resolution, Employment & Labour, Infrastructure, Projects & PPP, Restructuring & Insolvency and Tax.

Oraro & Company Advocates prides itself in its deeply rooted client relationships by steadily providing quality legal services through its partner-led approach and continues to distinguish itself as an African law firm offering legal services drawing from local knowledge and global perspectives.

Kipkirui Kosgei

Head of Business Development

T: +254 709 250 000/709 250 735

E: gkosgei@oraro.co.ke

Private Client

Posted on November 7th, 2019

Our Private Client practice area provides prudent direction to individuals and families. The Private Client team provides all-round legal services, in the most efficient way, by integrating the other practice areas, when handling personal and structural issues.

Through this practice area, we have been able to preserve, build, maintain and establish trust with our client base.  Our practice is aimed at linking relationships with our clients to provide them with practical and attainable legal advice and action.


Our private client practice area encompasses:

  • Wills and Probate
  • Private Trusts
  • Succession planning and offshore structures
  • Estate management
  • Family law – divorce, division of matrimonial property, child custody and maintenance advice and litigation.

Related Services

Dispute Resolution, Employment & Labour


For more information about our Private Client, please contact Chacha Odera (Managing Partner) or John Mbaluto, FCIArb (Deputy Managing Partner).  Alternatively click here to download our Private Client profile.

Key Contacts
Chacha Odera
Senior Partner

 

 

E: chacha@oraro.co.ke

John Mbaluto, FCIArb
Deputy Managing Partner

 

 

E: john@oraro.co.ke

The Nairobi Legal Awards

Posted on July 16th, 2019

Compliments to our Managing Partner, Chacha Odera, for being recognised as the overall lawyer of the year at the Nairobi Legal Awards, hosted by the Law Society of Kenya, Nairobi branch on 31st May 2019 . The award recognised, among others:

  • Standards of professional competence, ethics & integrity
  • Innovation and effective client care
  • Contribution to development if an identified area of law
  • Leadership and initiatives by young lawyers

Chacha has over the years built a remarkable career acting and advising local and international clients in alternative dispute resolution particularly in arbitration matters, banking, employment law, insolvency, asset tracing, industrial disputes, pensions, land, construction and real estate disputes.

Kosgei Kipkirui

Head of Business Development

T: +254 709 250 000/735

E: gkosgei@oraro.co.ke

LCIA African User’s Council Symposium

Posted on July 16th, 2019

Oraro & Company Advocates participated in The London Court of International Arbitration (LCIA) symposium held on 23-24 May 2019 at the Villa Rosa Kempinski Hotel - Nairobi.

Our very own Managing Partner, Chacha Odera, and Noella Lubano, Partner were among the East African panellist speakers. Also, in attendance was Geoffrey Muchiri, a Partner in the Dispute Resolution practice area. The Symposium covered a variety of issues related to the current and future practice of international commercial arbitration and ADR in Africa.

Kosgei Kipkirui

Head of Business Development

T: +254 709 250 000/735

E: gkosgei@oraro.co.ke

The Last Word: A Look at Section 83 of the Election Act, 2011

Posted on December 11th, 2018

Share this article

Kenya has marked slight over a year since the Supreme Court rendered its decision on the nullification of the presidential elections held on 8th August, 2017. The dust having settled, it is an appropriate time to reflect on the historic decision, albeit from a legal perspective.

Kenyans went to the polls on 8th August, 2017 to elect their president. Uhuru Muigai Kenyatta was declared the winner with his closest challenger Raila Amolo Odinga coming in second from a field of eight (8) candidates. Mr. Odinga and his running mate, Stephen Kalonzo Musyoka were dissatisfied with the way the elections were conducted and the outcome of the said presidential elections. Mr. Odinga and Mr. Musyoka challenged the declaration of results by the Independent Electoral and Boundaries Commission (IEBC) at the Supreme Court of Kenya in Raila Amolo Odinga & Another –vs- IEBC & Others (2017) eKLR (the 2017 Presidential Election Petition). This was the second time the result of a presidential election was being challenged in the Supreme Court the first one having been challenged in the year 2013.

After receiving arguments from counsel representing the parties, the Supreme Court delivered its judgment on 1st September, 2017. By a majority decision of four (4) to two (2), the Court held that the presidential elections was not conducted in accordance with Constitution of Kenya, 2010 (the Constitution) and the applicable law thereby rendering the declared result invalid, null and void. The Court proceeded to order the IEBC to organise a fresh presidential election in conformity to the Constitution and the applicable election laws, within sixty (60) days of the judgment.

In this article, we discuss the position of the law as relates to the application of section 83 of the Elections Act, 2011 (the Elections Act) to the determination of election petitions. This section sets the standard of proof for election petitions in Kenya. The position on the interpretation of the provisions of section 83 of the Elections Act and its application to the determination of election disputes was settled in the 2017 Presidential Election Petition. Elections in Kenya are governed by the Constitution and other principal legislations in addition to the Elections Act include the Independent Electoral and Boundaries Commission Act, 2011 (the IEBC Act) and the Election Offences Act, 2016 (the Elections Offences Act). The Constitutional threshold is set out in Articles 10, 38, 81, 86, 88 and 138 and the principles cutting across all these Articles include integrity, transparency, accuracy, accountability, impartiality, simplicity, verifiability, security and efficiency as a free and fair election by way of secret ballot, free from violence and an election conducted by an independent body in transparent, impartial, neutral, efficient, accurate and accountable manner.

Section 83 of the Elections Act

Section 83 of the Elections Act provides that:
“No election shall be declared to be void by reason of non-compliance with any written law relating to that election if it appears that the election was conducted in accordance with the principles laid down in the Constitution and in that written law or that the non-compliance did not affect the result of the election.”

The term “or” used makes the two limbs of the provisions of section 83 of the Act disjunctive under our law unlike under English law which is conjunctive where the term “and” is used in a similar provision in the English Act. The conjunctive term has also been used in the Election laws of various Commonwealth countries such as Nigeria, Ghana,Zambia, Tanzania and Uganda.

The Supreme Court explained the disjunctive application of section 83 of the Elections Act to be that an election can be nullified if it showed either that the elections were not conducted in accordance with the Constitution and the written law relating to elections or that the noncompliance affected the result of the election. In other words, a petitioner who proves that conduct of the election in question substantially violated the principles laid down in the Constitution as well as other written law on elections, will on that ground alone, void an election. A petitioner will also be able to void an election if he is able to prove that although the election was conducted substantially in accordance with the principles laid down in our Constitution as well as other written law on elections, it was so fraught with irregularities or illegalities as to affect the result of the election. The Supreme Court majority however rejected the English position that even trivial breaches of the law should void an election stating that that position was not realistic; in recognition of a global truism that the conduct of an election is rarely perfect. Applying this test to the evidence presented before them on the presidential elections conducted in Kenya in August of 2017 the Supreme Court in its majority decision found that the elections were neither transparent nor verifiable and that on that ground alone and on the basis of the interpretation of section 83, they had no choice but to nullify the election and to direct the IEBC to conduct fresh presidential elections.

Quantity vis-à-vis Quality

The Supreme Court discussed at length the quantitative and the qualitative test as a basis of determining whether an election result ought to be voided. In a paper titled Election Technology Law and theConcept of “Did the irregularity affect the result of the elections?”’ prepared by Hon. Justice Prof. Otieno-Odek prior to the determination of the 2017 Presidential Election Petition, the author discusses the quantitative and qualitative test. Justice Odek states that the quantitative element consists of requirements for an accurate, verifiable and accountable system while the qualitative element requires that elections must be free from violence, intimidation, improper influence and corruption and that there must also be transparency and administration of elections in an impartial, neutral and efficient manner. The quantitative test is therefore most relevant where the numbers and figures are in question whereas the qualitative test is most suitable where the quality of the entire election process is questioned and the Court has to determine whether or not the election was free and fair.

In the Court of Appeal decision of Daniel Ongong’a Abwao vs Mohamed Ali & 2 Others (2018) eKLR which was an appeal filed by a voter within Nyali Constituency against the decision of the High Court upholding the election of Mohamed Ali Mohamed as the Member of the National Assembly for Nyali Constituency, this threshold was applied by the Court and it was found that the appellant was unable to prove that the elections substantially violated the principles laid down in the Constitution as well as other written laws on elections. The appeal was dismissed.

Amendment

The annulment of the presidential elections by the Supreme Court of Kenya triggered the introduction of the Election Laws Amendment Bill, 2017 (the Bill) in Parliament to amend various provisions of the Elections Act, the IEBC Act, the Election Offences Act. The Bill, despite strong opposition from a section of Kenyans, was passed by Parliament, the Senate and finally transmitted to the President for assent. The President neither assented to the Bill nor returned it to Parliament and after fourteen (14) days of its passing, the Bill became law by virtue of the provisions of Article 116 of the Constitution. The law was published in the Kenya Gazette on 2nd November 2017 thus becoming effective as the Election Laws Amendment Act No. 34 of 2017 (the Election Laws Amendment Act).

The Katiba Institute Petition Following the passing of the Election Laws Amendment Act, Katiba Institute & 3 Others vs Attorney General & 2 Others (2018) eKLR (the Katiba Institute Petition) was a Constitutional Petition filed contending that the amendments were unconstitutional. Under the amendments, section 83 of the Election Act now reads as follows:

“(1) A Court shall not declare an election void for non-compliance with any written law relating to that election if it appears that- (a) the election was conducted in accordance with the principles laid down in the Constitution and in that written law; and (b) the non-compliance did not substantially affect the result of the election.”

The petitioners’ argument was that by amending the law from a disjunctive test to a conjunctive one by use of the word “and” instead of “or”, it would be difficult to challenge an election even where there was violation of Constitutional principles.

The High Court (Mwita J) delivered its decision in the Katiba Institute Petition on 6th April, 2018 noting that any amendments to the election laws must be forward looking in order to make elections more free, transparent and accountable, than to shield mistakes that vitiate an electoral process. The Court therefore held that “there was no constitutional compulsion or rational in amending section 83 of the Act to remove the disjunctive word ‘or’ and introduce the conjunctive word ‘and’ so that only where there are failures in complying with the constitution and election laws and they substantially affected the results should an election be nullified. Removing the twin test for annulling faulty election results negates the principles of electoral system in the Constitution… allowing such an amendment would be to ignore constitutional principles in our transformative Constitution that there should be free, fair, transparent and accountable elections.” The Court declared that the amendment of section 83 along with other specified sections of the Elections Act was invalid.

Conclusion

The position as relates to the interpretation of section 83 of the Election Act is now settled both by the Supreme Court of Kenya and also by the other Superior Courts. It is now for Parliament to effect the necessary changes by deleting the amended section 83 of the Act and restoring the initial disjunctive provision. Our fidelity to the Constitution that we gave unto ourselves should be maintained and upheld at all times.

It is apt to close with the words of the Supreme Court in the 2017 residential Election Petition:
“Therefore, however burdensome, let the majesty of the Constitution reverberate across the lengths and breadths of our motherland; let it bubble from our rivers and oceans; let it boomerang from our hills and mountains; let it serenade our households from the trees; let it sprout from our institutions of learning; let it toll from our sanctums of prayer; and to those, who bear the responsibility of leadership, let it be a constant irritant…

It is also our view that the greatness of a nation lies not in the might of its armies important as that is, not in the largeness of its economy, important as that is also. The greatness of a nation lies in its fidelity to the Constitution and strict adherence to the rule of law, and above all, the fear of God. The Rule of Law ensures that society is governed on the basis of rules and not the might of force.”

Competition Authority Ready to Snap the Whip on Abuse of Buyer Power

Posted on December 11th, 2018

The Competition Authority of Kenya (CAK) has in the recent past increased its efforts in ensuring the provisions of the Competition Act are adhered to. This is evidenced by a statement issued by the CAK on 28th November, 2018 informing the public of the establishment of a buyer power department (BPD) within its premises to exclusively handle concerns about businesses abusing their influence over suppliers.

The Competition Act No 12 of 2010 (the Competition Act) defines “buyer power” as the influence exerted by an undertaking or group of undertakings in the position of a purchaser of a product or service to obtain from a supplier more favourable terms, or to impose a long-term opportunity cost including harm or withheld benefit which, if carried out, would be significantly disproportionate to any resulting long-term cost to the undertaking or group of undertakings. Buyer power is not prohibited. It is the abuse of buyer power in a market in Kenya or a substantial part of Kenya that is specifically prohibited under the Competition Act. This is intended to protect parties with a weaker bargaining power like suppliers to supermarkets.

Examples of conduct that constitutes abuse of Buyer Power includes:

  1. Delayed payment by a buyer of goods or services without justifiable reasons in breach of contractual terms;
  2. unilateral termination (or threat of termination) of a commercial agreement without notice;
  3. a buyers refusal to receive or return goods without justifiable reasons and in breach of contractual terms; and
  4. a buyer demanding preferential terms that are unfavorable to suppliers or demanding suppliers limit products sold to competitors.

In determining buyer power, the BPD will look at:

  1. The nature and determination of contract terms;
  2. the payment requested for access infrastructure; and
  3. the price paid to suppliers.

Industry-specific investigations

The CAK has indicated that the BPD will begin to undertake investigations in the retail sector following complaints of abuse of buyer power within the retail value chain. The implication of this is that some businesses in the retail sector may begin to receive requests for information from the BPD or worse off the BPD may raid the premises in a bid to collect the information and/or documentaion. It is therefore imperative that these businesses handle these requests carefully and seek legal advice at the earliest opportunity.

Penalties

The penalty for abuse of buyer power is a 5-year prison sentence or a fine of Kenya Shillings ten million (Kshs. 10,000,000), or to both.

The CAK may also impose an administrative penalty of up to ten percent (10%) of the undertaking’s preceding year’s turnover, or issue cease and desist orders to remedy the infringement.


Should you require further information on the BPD, 2017 please contact: Chacha Odera or Milly Mbedi

Related Insights

Oraro & Company Advocates Recognised For the Fourth Consecutive Year by IFLR 1000 in the 2019 Rankings

Posted on November 13th, 2018

November 13, 2018

For the fourth consecutive year, leading legal directory – IFLR 1000, recognised Oraro & Company Advocates as a top-tier firm in its recently released 2019 rankings. The firm was commended as “…very professional and diligent in providing its legal services and undertaking the work. They have competent lawyers who proactively respond to their clients. The law firm is also sensitive to clients’ needs and they go out of their way to understand the clients’ needs and provide the advice and service required.”

Solidifying its 2018 ranking as a tier 2 firm in both Project Development (Infrastructure) and Project Development (Mining), Oraro & Company Advocates was yet again recognised as a tier 2 firm in both practice areas. For the very first time the firm was ranked in Project Development (Power) as a tier 3 firm, evidence of notable transactions it has handled in the Energy sector in Kenya. The directory also acknowledged that the firm was active in Mergers & Acquisitions.

Three of the firm’s partners were also recognised for their expertise including George Oraro SC who was ranked as a highly regarded lawyer in Project Development and M&A and lauded as “…a very competent and knowledgeable advocate with a deep understanding and application of the law.” Also coming in as a highly regarded lawyer was Pamella Ager who was identified for her expertise in Banking and M&A.

Nelly Gitau joined the highly regarded lawyer rankings this year in Banking (Real Estate) from a rising star in IFLR 2017 and 2018 respectively. Well-respected for her expertise in Arbitration and Insolvency, Noella Lubano, a Partner in the firm was singled out as having “…extensive [insolvency] experience, is client focused and provides high quality legal services. She is accessible, responsive and sensitive to clients’ needs.”

In response to the rankings, the Managing Partner – Chacha Odera remarked that “These rankings signify our continuous efforts as a firm to go over and above what our clients expect and I am particularly pleased with Nelly Gitau’s recognition as a highly regarded lawyer in Banking (Real Estate) from a rising star.”

###

Profile

Established 42 years ago by George Oraro SC (one of Kenya’s top litigators), Oraro & Company Advocates is a top-tier, full-service Kenyan law firm providing specialist legal services both locally and regionally in Arbitration, Banking & Finance, Conveyancing & Real Estate, Corporate & Commercial, Dispute Resolution, Employment & Labour, Infrastructure, Projects & PPP, Restructuring & Insolvency and Tax. The firm has been consistently ranked by leading legal directories such as Chambers Global, IFLR 1000 and Legal 500 and its partnership includes well-recognised advocates who are regarded for their expertise in their respective areas as well as their significant contribution to Kenyan jurisprudence.

Kipkirui Kosgei

Head of Business Development

T: +254 709 250 000/709 250 735

E: gkosgei@oraro.co.ke

Penalties for Non-Compliance With the Retirement Benefits Act, 1997

Posted on October 17th, 2018

Parliament amended the Law on Retirement Benefits through the Finance Act, 2018 following its enactment on September 21, 2018. Changes specific to the Retirement Benefits Act, 1997 were back-dated to July 1, 2018.

Below, we highlight some of the key changes:

Trustees

Trustees who fail to submit a copy of audited accounts to the Retirement Benefits Authority (RBA) will be penalised Kenya Shillings One Hundred Thousand (KES 100,000), and where the returns remain unsubmitted, an additional fine of Kenya Shillings 1,000 (KES 1,000) for each day or part thereof during which the returns remain unsubmitted.

Fund managers

Fund managers who fail to submit an investment return to the RBA by the due date will be penalised Kenya Shillings Ten Thousand (KES 10,000), and where the returns remain unsubmitted, an additional fine of Kenya Shillings 1,000 (KES 1,000) for each day or part thereof during which the returns remain unsubmitted.

Administrators

Administrators who fail to submit an investment return will be penalised Kenya Shillings Ten Thousand (KES 10,000), and where the returns remain unsubmitted, an additional fine of Kenya Shillings 1,000 (KES 1,000) for each day or part thereof during which the returns remain unsubmitted.

Employers

Where there is non-remittance by an employer, the RBA will direct the employer to pay the contributions and interest accrued to the scheme in full within a specified period as well as a five per cent (5%) penalty on unremitted contributions or Kenya Shillings Twenty Thousand (KES 20,000), whichever is higher and paid within seven (7) days of receiving a notice.

The RBA will also issue a temporary cessation order from deductions from employees until the employer is able to remit the employee emoluments. If the employer is unable to remit as required, the RBA will facilitate members to join other schemes where their contributions shall be remitted.

An Overview of Regional Systems for IP Protection

Posted on September 12th, 2018

Share this article

Intellectual property refers to inventions of the mind that are intangible in nature and are protected as such as trademarks, Patents, Copyrights and related rights and industrial designs.

They are a core component of most businesses in the 21st Century and valuable assets for which management efficiencies are as important as for any other asset. The dynamics of globalization and the effects that it has on strategies for every business, whether national or multinational, require that businesses pay closer attention to opportunities that help maximize benefits to the company and reduce costs to free up resources for other strategic interests of the business.

Given its territorial nature, protection of IP has often been undertaken by local, regional and multinational entities at national level. That means that subsidiaries or branches at national level are left to determine and follow up on protection and enforcement of IP rights in their respective jurisdictions. This in turn impacts on the cost of protection and enforcement, quality control, and ultimately the overall business strategies of the group.

A number of regional and international frameworks for IP protection however exist that can help reduce dispersed protection measures and facilitate central management and uniform strategy formulation for the group without impacting on local peculiarities of the business. Though enforcement ultimately remains territorial, these regional and multinational processes greatly contribute to better and central control of enforcement strategies and facilitate exchange of best practices.

The ARIPO System

In this edition, we provide commentary on the ARIPO System which is the key Africa region framework of significance to multinationals with Kenyan operations/interests.

ARIPO was the result of an idea mooted at a regional seminar on patents and copyright held in Nairobi  in  the early 1970’s and the first draft agreement on the creation of a regional intellectual property organization was adopted in 1976 by a diplomatic conference – The Lusaka Agreement [also known as the draft Agreement on the Creation of the Industrial Property Organization for English-speaking Africa (ESARIPO)]. The idea was that the organization would serve mainly Anglophone countries. In practice that remains the case with very few exceptions. A number of lusophone and francophone countries have since joined ARIPO (The latest being the Republic of Sao Tome and Principe). Membership
remains open to any member of the African Union or the Economic Commission for Africa.

The principal idea behind the establishment of ARIPO, was the pooling of resources of member countries in industrial property matters in order to utilize to the maximum available resources in these countries to ensure effective protection of industrial property, capacity building and training of staff in their respective industrial property institutions, development and harmonization of laws and general efficiencies.

Legal Framework

The Lusaka Agreement on the Creation of the African Regional Intellectual Property Organization (ARIPO)

The Lusaka Agreement was adopted at a diplomatic conference at Lusaka (Zambia) on December 9, 1976 and establishes ARIPO at Article 1 thereof.

Pursuant to its functions and powers under the Agreement (Article VII) the Administrative Council of ARIPO has developed protocols and regulations that form  the  background  of the legal and operational design of intellectual property protection in member states under the system. These include:

  1. The Harare Protocol on Patents and Industrial Designs within the Framework of the African Regional Industrial Property Organization
  2. The Banjul Protocol on Marks; and
  3. The Swakopmund Protocol on the Protection of Traditional Knowledge and Expressions of Folklore.

Membership to the Lusaka Agreement does not necessarily imply membership to the protocols. Each protocol applies to different aspects of intellectual property and membership to each is voluntary.

The Harare Protocol

The Harare protocol applies to protection of patents and Industrial designs and currently has 19 contracting States, namely; Botswana, The Gambia, Ghana, Kenya, Lesotho, Liberia, Malawi, Mozambique, Namibia, Rwanda, Sierra Leone, Sudan, Swaziland, Tanzania, Uganda, Zambia, Zimbabwe and the Democratic Republic of São Tomé and Príncipe (the latest member as at August 19, 2014).

How the filing System works: brief overview

The Harare Protocol provides a framework for filing and protection of patents and industrial designs within member states.  The Protocol is supplemented in its provisions by administrative regulations that make further and detailed provisions for the manner in which an application is treated from the date of filing to grant of patent or refusal as the case may be.

There are principally two regulations under the Harare protocol in this regard;

  1. The regulations for implementing the protocol on patents and industrial designs within the framework of    the African regional intellectual property organization (‘the regulations’); and
  2. The administrative instructions under the regulations for implementing the protocol on patents, industrial designs and utility models within the framework of the African regional intellectual property organization (the Administrative instructions)

The regulations are made by the Administrative council pursuant to section 5 of the Harare Protocol and mainly deal with substantive matters relating to the content of applications filed with the ARIPO office including on the requirements for patentability, the right of priority, Appeal procedures against decisions of patent examiners and treatment of PCT applications under the ARIPO system.

Administrative instructions on the other hand are made by the office of the Director General of ARIPO pursuant to rule 2(5) (a) of the regulations and mainly deal with the day to day administrative requirements of ARIPO including the formality details in respect of applications under the protocol, filing timings, fees payable for each service, detailed steps in the filing and examination of applications up to grant, notification and communication procedures, the forms to be used for various filings etc.

Patents

In summary the ARIPO system is registration based and subject to notifications of refusal by national offices whereas the PCT system is a filing system.

An applicant for the grant of a patent for an invention or the registration of an industrial design can, by filing only one application, either with any one of the Contracting States or directly with the ARIPO Office, designate any one of the Contracting States in which that applicant wishes the invention or industrial design to be accorded protection.

The ARIPO Office, on receipt of the patent application, undertakes both formality and substantive examination to ensure that the invention which is the subject of the application is patentable (i.e. it is new, involves an inventive step and is capable of industrial application).

If the application complies with the substantive requirements, copies thereof are sent to each designated Contracting State which may, within six months, indicate to the ARIPO Office that, according to grounds specified in the protocol, should ARIPO grant the patent that grant will not have effect in its territory.

For industrial design applications, only a formality examination is performed. If the application fulfills the formal requirements, the ARIPO Office registers the industrial design which has effect in the designated States. However, the same right to communicate to the ARIPO Office within six months that the registration may not have effect in the designated States concerned is reserved.

The Administrative Council, at its Second Extra-ordinary session held in April 1994, adopted amendments to the Harare Protocol and its Implementing Regulations to create a link between the protocol and the WIPO-governed Patent Co-operation Treaty (PCT). This link commenced operation on July 1, 1994, and has the following effects:

  1. Any applicant filing a PCT application may designate ARIPO which in turn means a designation of all States party to both the Harare Protocol and the PCT;
  2. The ARIPO Office acts as a receiving office under the PCT for such States; and
  3. The ARIPO Office may be elected in any PCT application.

All current Harare Protocol Contracting States are also signatory to the PCT.

The Banjul Protocol

The Banjul Protocol on Marks, adopted by the Administrative Council in 1993, establishes a trademark application filing system along the lines of the Harare Protocol. Under the Banjul Protocol, an applicant may file a single application either at one of the Banjul Protocol Contracting States or directly with the ARIPO Office. The application should designate Banjul Protocol Contracting States as the States in which the applicant wishes the mark to be protected once the ARIPO Office has registered it.

States currently party to the Banjul Protocol are: Botswana, Lesotho, Liberia, Malawi, Namibia, Swaziland, Tanzania, Uganda and Zimbabwe. (Total: 9 States.). Kenya is yet to accede to this treaty and so trademarks filing can only be done locally or through the Madrid system as we shall see in the next edition of the newsletter.

Since 1997, the protocol has been extensively revised in order to make it compatible with the TRIPs Agreement to make it more user-friendly.

Conclusion

The ARIPO system is highly advised for clients with regional interests. We represent a number of clients in patent applications using the system and recommend it for costs savings and efficient management of the application process (more so for bulk applications) in several member countries.

In the next edition of the newsletter, we shall provide commentary on international filing systems to give a broader perspective for multinationals operating in Africa and beyond.

About Us

Oraro & Company Advocates is a full-service market-leading African law firm established in 1977 with a strong focus on dispute resolution and corporate & commercial law. With a dedicated team of 10 partners, 4 senior associates, 10 associates, 1 lawyer and 36 support staff, the Firm has been consistently ranked by leading legal directories such as Chambers Global, IFLR 1000 and Legal 500 as a top-tier firm in Kenya.

Oraro & Company Advocates is an affiliate member of AB & David Africa.

Contact Us

Oraro & Company Advocates
ACK Garden Annex, 6th Floor, 1st Ngong Avenue
P. O. Box 51236 - 00200, Nairobi, Kenya.
T: +254 709 250 000
E: legal@oraro.co.ke | W: www.oraro.co.ke

Oraro & Company Advocates © 2021