Keeping the Wheels of Justice Turning During the COVID-19 Pandemic

Posted on April 17th, 2020

Following the announcement of the first confirmed COVID-19 case in Kenya on 13th March 2020, the National Council on the Administration of Justice (NCAJ) promptly issued directions scaling down the operations of Courts countrywide aimed at finding a balance between keeping the wheels of justice turning whilst safeguarding the health of both the judicial staff and the general public in the face of the prevailing pandemic. The general effect of the directions which have been amended from time to time has been a significant slowdown of litigation practice. Whereas the past month of litigation practice has been challenging, our firm has been able to navigate these unchartered waters and we take this opportunity to share some of our experiences in the litigation circles.

The initial directives from NCAJ on 15th March 2020 saw massive scaling down of Court activities throughout the country for two weeks effective 16th March 2020. During this period, all appeals, hearings, mentions and execution proceedings in criminal and civil cases in all Courts were suspended. The only filings accepted at the Court registries were those under certificate of urgency and time bound pleadings. With time, further directions were given on the electronic filing (e-filing) of pleadings.

Our first encounter with e-filing was in the Court of Appeal where we filed a Notice of Appeal and a letter to the Deputy Registrar bespeaking typed proceedings from the lower Court. The process entailed preparing the documents in the usual manner and thereafter scanning and sending the documents to an email address provided by the Judiciary. In this instance we were advised to send the documents to efilingkenya@gmail.com. After sending the scanned documents to the said email, we received an email confirming the assessed filing fees and proceeded to pay the amount through the M-Pesa Pay Bill Number provided by the Court registry. Upon confirmation of payment, a physical receipt was generated for collection by our clerk. During this period the process still necessitated attendance to the Court registry.

Subsequently, there was further scaling down of operations at the Court registries with absolutely no physical attendance at the Court registries. Contact details for the various Divisions and Court stations around the country were circulated for communication with the relevant Deputy Registrars for directions on e-filing. It was directed that all documents should be scanned and sent to the appropriate email addresses of the Deputy Registrars and Executive Officers (as the case may be) and once that was  done, the court would then advise on the mode of payment and how proof of payment would be communicated. During this period, we were able to file applications under certificate of urgency and time bound pleadings in the various Courts including the Court of Appeal where we filed an application for stay of execution.

We further had an interesting experience of participating in a hearing at the Chief Magistrate’s Court. The Plaintiff served us through email with an application under certificate of urgency together with the extracted orders relating to a contentious burial dispute. Upon receipt of the documents we drafted a notice entering appearance and response on behalf of our client (through scanning and sending the documents to the Court’s email address) and served the same upon the other parties via email. It was necessary to have each document clearly identified in capital letters and scanned separately. Upon receipt of the documents, the Court registry assessed the documents before sending out the amount of filing fees to be paid. We then paid the amount advised via an M-Pesa Pay Bill Number after which the confirmation message was sent. Once it was confirmed that payment had been received, the documents were processed and sent to the litigants. On the hearing date, we sought clarification on whether the hearing would be in open Court or via video-link. We were informed that due to the limited electronic resources available to the Chief Magistrate’s Court, the hearing of the application would be in open Court but with strict observance of the directives issued by the Government.

The Court session began with all parties being ushered into the Court room by the Court assistant who ensured that each Counsel and respective clients had worn protective masks and had either sanitized their hands or had latex gloves on. After this brief inspection, the Court assistant pointed everyone to their sitting positions and allocated everyone a spot at least one (1) meter apart from each other. Advocates were allocated the front benches while clients were allocated the rear benches. The general public was not allowed to sit in during the Court session. The Court room selected was spacious and with very good ventilation.

Once everyone was seated, the Court assistant informed the Magistrate who came in duly masked and gloved. In the course of the hearing, confirmation of e-filing and e-service was done by confirming the same from a laptop availed to the Magistrate and the Court assistant. The litigants had physical copies of the documents which had been availed to the Magistrate, who referred to the documents as the litigants followed proceedings.

The advocates observed at least one (1) meter’s distance while delivering their oral arguments. Whilst addressing Court, each advocate kept his mask on despite it muffling out the sound which made it difficult to hear what one was saying. After the conclusion of the hearing, order was observed as parties made their way out of the Court room. Parties were thereafter ushered out of the Court precinct to avoid crowding. Although the Ruling was promptly prepared and sent via email, parties still insisted on appearing in Court for the delivery of the Ruling, during which the same ‘rules’ were observed.

Whereas there have been Rulings and Judgment delivered via email and hearings conducted via Zoom, the Judiciary is still trying to put in place further measures to provide services using technology, however the process should be complementary between the Judiciary, advocates and litigants, so as not to leave out any stakeholders. We have also noted most of the e-filings and hearings via video-link have been largely in Nairobi and there is room for expansion to other stations.

NCAJ has recently issued the latest update vide a communique of 16th April 2020 which will see Court operations upscaled effective 21st April 2020. Some of the implications of these latest resolutions will see operations and services in all Court registries upscaled and are therefore set to be accessible to Court users but in a manner that is in compliance with the guidelines of the Ministry of Health on combating COVID-19. With respect to civil matters, hearings will be upscaled with effect from 22nd April 2020 and guidelines on how the hearings and appeals are to be conducted will be put in place in accordance with the guidelines of the Ministry of Health. This is a clear indication that going forward, parties will be able to institute Court proceedings and progress pending cases, even in instances where there is no urgency, with effect from 22nd April 2020. Further guidelines on how matters which were taken out between 16th March 2020 and 22nd April 2020, will be dealt with are to be put in place by the respective Heads of Divisions and various Court stations.

It is expected that going forward, all pending Judgments and Rulings will now be delivered in open Court upon notice to the parties as opposed to the electronic delivery via email or video-link as was previously the case. This indicates that there is likely to be controlled Court appearance by litigants and/or their advocates. Further, orders will now be extracted by the Court registries and released to the litigants or their advocates within twenty-four (24) hours of their making. The suspension of execution of civil orders, decrees and eviction orders made before 16th March 2020, remains in force until 22nd April 2020.

We will keep you updated on any developments with respect to the implementation of the latest directives issued by the NCAJ.


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 Georgina Ogalo-Omondi (georgina@oraro.co.ke), Daniel Okoth (daniel@oraro.co.ke), Meshack Kwaka (meshack@oraro.co.ke), Quinter Okuta (quinter@oraro.co.ke) or your usual contact at our firm, for legal advice relating to the COVID-19 pandemic and how the same might affect you.

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.

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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

Housing Fund Levy Set to Take Effect Next Month

Posted on April 16th, 2019

By Geoffrey Muchiri | Georgina Ogalo-Omondi

The Principal Secretary in the Ministry of Housing and Urban Development has today announced the coming to effect of the Housing Fund Levy (the levy) introduced, under the Finance Act, 2018.

The employer and the employee shall each be required to contribute 1.5% of the employee's monthly basic salary to a maximum of Kenya Shillings Five Thousand (KES 5000). Voluntary contributions will also be accepted to the scheme at a minimum of Kenya Shillings Two Hundred (KES 200) per month.

According to the notice, the levy shall fall within other payroll statutory deductions such as PAYE, NSSF and NHIF that are deducted by an employer every month. The first contribution shall be due by May 9th 2019.

The purpose of the levy is to finance the Affordable Housing Scheme under the Big 4 Agenda which will enable employees to purchase a home under the scheme, transfer the contributions to a pension scheme, transfer the contributions to another person under the scheme or, as cash to self, spouse, or a dependent child.

We shall update you as this matter unfolds.


Should you require further information on this subject please contact Geoffrey Muchiri (Partner) or Georgina Ogalo-Omondi(Partner).

Before ‘I Do’: Validity and Enforcement of Prenuptial Agreements in Kenya 

Posted on December 11th, 2018

By Georgina Ogalo-Omondi | Jill Barasa

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Issue No. 2 of this newsletter featured an article titled For Better or Worse: A Reflection on the Matrimonial Property Act, 2013 (the Act), in which we explored the salient features of the Act and introduced our readers to section 6(3) of the Act on prenuptial agreements. In the present article, we take a closer look at prenuptial agreements, which are gradually gaining recognition in Kenya as an efficient and cost effective way for couples to iron out, before entering marriage, property rights issues that could arise in the event of separation, divorce or death.

Legal Framework Governing Prenuptial Agreements Article 40(1)(b) of the Constitution of Kenya, 2010 (the Constitution) provides for the right to own property in any part of Kenya either individually or in association with others. Further, Article 40(2)(b), as read with Article 27(4), provides that Parliament shall not enact any laws that permit the State or any person to limit or in any way restrict the enjoyment of any right to own property on the basis of marital status.

Nevertheless, it was not until the enactment of the Act that prenuptial agreements gained official recognition in Kenya. The Act came into force on 16th January, 2014 and repealed the Married Women’s Property Act of 1882, which made no provision for prenuptial agreements. Its main objective is to provide for the rights and responsibilities of spouses in relation to matrimonial property and connected purposes. Section 6(3) of the Act provides that parties to an intended marriage may enter into an agreement prior to their marriage to determine their property rights. Indeed, in the case of MBK v MB (2016) eKLR, the Court was called upon to determine whether an apartment thatnthe defendant had bought prior to the marriage formed part of the
matrimonial property. The prenuptial agreement had only two clauses and provided, inter alia, that any property acquired by either party prior to their intended marriage would belong to that party after marriage. The Court held that since there was no evidence that the parties had agreed that the apartment would form part of the matrimonial property, it followed that the property belonged exclusively to the defendant.

Grounds for Invalidating a Prenuptial Agreement

Section 6 (e) of the Act provides that prenuptial agreements should be entered into freely by the spouses while section 6 (4) states further that a party to a prenuptial agreement may apply to the Court to set aside the agreement on the ground that the agreement was influenced by fraud, coercion or is manifestly unjust. However, the Act is silent on what amounts to fraud or coercion or what would render an agreement manifestly unjust.

It should be noted that common law principles and other laws of England have played an important role in shaping the history of Kenya’s legal framework. Kenyan jurisprudence has continually been influenced by that of England and as a result, English jurisprudence is still influential in Kenya. In fact, it is not uncommon for Kenyan Courts to refer to and apply English cases, particularly to fill gaps in the legislation or where certain matters have only recently been given force of law in Kenya and have not been dealt with in depth by the Courts, as is the case with the provisions on prenuptial agreements under the Act.

In England, the case of Radmacher v Granatino (2010) UKSC 42 provided the first significant judgment about the status of prenuptial agreements. In its judgment, the United Kingdom Supreme Court set out the following factors that increase the likelihood of a prenuptial agreement being binding the parties:

(i) The agreement must be freely entered into.
(ii) The parties must have a full appreciation of the implications of the agreement.
(iii) It must not be unfair to hold the parties to their agreement in the circumstances prevailing.

Before entering into a prenuptial agreement, it is important that each party seeks independent legal advice. Taking independent legal advice will aid in establishing that an individual was fully aware of the terms of the agreement and therefore freely entered into it, particularly if warnings were raised at a preliminary stage. For instance, in the case of DB v PB (2016) EWHC 3431 (Fam), the wife’s assertion of misrepresentation failed because it revealed that she had received independent legal advice in the United States advising her not to sign the agreement.

A person’s emotional state at the time of making the agreement is also relevant to whether the person entered into the agreement of his or her own free will, without undue influence or pressure. The Courts will also take into account the individual’s age and maturity and whether either or both had been married or been in long-term relationships before.

Timing is equally important and signing the prenuptial agreement immediately before the marriage increases the risk that one party will be considered to have put undue pressure on the other. The parties should have a full appreciation of the implications of the prenuptial agreement. This requires an exchange of financial disclosure before the agreement is signed to ensure that each party is aware of the extent of the claims he or she may potentially be giving up. On this point, in the case of Y v Y (2014) EWHC 2920, the Court refused to give effect to a French-style prenuptial agreement entered into by a French coupleliving in London who signed the agreement barely two days before their wedding. The Court took the view that while the wife had understood the function of the agreement when she signed it, she had not had any understanding of the financial consequences should the marriage breakdown.

The agreement must also be fair in the circumstances of the case. Concept of fairness has been subjected to much debate. The English courts have a broad discretion in financial remedy proceedings and at an absolute minimum will seek to ensure that both parties’ needs, and in particular the needs of the financially weaker party, and the needs of any children of the family are met. As a general rule, the longer the marriage, the lower the chance that the prenuptial agreement will be upheld, particularly if there have been significant or unforeseen changes in circumstances. In the case of WW v HW (2015) EWHC 1844, the Court accorded significant weight to the prenuptial agreement and went on to find that it would be fair to hold the husband to its terms unless his needs dictated a different outcome.

Way Forward

In view of the provisions of the Act on prenuptial agreements and the jurisprudence, couples contemplating signing a prenuptial agreement should be mindful of the following points:
• The parties should seek independent legal advice as a prerequisite to signing the agreement, even where one of the parties insists that he or she has read and understood the terms of the agreement, the rights and obligations that he or she will be surrendering. This is an essential element as it tends to show that the agreement was freely entered into by the parties without coercion or fraud.
• The parties should make full and frank disclosure of all of their assets including those that they intend to exclude under the prenuptial agreement. This is a requirement at common law.
• The parties should note that the agreement could be set aside by the Courts on the ground that it was unfair or manifestly unjust; therefore, the parties should ensure that the agreement does not have the effect of producing gross inequality between them either at the time of execution or during the marriage and that the division of assets is not weighted too heavily in favour of one party.
• The right of the child to support should be addressed prior to signing the Agreement, noting that the interests of the child take precedence over all other interests under Kenyan law. As was held in Radmacher v Granatino, the agreement cannot be allowed to prejudice the reasonable requirements of any children of the family.
• While there is no minimum time requirement for a party to review and sign a prenuptial agreement under the Act, the position at common law appears to be that prenuptial agreements must not be entered into less than twenty-one (21) days before the marriage.
• Signing the prenuptial agreement closely before the wedding is not recommended. The party initiating the process should therefore ensure that the other party is provided sufficient time to review the prenuptial agreement and the financial disclosures.

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.

Sweeping Changes in Kenya’s Disputes’ Regime: The New Magistrates’ Courts Act, 2015

Posted on September 12th, 2018

Changing times beckon in the Kenyan Magistrates Courts, as marked by the enactment of the Magistrates’ Courts Act, 2015 (the Act) which came into commencement on 2nd January, 2016. The Act confers jurisdiction, functions and powers on the magistrates’ courts and provides for the procedure of the magistrates’ courts

According to the law, in exercising its authority, a magistrate’s court shall be guided by the principles specified under the Constitution in Article 10 on the national values and principles of governance, Article 159 on the principles guiding the exercising of judicial authority and Article 232 – with regards to the values and principles of public service.

In light of the backlog that has otherwise become synonymous with the Kenyan Courts the Act’s new objective  to enable the Magistrate courts to facilitate just, expeditious, proportionate and accessible judicial service in the exercise of criminal and civil jurisdiction is obviously a welcome relief towards easing the backlog of cases.

A magistrate’s court shall be subordinate to the High Court and shall be presided over by a chief magistrate, a senior principal magistrate, a principal magistrate, a senior resident magistrate or a resident magistrate. The Court shall exercise criminal jurisdiction as conferred on it by the Criminal Procedure Code or any written law. This is in line with the general principle that any crime and its punishment must be prescribed by written law.

One of the most notable changes in terms of the expansion of the jurisdiction of the Magistrates Courts is with regard to the increase of the pecuniary jurisdiction in relation to proceedings of a civil nature. For instance, the pecuniary jurisdiction where the Court is presided over by a chief magistrate has been increased from KES 7 million to KES 20 million shillings. The Chief Justice is however empowered to revise the pecuniary limits of the civil jurisdiction by a Gazette notice, by taking into account inflation and prevailing economic conditions.

The Act retains the jurisdiction of the magistrate’s court in proceedings of a civil nature regarding African customary Law on specified matters such as land held under African customary tenure; marriage, divorce, maintenance or dowry; Seduction or pregnancy of an unmarried woman or girl; enticement of, or adultery with a  married person; matters affecting status and, in particular the status of widows and children including guardianship, custody, adoption and legitimacy; and Intestate succession and administration of intestate estates, so far as they are not governed by any written law.

The Court now has jurisdiction over claims relating to violation of human rights only on rights guaranteed under Article 25 (a) of the Constitution dealing with freedom from torture and cruel, inhuman or degrading treatment or punishment; and Article 25 (b) of the Constitution dealing with freedom from slavery or servitude.

Presently, the magistrates’ courts can hear claims in employment and labour relations subject to the pecuniary limits under the Act.  They can also hear and determine environment and land cases subject to the pecuniary limits. The type of environment and land cases that can be heard include claims relating to environmental planning and protection, climate issues, land use planning , title, tenure, boundaries, rates, rents, valuation, mining, minerals and other natural resources; compulsory acquisition; land administration and management.

Furthermore, the court can now adjudicate over matters relating to contempt of court other than contempt that occurs in the face of the court. A person who commits contempt can be sentenced to imprisonment for a term not exceeding five days or a fine not exceeding KES 100,000 or both.

The Act introduces a court administrator to be appointed by the Judicial Service Commission and shall be responsible for among others, the day to day administration of the Court. The Chief Justice is expected to make rules for the effective organization and administration of the Magistrates courts to cover among others, the automation of court records, case management, protection and sharing of court information and the use of information communication technology.

Whereas the Chief Justice is expected to take measures as may be necessary for the supervision and inspection of magistrates’ courts, including prescribing a code of conduct for magistrates within six months of the Commencement of the Act, it must always be borne in mind at all times that the courts are subject to the supervisory jurisdiction of the High Court as a check mechanism.

A copy of the new Act, can be found here

Related Practice areas

At the Very Least: Basic Minimum Conditions of Employment

Posted on September 12th, 2018

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Co-authored by Clifford Odhiambo

Introduction

Contracts of employment were known for many years as “master and servant” contracts. The terminology obviously now has archaic connotations and is no longer found in modern legislation. Simply put, a contract of employment means an agreement whether oral or in writing and whether expressed or implied, to employ or to serve as an employee for a period of time, and includes a contract of apprenticeship or indentured learnership but does not include a foreign contract of service. Familiarization with the laws which have been passed to govern employment relationships and that define the basic terms and conditions of employment are crucial.

A basic condition of employment constitutes a term of any contract of employment, except to the extent that any other law provides a term that is more favorable to the employee or a term of the contract of employment that is more favorable than what is set out in law, thus such favorable terms and conditions of service shall apply. This article shall look at the following basic conditions: basic minimum wage, house allowance, hours of work, annual leave, maternity leave, paternity leave, sick leave, water, food and medical attention.

Basic minimum wage

Under the General Order under the Regulations of Wages and Conditions of Employment Act (though the Act has since been repealed the regulations under the Act are still in force by virtue of Section 63 of the Labour Relations Act) no person shall be employed at a basic minimum wage less favourable to him than that which is applicable to him under the Regulation of Wages  (Amendment) Order 2015 which defines minimum rates of wages in cities and municipalities and Regulations of Wages (Agricultural Industry) (Amendment) Order 2015 which provides wage guidelines of agricultural areas. Minimum wage is normally reviewed every two years according to the Wages guidelines. The last minimum wage review was in June 2015.

House allowance

Section 31 of the Employment Act obligates employers to provide reasonable housing accommodation for each of their employees, either at or near to the place of employment or shall pay to the employee such sufficient sum, as rent, addition to the wages or salary the employee as will enable the employee to obtain reasonable accommodation. This provision does not apply to an employee whose contract of service contains a provision which consolidates as part of the basic wage or salary of the employee, an element intended to be used by the employee as rent. The General Order provides for 15% of the basic salary as housing allowance in addition to basic salary, if free housing is not provided. Where the employer cannot provide housing, then the employer is under an obligation to pay to the employee house allowance to enable the employee to access reasonable housing. Provision of housing or in lieu thereof therefore is a basic minimum right of the employee and there is a correlative duty upon the employer to provide housing or pay housing allowance. The employer should therefore in the contract of employment state whether the salary is inclusive of the house allowance or not.

Hours of work, overtime and weekly rest

The normal working week shall consist of not more that fifty-two (52) hours of work for day employees and sixty (60) hours for night employees per week with one rest day in every seven days. Overtime shall be payable for time worked in excess of the normal number of hours per week at one and one-half (1.5) times the normal hourly rate and for time worked on the employee’s rest day or public holiday at two (2) times the normal hourly rate. Furthermore, overtime plus time worked in normal hours per week shall not exceed in any period of two consecutive weeks – one hundred and forty-four (144) hours for employees engaged in night work and one hundred and sixteen (116) hours for all other employees.

Annual leave

An employee is entitled, to a minimum of twenty one (21) days annual leave with full pay after every twelve months of consecutive service. Where in a contract of employment an employee is entitled to leave days in excess of the minimum specified above, the employer and employee may agree on how to utilize the leave days. Section 74(1)(f) of the Employment Act obligates an employer to keep a record of the annual leave entitlement of every employee, days taken and due. According to the Act, in any legal proceedings where an employer fails to produce such records it will be the burden of the employer to prove or disprove an alleged term of employment

Maternity and paternity leave

A female employee shall be entitled to three months maternity leave with full pay and on expiry of the maternity leave she shall have the right to return to the job which she held immediately prior to her maternity leave or to a reasonably suitable job on terms and conditions not less favourable than those which would have applied, had she not been on maternity leave. No female employee shall forfeit her annual leave entitlement on account of having taken her maternity leave. A male employee shall be entitled to two weeks paternity leave with full pay.

Sick leave

After two consecutive months’ service with an employer an employee is entitled to sick leave with full pay up to a maximum of thirty days and thereafter to a maximum of fifteen days with half pay, in each period of twelve months’ consecutive service, subject to the employee producing a certificate of incapacity signed by a qualified medical practitioner or a person acting on his behalf in charge of a dispensary or medical aid centre. This is according to the General Order.

Food, water and shelter

Every employer is duty bound to provide sufficient supply of wholesome water for the use of his employees at the place of employment and, as the case may be, within a reasonable distance of any housing accommodation provided for them by him.  Section 33 of the Employment Act states, an employer shall, where the provision of food has expressly been agreed to in or at the time of entering into a contract of service, ensure that an employee is properly fed and supplied with sufficient and proper cooking utensils and means of cooking, at the employer’s expense. The law does not impose any obligation on the employer to provide food but if contractually agreed upon the above is the basic minimum required.

Medical attention

The employer is required to provide sufficient and proper medicine to his employees during times of illness and if possible medical attendance during times of emergency. This obligation stems from section 34 of the Employment Act. The attitude of the courts in interpreting Section 34 of the Act is also aptly captured in the recent case of Eddie Mutegi Njora v Mega Microfinance Co. Ltd [2015] eKLR in which Mbaru J observed that:

Where an employer provides a medical cover, such a cover is to ensure the employer has taken a progressive step to ensure all employees are covered in terms of medical care and attention at all times. Where an employer has not provided such a medical cover, once an employee is unwell, such information should be brought to the attention of the employer as soon as it is reasonably practical. The employer then has a duty to address the matter as appropriate where such sickness has been brought to their attention….”

Conclusion

In conclusion, it is important to for the employers to understand their obligation and ensure implementation of minimum employment conditions in compliance with statutory provisions, to improve the employee-employer relationship and overall advancement of economic development and social justice.

Redundancy Process: Getting it Right

Posted on September 12th, 2018

By Walter Amoko | Georgina Ogalo-Omondi

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Running a business is no easy task, running it profitably is even more difficult. Since the advent of liberalization in 2003, redundancy has become progressively more common in Kenya. Rapidly shifting markets driven mainly but not exclusively by technological innovation; uncertain economic times including cyclical downturns which in this age of globalization has world-wide effects, like the 2007-2008 economic melt-down; increased demand by shareholders for better  performance etc, make existing business models superfluous pretty quickly. An inevitable consequence of adjusting the business model every so often is a reduction on head-count as positions or on occasion departments that were once crucial require elimination. However, this must be done within the framework of existing laws.

Redundancy is defined under Section 2 of the Employment Act, 2007 as the loss of employment, occupation, job or career by involuntary means through no fault of an employee. It involves termination of employment at the initiative of the employer, where the services of an employee are superfluous. Redundancy may arise under various circumstances including but not limited to the practices commonly known as abolition of office, job or occupation and loss of employment. Examples of these circumstances are:

  1. the employer has ceased, or intends to cease continuing business;
  2. the requirement for employees to perform work of a specific type or to conduct it at the location in which they are employed has ceased or diminished; or
  3. re-organization of the workforce resulting in is less work and changes in conditions that result in the new job being quite different from the old

If the intended action of termination of employment arises from the above definition or examples of circumstances leading thereto, Section 40(1) of the Employment Act provides for the substantive and procedural legal requirements to be met by the employer to effect a termination of employment on account of redundancy as follows:-

“An employer shall not terminate a contract of service on account of redundancy unless the employer complies with the following  conditions:-

  1. where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labour officer in charge of the area where the employee is employed of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy;
  2. where an employee is not a member of a trade union, the employer notifies the employee personally in writing and the labour officer;
  3. the employer has, in the selection of employees to be declared redundant had due regard to seniority in time and to the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy;
  4. where there is in existence a collective agreement between an employer and a trade union setting out terminal benefits payable upon redundancy; the employer has not placed the employee at a disadvantage for being or not being a member of the trade union;
  5. the employer has where leave is due to an employee who is declared redundant, paid off the leave in cash;
  6. the employer has paid an employee declared redundant not less than one month’s notice or one month’s wages in lieu of notice; and
  7. the employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days pay for each completed year of service.”

In summary Section 40 (1) of the Employment Act prohibits an employer from terminating the services of an employee on account of redundancy unless the employee’s union is notified or in the case where the employee is not a member of a union then the employee is notified personally in writing and the local labour officer is also informed in both cases. The employer is also expected to consider seniority, skill, ability and reliability of each employee; pay off pending leave in cash, pay one months’ wages in lieu of notice and severance pay. For a termination on account of redundancy to be fair and lawful, an  employer must  adhere to  the requirements set out in Section 40(1) of the Employment Act, 2007, unless the parties have entered into an agreement to the contrary with terms greater than the minimum statutory requirements which may be through a contract of employment or Collective Bargaining Agreement (CBA).

Over the past couple of years there has been an increase in claims filed in the Employment and Labour Relations Court against termination on account of redundancy. One of the most notable of these claims was Industrial Cause No. 1661 of 2013 Aviation Allied Workers Union Kenya & 3 others v Kenya Airways Limited, wherein over 400 employees of the airline were rendered redundant following a restructuring exercise. The Union filed a claim seeking a declaration of unfair termination on account of redundancy claiming proper procedure was not followed in accordance with Section 40 of the Employment Act,  an  order  for  reinstatement  of the affected employees and in the alternative payment for pecuniary loss and maximum compensation of twelve (12) months for loss of employment. The trial court found in favour of the Union on grounds that the Respondent did not have valid reasons for the terminations as all the airline was facing was a cyclical crisis which did not affect its bottom line. The trial Court also found that procedure employed by the airline was flawed as there was no meaningful consultation and the process for selection of the affected employees was flawed reeking of pre-selection and bad faith. It ordered immediate reinstatement of employees and payment of salaries for the period that the employees were out of employment.

The airline which was represented by the firm of Oraro & Company Advocates both before the  Employment  and Labour Relations Court and the Court of Appeal successfully appealed – Civil Appeal No. 46 of 2013 Kenya Airways v Aviation Allied Workers Union Kenya & 3 others. There were three  separate judgments  basically upholding  the position of Kenya Airways in all matters except one in which two judges found the process fell short, that being the selection criteria. Thus while the judgment in the Industrial court was in most reversed, by a majority of two to one, the employees were awarded damages for a limited period rather than reinstatement. From this decision for any termination of employment under redundancy to be lawful, it must be both substantially justified and procedurally fair:

  1. To establish substantive justification the appellate court looked at the definition of  redundancy  under  Section  2 of  the Employment  The  employer  must prove  that the loss of employment in redundancy cases has to be by involuntary means and at the initiative of the employer, brought about by operational  requirements  of  the employer e.g. reduction of head count so as to respond to adverse market condition or improve efficiency. While the  Court should be eternally vigilant to ensure that the reasons given are not pre-textual, it is not for the Court to substitute its judgment for that of the employer. The Court found that Industrial Court had overstepped its limited role of review when it essentially trashed the reasons given by Kenya Airways and held that the Company facing a cyclical downturn which could address by being run more efficiently rather than laying off its staff.
  2. Procedural fairness is comprised two aspects:
    1. Firstly, the employer must strictly comply with the provisions of Section 40 (1) of the Employment Act for termination on account of redundancy to be lawful, which consist of issuance of notices in the prescribed manner and statutory period as detailed above, (unless the CBA or contract of employment stipulates a longer period). The purpose of the provision requiring notice to be given is to elicit consultation between the Kenya is a state party to the International Labour Organization (ILO) and is bound by the ILO conventions. Article 13 of Recommendation No. 166 of the ILO Convention No.158- Termination of Employment Convention, 1982 which requires consultation between the employers on the one hand and the employees or their representatives on the other before termination of employment under redundancy. The requirement of consultation is implicit in the principle of fair play under Section 40 (1) of the Employment Act. The purpose of the notice under Section 40 (1) (a) and (b) of the Employment Act is to give the parties an opportunity to consider “measures to be taken to avert or to minimize the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned such as finding alternative employment”. Such consultations must be genuine rather than pre-textual- going through the motions merely to comply with the law
    2. Selection Criteria- The employer must develop and apply an objective process for identifying the employees who will be affected by the redundancy. This must, of necessity be related to the reasons of the redundancy. Selection must be not the basis of such invidious factors such as participation in protected union activities or race, gender etc

We are yet to see the effect of the decision of the Court of Appeal being adopted by the Employment and Labour Relations Court in similar matters. While this is based on casual empiricism, there seems to be some resistance to the lessons of the case. In the meantime, employers contemplating redundancy are well advised to ensure that every substantive and procedure ‘Ts’ and ‘Is’ are crossed and dotted.

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