"Kenya Labour Court Declares ‘Consultant’ an Employee, Orders EIDU to Pay Kshs. 641K for Unfair Sacking"

Case Study:Adhiambo v Eidu Education Limited (Cause E582 of 2021) [2025] KEELRC 2276 (KLR) (31 July 2025) (Judgment)

Background

Cynthia Anyango Adhiambo sued Eidu Education Limited for unlawful termination of employment. The core of the dispute was whether Adhiambo was an employee or a consultant.

Initially, Adhiambo was hired as a Product Manager under an employment contract. A few weeks later, the company switched her to a "consultancy agreement" while she kept the same job title, duties, and salary.

Adhiambo’s Arguments

• Adhiambo argued that she was an employee throughout her time at the company, despite the change in her contract.
• She worked fixed hours (40 hours per week) in the office, was supervised by the company, and her performance was evaluated weekly.
• She claimed the termination of her services was unlawful and unfair because the company didn't have a valid reason and didn't follow the proper legal procedure for terminating an employee.

Eidu’s Arguments

• Eidu Education Limited argued that Adhiambo was an independent contractor or consultant after her initial brief employment period.
• They claimed the consultancy agreement ended the employer-employee relationship.
• They stated that as a consultant, she was not subject to their control, had discretion over her working hours, and was not entitled to the protections of the Employment Act.
• They believed there was no requirement for them to provide a reason or follow a specific procedure when terminating a consultancy agreement.

The Court’s Decision

The court had to determine three main issues: the nature of the engagement, whether the termination was unlawful, and the remedies Adhiambo was entitled to.

1. Nature of the Engagement

The court found that Adhiambo was an employee, not a consultant. The judge highlighted several key factors in reaching this conclusion:

• The court referred to the legal principle that it must look beyond the name of a contract to determine the true nature of the relationship.
• The court noted that Adhiambo's job title, duties, and salary remained the same when her contract was changed from an employment contract to a consultancy agreement.
• She was required to work defined hours and was supervised by the company's Country Director.
• Her role was integral to the company's core business, which is a key test for an employment relationship.
• The company did not prove that it made the required withholding tax deductions that would be expected for a true consultancy arrangement.

The court concluded that the relationship was always one of employer and employee, and the consultancy agreement did not change this fact.

2. Unlawful Termination

The court ruled that the termination was substantively and procedurally unfair.

• The termination letter was terse and did not provide any reason for the termination, which violates Section 43 of the Employment Act.
• Adhiambo was not given any pre-termination disciplinary hearing or an opportunity to be heard before her services were ended, which violates Section 41 of the Employment Act.

3. Remedies

The court awarded Adhiambo a total of Kshs. 641,667. This amount was broken down as follows:

• Kshs. 420,000 for three months' salary as compensation for the unfair termination. The court considered her length of service, the lack of a valid reason for termination, and the failure to provide a pension benefit.
• Kshs. 140,000 for one month's salary in lieu of notice because she was not given proper notice.
• Kshs. 81,667 for prorated leave for the 10 months she worked.

The court also ordered Eidu Education Limited to provide Adhiambo with a certificate of service and pay the costs of the case plus interest on the awarded amount.