Damn that word!!!

“Outsourcing”, Nyakio does not like that word; to her it symbolizes the end of a job she has held for over 15 years. She is employed as a ‘wrapper’, that is, someone who wraps manufactured products as the final step in the manufacturing process.

In the past 2 years, the union she belongs to has warned her and her colleagues that outsourcing is the latest trend which is being adopted by employers to eliminate the burden and obligations placed on employers under the labour laws.

The union had cited a number of companies where services such as those of wrappers had been outsourced. The union is aware that management is seriously contemplating outsourcing, especially now that Mzee (the company’s founder) is too old to be involved in the affairs of the company; Mzee is against machines.

That which she feared the most finally came

A meeting was called by management at which the wrappers were informed that it was inevitable and necessary for the company to downsize wrappers from fifty to just ten.

Those whose jobs were affected were issued with redundancy notices, paid their terminal dues and they left. Fortunately or unfortunately, since Mueni is one of the longest serving wrappers, the “first in, last out” rule saved her job, at least for now.

Employed again!

When Mueni reported to work the Monday after her former colleagues’ last Friday at work, she was surprised to see Nyakio and the rest of her former colleagues on the shop floor; apparently they had been offered employment by OutFit (the outsourcing company) and had been deployed to work at the company. This worked well for OutFit as they had a ready pool of workers who needed no training.

Nyakio, and the other outsourced workers, were glad to be back at work but their joy was short lived.

Their terms and conditions of service were significantly lower than those of Mueni and the rest of their former colleagues, OutFit was relatively young and it did not have solid systems and structures and worst of all, they were missing out on the benefits of collective bargaining and union representation.  It was not long before they became a disgruntled lot and this was impacting their performance negatively.

The union representing Mueni approached the company with the aim of looping in the outsourced workers into the collective bargaining agreement.

The company declined on the grounds that the outsourced workers were employees of OutFit and could not be governed by a collective bargaining agreement which provided the terms and conditions of service of the company’s workers.

With time, the disparity between the terms and conditions of service of the outsourced workers and those of Mueni and the rest of the wrappers became too expansive so much so that Nyakio, and the other outsourced workers, decided to sue OutFit for what they termed as ‘unfair labour practices’, that is, the fact that they were doing the same job as the other wrappers and yet their terms and conditions of service were significantly lower.

The Judgment

The court could not hide its shock at the disparities, the most shocking being the fact that the salary gap was almost Kshs. 10,000/=.

The Judge found in favour of Claimants against OutFit; he held that the disparities amounted to unfair labour practices.

He also held that the redundancy was unlawful since the positions of wrappers had not been abolished, the company had simply wanted to get rid of some of the wrappers so as to engage the outsourcing company which could provide wrappers at a cheaper fee [update – it is now accepted that this would be a legitimate redundancy].

Outsourcing guidelines

Our courts have, overtime, developed a set of principles on the issue of outsourcing:-

  1. employers are not expected to outsource their core functions;
  2. an employer will not be permitted to use outsourcing as a means to escape from meeting accrued contractual obligations to its employees; and
  3. outsourcing is unlawful if its effect is to introduce discrimination between employees doing equal work in an enterprise.

Since outsourcing is not expressly covered in our labour laws, whenever a question involving outsourcing arises, our courts stand by Article 41 of the Constitution which provides that, ‘every person has a right to fair labour practices’ as well as decided cases and international conventions such as ILO Convention No. 181 Private Employment Agencies Convention, 1997.

Under the Convention, private employment agencies include those entities that offer various labour market services which include employing workers with a view to making them available to a third party, which assigns their tasks and supervises the execution of these tasks.

It is made clear, under the Convention that measures should be taken to ensure that workers recruited by private employment agencies are not denied the right to freedom of association and the right to bargain collectively. The Convention is however not legally binding in Kenya since it has not been ratified.

About Anne Babu

Anne is an Advocate of the High Court of Kenya and the Founding Partner of Anne Babu & Co. She has practised employment law for over 12 years and her employment law practice has been recognized by the prestigious Chambers & Partners. Anne cares about employers and their labour issues.


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Comments

  1. Richard A O Litaba says:

    Hi Anne!

    Have read the article on outsourcing which i find quite interesting. Since the trend is spreading fast to all sectors including public service, and since the labours laws as currently crafted do not give guidelines on how outsourcing, we now left to what the judges may say. As one who is interested in this type of labour management would you kindly share with me any decided cases.

    Secondly, what would you say about the Wrigley EA case?

    1. Anne Babu says:

      Hi Richard, the cases I’m aware of are quoted in the article. We shall be revising it in the near future to include any recent cases.

  2. Christine says:

    Hi Anne… I love your blog. Very informative and resourceful to everyone. However, in relation to outsourced labor, why is it not cool to have a clause that gives the Principal the right to discipline the contractor’s staff in case of misbehavior by the contractor’s staff in the principal’s premises?

    1. Anne Babu says:

      Thanks for the compliments. Because disciplinary functions are carried out by employers not third parties.

  3. Kanyi Kimani says:

    How does an organization determine what it’s core functions are?

    For example, most if not all organizations use computer technology in their day to day operations. Personnel employed to support the ICT infrastructure perform a support role but do not necessarily have direct input into the business.

    Can they be outsourced?

    1. Anne Babu says:

      What is core is subjective and depends from organization to organization. What is core is what the organization is set up to do as well as other critical roles. The line is however thin.

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