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Act does not govern family businesses

By | July 15th 2009

Claris Ogangah

In as much as the Employment Act 2007 is supposed to protect the rights of employees, there are a category of employers and employees whose terms of employment are not governed by the Act.

Application Section (3) of the Act provides that the Act shall not apply to the following: The Armed Forces or the reserve who are governed by the Armed Forces Act; the Kenya Police, Kenya Prisons Service and the Administrative Police; the National Youth Service; an employer and the employer’s dependants where the dependants are the only employees in a family business.

It seems you fall within the last category, but this is only if this is a family business and all the employees are dependants of the employer.

Special arrangement

What this means is that your employment is not governed by this Act and you cannot rely on it to vindicate your rights should you feel your father or mother is violating them.

The Act excludes this sort of employment from being governed by it because it envisaged that in businesses run by family members, there is a special arrangement between the family members on how the company should be run.

Normally when families register businesses or companies, they do so with the various members of the family being registered as directors or shareholders.

The terms and conditions of shareholding and directorship are then governed by the Company’s Act and at the time of registration the family members agree on the percentages of shares each member is to hold and the rights and obligations of each shareholder.

If family members have issues with the running of the firm, the matter does not go to the labour office or the industrial court, but to the commercial court mandated to handle issues governed by company law. A perfect example is a case currently in court involving a father and son and you will note that the matter is being handled at the commercial court and not by the industrial court.

What rights accrue to you would be best addressed by looking at the memorandum and articles of association.

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