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Court of AppealPartially AllowedCivil Appeal No. 207 of 2017

Kenya Tea Growers Association v Kenya Plantation & Agricultural Workers Union [2018] KECA 706 (KLR)

Court of Appeal
16 February 2018
AVAlnashir VisramWKW. KaranjaMartha Karambu KoomeM.K. Koome
6,395 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Court of Appeal confirmed that the Employment Court can set CBA terms when parties deadlock, but slashed the wage award to 8%.

What this practically means

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Executive summary

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The Court of Appeal (Visram, Karanja and Koome, JJ.A) allowed an appeal by the Kenya Tea Growers Association against an ELRC judgment (Mbaru, J.) that had imposed terms of the 2014/2015 CBA following a failed conciliation. The central question was the role of the ELRC where parties cannot agree on CBA terms. The Court held that the ELRC does have jurisdiction to adjudicate on such economic disputes, but only after the compulsory dispute resolution procedure under Part VIII of the LRA has been followed; it distinguished the TSC v KNUT decision, which it read as turning on non-exhaustion of that procedure rather than absence of jurisdiction. The Court further held that under Section 26(2) of the Employment Act the ELRC may issue terms more favourable than statutory minima, but must do so judiciously on a case-by-case basis, guided by the Wage Guidelines, productivity, cost of living and the employer's ability to pay. It faulted the trial Judge for ignoring unchallenged expert evidence on the members' inability to pay and for using an unclear inflation figure, fixing the rate at 7.15% and reducing the wage award from 15%:15% to 8%:8%. It varied the awards: retirement at 55 (voluntary 50), unpaid weekly rest day, distance-based travel allowance, funeral expenses retained at Kshs.27,500, baggage allowance and day-of-worship orders set aside, and annual leave and gratuity left as per the 2012/2013 CBA. No orders as to costs were made, this being an employment dispute.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.What role, if any, does the ELRC play where parties are unable to agree on the terms of a CBA?
  2. 2.Whether the ELRC has jurisdiction to impose terms of a CBA where parties fail to agree
  3. 3.Whether the ELRC may impose terms more favourable than the minimum standards set under the Employment Act and Wages Orders
  4. 4.Whether the learned Judge erred in ignoring the appellant's unchallenged expert evidence on ability to pay and in the inflation rate she applied
  5. 5.The correctness of the specific awards on retirement age, rest day, annual leave travelling allowance, medical/funeral expenses, baggage allowance, day of worship, gratuity and annual leave

Key legal issues

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01

Jurisdiction of the ELRC to impose terms of a CBA

Holding

The ELRC has jurisdiction to adjudicate on an economic dispute over CBA terms once the compulsory dispute resolution procedure under Part VIII of the LRA has been followed; the TSC case did not hold otherwise.

Reasoning

Article 162(2)(a) establishes courts with High Court status for employment and labour disputes. Part IX of the LRA contemplates referral of unresolved trade disputes to the ELRC for adjudication, which includes determining disagreements on CBA terms. The TSC decision was distinguished: jurisdiction failed there only because the compulsory conciliation procedure had not been exhausted.

p. 5
02

Whether the ELRC is confined to statutory minimum standards

Holding

No - Section 26(2) of the EA permits terms more favourable than statutory minima and empowers the ELRC to issue such terms, but judiciously and guided by Wage Guidelines, productivity, cost of living and ability to pay.

Reasoning

Section 26(2) of the EA gives effect to terms more favourable than the statutory floor. The court adopted Rika, J.'s formulation that wage orders fix wage floors and collective bargaining and judicial intervention may move above the benchmark, guided by economic indicators.

p. 6
03

Treatment of expert evidence and ability to pay

Holding

The trial Judge erred in ignoring unchallenged expert evidence on the appellant's members' inability to pay and in relying on an unclear inflation figure; the correct inflation rate was 7.15% for December 2013, yielding an 8% wage increase.

Reasoning

Both experts gave uncontroverted evidence that production costs exceeded tea prices and producers were price takers. Following Dhalay vs. Republic, an unchallenged reasoned expert opinion cannot be rejected without good and cogent grounds. The judge's CPI figure of 8.89% lacked a clear basis.

p. 7
04

Specific CBA terms

Holding

Retirement age set at 55 (voluntary 50); one unpaid rest day per week; distance-based travel allowance; funeral expenses retained at Kshs.27,500; baggage allowance and day-of-worship orders set aside; annual leave and gratuity remain as per the 2012/2013 CBA.

Reasoning

Section 27 of the EA entitles an employee to at least one rest day weekly but not a paid rest day, and neither the EA nor the Constitution obliges an employer to set aside a particular day of worship. Baggage allowance had no basis in law or prior CBA, and the retirement age had been agreed by the parties.

p. 7

Legal principles established

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  • The ELRC can assume jurisdiction to adjudicate on an economic dispute over CBA terms only after the compulsory dispute resolution procedure under Part VIII of the LRA (conciliation and certificate of disagreement) has been followed.
  • Once seized of a trade dispute under Section 73(1) of the LRA, the ELRC is empowered not merely to enforce minimum standards but to determine the terms of a CBA where parties cannot agree, including issuing terms more favourable than statutory minima.
  • That power must be exercised judiciously on a case-by-case basis, guided by the Wage Guidelines, productivity, cost of living and the employer's ability to pay; the court must not substitute its preference for the parties' contractual freedom.
  • A court faced with unchallenged expert evidence that gives reasons and is not contradicted cannot reject it without good and cogent grounds.
  • On a first appeal, the Court of Appeal may re-appraise evidence and draw its own inferences of fact, while extending some deference to the trial court's conclusions.

Court orders

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  1. 1.Rate of pay (basic wage/salary) awarded at 8%:8% for the 2014/2015 CBA across the board
  2. 2.Retirement shall be at 55 years with the option to voluntarily retirement at 50 years
  3. 3.There shall be one rest day every working week without any additional payment
  4. 4.Annual leave travelling allowance adjusted: 0-3km at 3%, 31-60km at 3%, 61-610km at 0% and over 611km at 3%
  5. 5.Medical treatment and sick allowance awarded at Kshs.30,000.00 set aside; Kshs.27,500 for funeral costs in the previous CBA retained in the 2014/2015 CBA
  6. 6.Baggage allowance awarded at Kshs.30,000.00 set aside
  7. 7.Order that parties review the CBA 2014/2015 to accommodate the Union member's right to observe their day of worship set aside
  8. 8.Annual leave and gratuity shall remain as under the CBA 2012/2013
  9. 9.No orders as to costs both in this appeal and in the ELRC suit

The bench

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One judgment of the whole court — no separate or dissenting opinions.

AV
majority
WK
majority
Martha Karambu Koome
M.K. KoomeJA
Currently serving
majority
On appeal from
Employment and Labour Relations Court at Nairobi
ELRC Cause No. 1997 of 2014 (consolidated with ELRC Cause No. 14 of 2014)
Jurisdiction invoked
First appeal to the Court of Appeal from the ELRC, exercising the power under Rule 29(1)(a) of the Court of Appeal Rules to re-appraise evidence and draw inferences of fact
Consolidated with
ELRC Cause No. 14 of 2014

Relief refused

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Consolidation ground of appeal

No submissions were made on the consolidation of the two suits; the court declined to say more

p. 5

Finding on NSSF Act contributions

Suit challenging the NSSF Act provisions still pending

p. 7

Respondent's higher awards (15%:15% wage increase, retirement at 60, paid rest day, baggage allowance, day of worship order)

Court found no legal basis for these awards and substituted its own terms

p. 7

Costs

This being an employment dispute we make no orders as to costs both in this appeal and in the ELRC suit.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

we find that the appeal has merit and we hereby allow the same in the following terms:
p. 7Disposition
Rate of pay (basic wage/salary) is hereby awarded at 8%:8% for the 2014/2015 CBA across the board.
p. 7Final orders - wage award
Retirement shall be at 55 years with the option to voluntarily retirement at 50 years.
p. 7Final orders - retirement age
Baggage allowance awarded at Kshs.30,000.00 is hereby set aside.
p. 7Final orders - baggage allowance
This being an employment dispute we make no orders as to costs both in this appeal and in the ELRC suit.
p. 7Costs
The long and short of it is that the ELRC can only assume jurisdiction to adjudicate on an economic dispute after the compulsory dispute resolution procedure under Part VIII of the LRA had been followed.
p. 5Jurisdiction
the power to do so by the ELRC ought to be exercised judiciously and on a case by case basis where parties are unable to agree on the terms of a CBA.
p. 6Judicial discretion in CBA disputes

Issues in the judgment

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minor

The appeal grounds as summarised refer to a 'ruling dated 28th May, 2016' in ground (vi) while the judgment states the ruling was dated 28th May, 2015 - an internal inconsistency in dates.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kenya Tea Growers Association v Kenya Plantation & Agricultural Workers Union [2018] KECA 706 (KLR)", Case Analysis (2018). Civil Appeal No. 207 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/706/eng@2018-02-16

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.