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ELRCAllowedCause No. 98 of 2002· [2004] KEELRC 7 (KLR)

TRANSPORT & ALLIED WORKERS’ UNION v KENYA BUS SERVICES LTD (Cause 98 of 2002) [2004] KEELRC 7 (KLR)

Industrial Court of Kenya
18 August 2004
CCCharles P. ChemmuttutMWM.A. WarrakahMJM.M. Jahazi
6,377 words in judgment
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The bottom line

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Kenya's Industrial Court voided early-retirement settlements that short-changed 491 retrenched bus workers, ordering full redundancy benefits instead.

What this practically means

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Executive summary

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The Minister for Labour referred to the Industrial Court a trade dispute over the redundancy of 491 employees of Kenya Bus Services Ltd. The Company, facing heavy losses and indebtedness, had by notice dated 11th May 2001 informed the Union of intended redundancies. Following negotiations, the parties entered three settlements (28th September, 30th October and 21st November 2001) under which the grievants were laid off on 'early retirement' terms under Article 14 of the collective agreement rather than declared redundant under Article 6, with terminal payments of Kshs.17,225,032 made to most grievants. The Union sought declarations that the settlements were null and void for non-disclosure and misrepresentation of material facts - notably the contemporaneous transfer of part of the business to Bustrack Ltd under Gazette Notice No.7888 and subsequent recruitment of employees and purchase of buses - and payment of redundancy benefits under Article 6. The Company maintained the negotiations were free, in good faith, and that employment contracts and collective agreements are not contracts of utmost good faith. The court found both parties had erred in settling under Article 14 without considering the grievants' paramount interests, and held the settlements incapable of implementation. It declared the three settlements null and void and ordered that the grievants' terminal benefits be calculated and paid under Article 6 (redundancy), less amounts already paid. The decision was made by the Judge alone under Section 14(8) of the Trade Disputes Act, acting with the full powers of an umpire, the Members being unable to render an opinion.

Key legal issues

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01

Non-disclosure and misrepresentation of material facts in collective bargaining leading to early-retirement settlements in place of redundancy

Holding

The settlements of 28th September, 30th October and 21st November 2001 were declared null and void, and the grievants are entitled to terminal benefits under Article 6 (Redundancy) rather than Article 14 (Compulsory Retirement) of the collective agreement.

Reasoning

The court noted the Company itself had intended to declare employees redundant under Article 6, yet the parties negotiated settlement under Article 14 to the detriment of the grievants for whom the collective agreement was made. The court found the parties erred in entering the settlements without considering the grievants' paramount interests, and was satisfied the settlements were incapable of implementation as they stood. The Union's claim for payment under Article 6 therefore succeeded.

p. 13

Legal principles established

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  • Settlements or agreements entered into in redundancy negotiations without full and fair disclosure of material facts to the union and without regard to the paramount interests of the affected employees are incapable of implementation and may be declared null and void.

Court orders

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  1. 1.Declared that all the settlements or agreements entered into and signed by the parties on 28th September, 30th October and 21st November 2001 are null and void
  2. 2.Ordered that the terminal benefits of the grievants be calculated and paid under Article 6 of the parties' collective agreement in force at the material time, less the amount already paid to them, if any
Jurisdiction invoked
Section 8 of the Trade Disputes Act, Cap.234 - reference of the dispute to the Court by the Minister for Labour

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "TRANSPORT & ALLIED WORKERS’ UNION v KENYA BUS SERVICES LTD (Cause 98 of 2002) [2004] KEELRC 7 (KLR)", Case Analysis (2004). Cause No. 98 of 2002. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2004/7/eng@2004-08-18

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