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ELRCOtherCause No 879 of 2011· [2013] KEELRC 143 (KLR)

Tailors And Textiles Workers Union v Bonar [E.A.] Limited [2013] KEELRC 143 (KLR)

Industrial Court of Kenya
18 September 2013
JRJames Rika
373 words in judgment
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The bottom line

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A Kenyan employment court ruled that a company cannot avoid paying workers' terminal benefits simply by claiming it closed down due to insolvency.

What this practically means

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Executive summary

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The Claimant Union sued the Respondent by a Statement of Claim filed on 7th January 2011, seeking payment of terminal benefits for its members whose positions the Respondent declared redundant, in accordance with a CBA between the parties. The Respondent, in its Statement of Reply filed on 25th July 2011, denied the claim, contending that it was forced to close down operations through insolvency in 2006 rather than declaring redundancy, and that all employees, and the Claimant Union itself, were aware of the insolvency. The Respondent raised a preliminary objection on this basis, which was canvassed in court on 4th April 2013. The Court held that the objection could not suitably be determined without hearing the parties, since whether the company closed through insolvency, whether positions were declared redundant, and whether terminal benefits were paid in either scenario were factual questions meriting enquiry. The Court observed that parties had gone through conciliation and agreed to disagree, and that upholding the objection would leave the dispute unresolved. It further held that whether a business collapsed or jobs were phased out due to financial meltdown does not preclude payment of employees' terminal dues. The Court rejected the preliminary objection, directed the parties to agree on a hearing date for the main dispute at the Registry, and made no order on costs. The judgment was dated and delivered at Nairobi on 18th September 2013 by James Rika, Judge.

Key legal issues

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01

Whether a preliminary objection can be sustained on facts requiring evidentiary inquiry

Holding

It cannot; the objection raised factual issues that require hearing of the parties.

Reasoning

The Court held that whether the company closed through insolvency or declared redundancy, and whether terminal benefits were paid, are contested factual matters meriting enquiry. A preliminary objection should only succeed where the issue is capable of determination without ascertaining facts. Since parties had gone through conciliation and agreed to disagree, upholding the objection would leave them without determination of their dispute. The Court therefore rejected the objection and directed that the main dispute proceed to hearing.

p. 2

Legal principles established

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  • Whether a business collapsed through insolvency or jobs were phased out due to financial meltdown does not preclude payment of employees' terminal dues; facts must be established at a hearing.

Court orders

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  1. 1.The Preliminary Objection is rejected
  2. 2.Parties to agree on a hearing date for the main dispute at the Registry
  3. 3.No order on the costs
Jurisdiction invoked
Not stated in judgment

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, "Tailors And Textiles Workers Union v Bonar [E.A.] Limited [2013] KEELRC 143 (KLR)", Case Analysis (2013). Cause No 879 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/143/eng@2013-09-18

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