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ELRCDismissedCause Number 405 of 2012· [2014] KEELRC 381 (KLR)

Paul Seki Nzau & 27 others v Laico Regency Hotel [2014] KEELRC 381 (KLR)

Industrial Court of Kenya at Nairobi
8 July 2014
JRJames Rika
1,669 words in judgment
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The bottom line

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Kenya's Industrial Court dismissed 28 hotel workers' claims for redundancy gratuity and compensation because their union had already litigated the same redundancy dispute.

What this practically means

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Executive summary

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Twenty-eight former employees of the Grand Regency Hotel (later the Laico Regency Hotel) sought gratuity and twelve months' gross salary each as compensation for loss of employment, arising from the redundancy declared upon the 2008 transfer of the hotel from receivership under the Central Bank of Kenya to a new investor. Their claims, consolidated from six causes, were met by the Respondent with a plea of res judicata, relying on an Award in Industrial Court Cause Number 109 [N] of 2008 in which the successor union, KHAWU, unsuccessfully challenged the lawfulness of the redundancy. The evidence of the 15th Claimant established that the employees were unionisable, covered by a CBA between KUDHEIHA and the Grand Regency, and that terminal benefits were agreed and paid, save for gratuity which was claimed under the CBA. The Respondent called no witness. Rika J held that the redundancy was consensual, agreed through consultations involving the Respondent, KUDHEIHA and the Central Bank of Kenya, and that compensation for loss of employment is unavailable where termination rests on a fair and valid reason carried out consensually. Any gratuity entitlement should have been secured by KUDHEIHA in the redundancy agreement or pursued by KHAWU in the earlier cause; the employees, being in privity with their union, could not re-litigate. Applying the three elements of res judicata - identical claims from a common nucleus of operative facts, privity of parties, and a final merits-based decision - the Court held the consolidated claims res judicata and dismissed them in their entirety with no order on costs, delivered at Nairobi on 8th July 2014.

Key legal issues

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01

Res judicata

Holding

The consolidated claims are res judicata, being barred by the Award in Cause Number 109 [N] of 2008

Reasoning

The prior claim by KHAWU, the Claimants' successor union, challenged the same redundancy arising from the transfer of business. The Respondent was party to both suits, and the Claimants were in privity with KHAWU, one of them having even testified in the earlier cause. The earlier Award was a decision on the merits, and gratuity and compensation could have been pleaded there.

p. 3
02

Gratuity under the CBA

Holding

No gratuity is payable; the union had the mandate to secure it and any omission cannot be cured by individual claims

Reasoning

KUDHEIHA, the recognised sole collective bargaining agent, authored the CBA and agreed the redundancy terms with the Employer and the Central Bank of Kenya. If gratuity was due under the CBA, it was for KUDHEIHA to include it in the redundancy agreement, or for KHAWU to pursue it in Cause 109 [N] of 2008. Employees cannot extract more than was obtained through their sole bargaining agent.

p. 3
03

Compensation for loss of employment

Holding

Not available because the redundancy was consensual and for a fair and valid reason

Reasoning

Compensation for loss of employment is granted only where termination is unfair. Here termination was by redundancy occasioned by transfer of business to new investors, agreed through consultations involving the Respondent, the Claimants' Trade Union and the Vendor Central Bank of Kenya, with terminal benefits computed and paid as agreed.

p. 3

Legal principles established

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  • Res judicata rests on three elements: prior litigation raising identical claims or claims that could have been raised; identity or privity of parties; and a final decision on the merits in the original claim
  • Employees in privity with their recognised trade union are bound by litigation prosecuted by that union, and cannot re-litigate matters that union represented them on
  • Res judicata bars not only re-litigation of claims actually decided but also claims that could have been litigated in the first claim
  • Compensation for loss of employment is unavailable where termination is consensual and founded on a fair and valid reason

Court orders

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  1. 1.The consolidated Claims are dismissed in their entirety
  2. 2.No order on the costs
Jurisdiction invoked
Jurisdiction of the Industrial Court over employment and labour relations disputes (issue in dispute: redundancy payments)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (5)

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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, "Paul Seki Nzau & 27 others v Laico Regency Hotel [2014] KEELRC 381 (KLR)", Case Analysis (2014). Cause Number 405 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/381/eng@2014-07-08

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