Banking Insurance& Finance Union (Kenya) v Kirinyaga District Cooperative Union Ltd & another [2014] KEELRC 809 (KLR)
The bottom line
#Kenya's Industrial Court upheld a 2009 bank redundancy because the union was consulted and workers got better-than-legal severance pay.
What this practically means
#Executive summary
#Key legal issues
#Applicable law and limitation
The Employment Act 2007 and Labour Relations Act 2007 applied; the main claim was filed within three years, but the underpayment claim was time-barred under section 90 of the Employment Act
The redundancy occurred in March 2009 and the suit was filed on 9th February 2012, within the three-year period in section 90. However, the underpayment claim, allegedly accruing from 2006, was never raised through the Trade Disputes Act or Labour Relations Act procedures before termination, and was caught by the three-year limitation in section 90, with no extension mechanism available.
Compliance with section 40 of the Employment Act in the redundancy
The respondent complied; the Union was notified and participated, and no prejudice was shown from the unclear position on the Labour Officer's participation
Section 40(1) conditions are mandatory, but the Act does not prescribe the form of notification. Mr. Karani, the then Branch Secretary of KUCFAW, testified uncontroverted that the Union attended the meeting of 28th February 2009, participated in identifying who to retrench, and agreed to the more favourable gratuity formula. His evidence was not challenged in cross-examination, so the Union was notified and participated.
Whether payment under the gratuity clause discharged the redundancy obligations
The gratuity formula was imported into the redundancy calculation, yielding a better package than the statutory and CBA minimum, so no breach occurred
Clause 17(d) of the CBA provided 17 days' salary per completed year as severance pay, while clause 29 provided gratuity at 2 months' salary per year for those retiring, resigning or dying. Strictly, the grievants could not be paid 'gratuity' on redundancy; rather, the gratuity formula was applied, giving more than the 15 days per year minimum under section 40(1)(g). The Act sets minimum terms which parties may exceed.
Whether the claimant could reopen matters settled between the respondent and KUCFAW
No; the claimant is bound by the concluded arrangements of its predecessor union
The grievants were members of KUCFAW at the material time and only joined the claimant after termination and full payment of terminal dues. KUCFAW participated in the redundancy process, agreed to the gratuity formula, and raised no complaint after payment. The claimant, having taken over representation, could not recant its predecessor's agreement; it was estopped from doing so.
Legal principles established
#- Notification of redundancy under section 40(1)(a) of the Employment Act need not be in a specific written format, provided it sufficiently communicates the intended redundancy within the prescribed period
- The Employment Act prescribes minimum terms below which parties cannot contract; an employer who pays above the statutory minimum is not in breach even if it caps the enhanced package
- A union is bound by concluded agreements or settlements entered into by its predecessor representative union
Court orders
#- 1.The claimant's claim is dismissed with costs
- 2.It is so ordered (judgment dated at Nyeri, 21st February, 2014)
- Jurisdiction invoked
- First-instance jurisdiction of the Industrial Court over a trade dispute referred following conciliation (certificate of disagreement dated 18th January, 2012) under the Labour Relations Act, 2007
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Banking Insurance& Finance Union (Kenya) v Kirinyaga District Cooperative Union Ltd & another [2014] KEELRC 809 (KLR)", Case Analysis (2014). Not stated in the judgment as provided (memorandum of claim dated 8th February, 2012, filed 9th February, 2012). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/809/eng@2014-02-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.