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ELRCPartially AllowedCause No. 1182 of 2013· [2014] KEELRC 906 (KLR)

Amalgamated Union of Kenya Metal Workers v Unity Auto Garage (Nrb) Limited [2014] KEELRC 906 (KLR)

Industrial Court of Kenya
10 March 2014
MMM. Mbaru
3,062 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~12 min to read original · ~4 min brief

The bottom line

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Kenyan employers must pay union agency fees for non-union staff once a Gazette Notice directs it, and cannot ignore the notice pending a challenge.

What this practically means

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Executive summary

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The claimant union, which had a recognition agreement and a CBA (CA 124 of 2011) with the respondent, obtained Gazette Notice No. 14722 of 19th October 2012 directing the respondent to deduct an agency fee of 2% of basic monthly wages from non-union employees covered by the CBA. The respondent declined to remit, alleging the gazettement was procured fraudulently because the union did not follow the section 49(2) procedure requiring an employer-signed request and an employer-supplied list of employees, and that non-union employees objected to deductions. After a petition through the employers' association, the Cabinet Secretary revoked the Notice with effect from 7th November 2013 (published 29th November 2013). The court framed three issues: when agency fees are due, their justification, and whether they were due here. It held that agency fees exist to prevent free riding by non-union employees who enjoy CBA benefits, following its own decision in Cause No. 1624 of 2013. It held that the union's procedural non-compliance did not invalidate the obligation, since a Legal Notice remains lawful until revoked and the respondent should have complied or challenged the Notice rather than ignore it. The court ordered the respondent to pay 2% agency fees on non-union employees' basic wages from 30th November 2012 to 30th October 2013, tabulated within 14 days and subject to court confirmation, crediting Kshs.10,000 already paid. The prayer to renegotiate the CBA was overtaken by events as a new CBA had been negotiated, and each party was ordered to bear its own costs.

Key legal issues

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01

When are agency fees due and what is their justification

Holding

Agency fees fall due once a registered CBA is in force and a Gazette Notice directing deduction is issued; non-union employees enjoying CBA benefits must contribute to collective bargaining costs.

Reasoning

Sections 48 and 49 of the Labour Relations Act recognise the role of unions in negotiating benefits that extend to non-members. Employees who receive such benefits but do not pay are free riders; an agency fee makes them contribute without compelling union membership. The court affirmed this rationale, citing its own prior decision in Cause No. 1624 of 2013.

p. 4
02

Whether the failure to follow section 49(2) procedure (employer-signed request and employer-supplied list) invalidated the Gazette Notice

Holding

No. The procedural non-compliance by the union did not substantially affect the whole; the respondent, aware of the CBA and the Notice, should have complied pending a challenge and could have supplied the approved list itself.

Reasoning

The court held section 49 should be interpreted positively where the employer knew of the CBA and its own role. Nothing prevented the respondent from approaching the court to address alleged fraud when it became aware of the Notice. Until revoked, the Gazette Notice bound the respondent.

p. 5
03

Period for which agency fees are payable

Holding

The Notice was in force from 19th October 2012 until revocation effective 7th November 2013; fees are payable from 30th November 2012 to 30th October 2013, with the Kshs.10,000 already paid taken into account.

Reasoning

The court distinguished the two Gazette Notices: No. 14722 issued the agency fee direction and No. 14930 revoked it with effect from the date specified, being 7th November 2013. The respondent was to compute deductions from wages due over that period and file a tabulation within 14 days.

p. 5

Legal principles established

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  • A Gazette Notice/Legal Notice remains a lawful and binding direction until it is revoked, and a party affected must comply pending a challenge or revocation.
  • The procedural defect of a union failing to comply with section 49(2) of the Labour Relations Act does not invalidate the whole agency fee obligation where the employer was aware of the CBA and could have supplied the list itself.
  • Non-union employees who benefit from a CBA negotiated by a representative union should contribute to collective bargaining costs through agency fees.

Court orders

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  1. 1.The respondent to pay agency fees equal to two per cent (2%) of each non-union employee's basic monthly wage, calculated from 30th November 2012 up to 30th October 2013
  2. 2.The respondent to tabulate these dues within 14 days and remit a record of the same before the court for confirmation
  3. 3.The amount of Kshs.10,000.00 already remitted in November 2013 to be taken into account
  4. 4.Each party to bear their own costs

Authorities

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Legislation

  • Labour Relations Actsection 2
  • Labour Relations Actsection 48
  • Labour Relations Actsection 49
  • Labour Relations Actsection 49(2)(b)
  • Labour Relations Actsection 49(3)
  • Labour Relations Actsection 54(1)
  • Labour Relations Actsection 82

Cases cited (1)

  • Tailor and Textile Workers Union versus New Wide Garments Kenya (EPZ) Limited
    Cause No. 1624 of 2013
Jurisdiction invoked
Sections 48, 49 and 82 of the Labour Relations Act (first-instance employment and labour relations jurisdiction)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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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, "Amalgamated Union of Kenya Metal Workers v Unity Auto Garage (Nrb) Limited [2014] KEELRC 906 (KLR)", Case Analysis (2014). Cause No. 1182 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/906/eng@2014-03-10

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