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ELRCPartially AllowedCause No 1486 of 2011· [2014] KEELRC 1143 (KLR)

Banking Insurance and Finance Union v CFC Stanbic Bank [2014] KEELRC 1143 (KLR)

Industrial Court of Kenya
14 July 2014
LNLINNET NDOLO
1,766 words in judgment
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The bottom line

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Kenya's Industrial Court ruled CFC Stanbic Bank's redundancy unfair because it skipped legal notification steps, awarding affected staff six months' salary each.

What this practically means

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Executive summary

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The Banking Insurance and Finance Union (the Claimant) sued CFC Stanbic Bank on behalf of twelve Grievants declared redundant by letters dated 25th May 2010, claiming the redundancies were unfair, unlawful, and driven by victimisation of union members, particularly three Grievants elected as union representatives days before the redundancy letters issued. The Respondent maintained the redundancies arose from a bona fide management decision to outsource Supply Chain Management Department functions. The Court framed four issues: whether the redundancies targeted union members and officials; whether the Respondent complied with the law and the Collective Bargaining Agreement; whether terminal benefits were fully paid; and entitlement to relief. On targeting, the Court found no specific evidence of victimisation, holding the redundancies coincidentally affected unionisable staff. However, on compliance, the Court found the Respondent sent the Grievants on forced leave to avoid paying pending leave days and failed to notify the union of the extent of the redundancy, contrary to Section 40 of the Employment Act and the CBA, amounting to unfair termination under Section 45. The Respondent's witness also conceded wrong figures were used in calculating terminal benefits. Reinstatement was refused because the Grievants' positions had been outsourced. The Court awarded each Grievant six months' salary as compensation for unfair termination, ordered recalculation of terminal benefits based on last salary with payment of the difference, both within 21 days, and awarded costs to the Claimant.

Key legal issues

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01

Whether the redundancies targeted union members and officials

Holding

No; the redundancies targeted the Supply Chain Management Department and any union overlap was coincidental

Reasoning

The Claimant led no specific evidence of victimisation beyond a general allegation. The evidence showed the redundancies flowed from a management decision to outsource Supply Chain functions. The Grievants themselves confirmed the outsourcing. The Court therefore found no unfair labour practice or targeting of union officials.

p. 3
02

Whether the Respondent complied with Section 40 of the Employment Act and the CBA

Holding

No; the Respondent failed the fairness test

Reasoning

The Respondent sent Grievants on leave immediately upon declaration of redundancy to avoid paying pending leave days, and failed to notify the union of the extent of the redundancy as required by Section 40(1)(a) of the Employment Act and Clause A7(1) of the CBA. Such non-compliance rendered the redundancies unfair terminations under Section 45.

p. 4
03

Whether terminal benefits were correctly calculated

Holding

No; the Respondent used wrong salary figures

Reasoning

Clause A7(1)(h) of the CBA requires that the salary used in calculating pay be the employee's salary on the date of cessation of employment. The Respondent's own witness conceded in cross-examination that wrong figures appeared to have been used, warranting recalculation and payment of the difference.

p. 4

Legal principles established

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  • A redundancy that ignores the conditions under Section 40 of the Employment Act amounts to unfair termination within the meaning of Section 45 of the Act
  • Section 40 safeguards against redundancy cannot be circumvented by an employer

Court orders

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  1. 1.The Respondent shall pay to each Grievant the equivalent of 6 months' salary in compensation for unfair termination of employment within the next 21 days from the date of this award
  2. 2.The Respondent shall recalculate the Grievants' terminal benefits on the basis of their last salary and pay the difference within the next 21 days from the date of this award
  3. 3.The Respondent shall pay the costs of this case

Authorities

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Legislation

  • Employment ActSection 2
  • Employment ActSection 40
  • Employment ActSection 45
  • Labour Relations ActSection 2 (corresponding definition of redundancy)

Cases cited (1)

  • Francis Maina Vs Lee Construction
    [2014] eKLR
Jurisdiction invoked
Jurisdiction of the Industrial Court of Kenya over employment and labour relations disputes (Cause No 1486 of 2011)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (2)

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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, "Banking Insurance and Finance Union v CFC Stanbic Bank [2014] KEELRC 1143 (KLR)", Case Analysis (2014). Cause No 1486 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/1143/eng@2014-07-14

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