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ELRCPartially AllowedNot stated in judgment· [2014] KEELRC 1194 (KLR)

Banking, Insurance & Finance Union (Kenya) v Magereza Savings & Credit Co-Operative Society Limited [2014] KEELRC 1194 (KLR)

Industrial Court of Kenya
17 June 2014
MOMAUREEN ONYANGO
1,693 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court upheld a redundancy because the employer properly consulted the union and Labour Office, but ordered the employees' exit packages paid immediately.

What this practically means

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Executive summary

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The Claimant Union brought a claim under certificate of urgency alleging that the redundancy ('right-sizing') of four grievants - Betty Dimba, Sarah K. Kithinji, George Oluoch and Martine Olilah - effected by the Respondent SACCO on 1st November 2012 was unprocedural, unjustified, unlawful and unfair, and sought a declaration of nullity and re-instatement without loss of benefits. The Respondent denied the claim, asserting the redundancy followed the law and the collective bargaining agreement, and complied with the recommendations of the SACCO Societies Regulatory Authority, then regulating it on a temporary licence. The court framed two issues: whether the redundancy was unprocedural and unfair, and whether the grievants were entitled to re-instatement. Applying Section 40 of the Employment Act and Clause 14 of the CBA, the court found the Respondent notified the union, consulted with it through meetings on 16th, 23rd and 25th October 2012, agreed an enhanced exit package, and notified the labour office. The union's dispute report of 18th October 2012, made while negotiations were ongoing, was found to be in bad faith. The court also held that the union could not, having agreed to the redundancy and negotiated the exit package, challenge the selection criteria or seek re-instatement. The claim for re-instatement was refused, but the grievants were held entitled to the exit package specified in their exit letters, payable immediately if not already paid. Judgment was delivered at Nairobi on 17th June 2014 by Lady Justice Maureen Onyango.

Key legal issues

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01

Whether the redundancy was unprocedural and unfair

Holding

The redundancy was procedural: the union was notified and consulted, meetings were held and agreed the exit package, and the labour office was notified

Reasoning

The court found the Respondent notified the union of the intended right-sizing by letter dated 12th October 2012, parties met on 16th, 23rd and 25th October 2012, and agreed a voluntary early retirement scheme with an enhanced severance pay. The Minister for Labour was notified by copy of the letter of 19th October 2012 and the County Labour Officer acknowledged and advised on compliance. The dispute report by the union was made while negotiations were ongoing, in bad faith.

p. 4
02

Whether the grievants are entitled to re-instatement

Holding

Re-instatement refused; the union having agreed to the redundancy and negotiated the exit package cannot seek re-instatement, though the grievants remain entitled to their exit package

Reasoning

The Claimant Union participated in negotiations, agreed to the redundancy of the grievants as the only employees who did not accept voluntary early retirement, and negotiated an enhanced exit package including golden handshake and 4 months' salary in lieu of notice. Having done so, the court held the union could not pray for re-instatement; however, the exit package specified in the exit letters remains payable immediately if not already paid.

p. 4

Legal principles established

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  • A redundancy carried out with consultation and agreement of the union and with notification to the labour office complies with Section 40 of the Employment Act
  • Parties may agree on terms and conditions of service outside the Employment Act provided such terms are not less favourable to the employee
  • A union that has agreed to a redundancy and negotiated an exit package cannot later seek re-instatement of the affected employees

Court orders

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  1. 1.The prayer for re-instatement of the grievants is refused
  2. 2.The grievants are entitled to the exit package as specified in their exit letters, to be paid to them immediately if not already paid

Authorities

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Legislation

  • Employment ActSection 40
  • Employment ActSection 26(2)
  • Labour Relations ActSections 61, 62 and 74
Jurisdiction invoked
Section 74 of the Labour Relations Act (urgent referral of redundancy disputes to the Industrial Court)

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, "Banking, Insurance & Finance Union (Kenya) v Magereza Savings & Credit Co-Operative Society Limited [2014] KEELRC 1194 (KLR)", Case Analysis (2014). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/1194/eng@2014-06-17

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