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ELRCPartially AllowedNot stated in judgment· [2015] KEELRC 372 (KLR)

Tailors and Textile Workers Union v African Cotton Industries [2015] KEELRC 372 (KLR)

Employment and Labour Relations Court
23 October 2015
2,177 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 union's conciliation settlement but recalculated redundancy pay using CBA minimum wages, awarding 22 workers Ksh 1.49 million.

What this practically means

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Executive summary

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The claimant union sued on behalf of 22 grievants terminated through redundancy on 3.6.2014, seeking Ksh 3,771,795.59 in terminal dues. The respondent relied on a settlement agreement signed at the Mombasa County Labour Office on 18.6.2014 after conciliation, pursuant to which it unilaterally assessed and deposited severance pay and notice pay at the labour office. The court framed two issues: whether to interfere with the settlement agreement, and the correct terminal dues payable under it. It held that although the conciliation was not founded on Part VIII of the Labour Relations Act, since the labour officer learnt of the dispute from the media and summoned the parties by phone, the parties voluntarily submitted to the process and signed the agreement without mistake, coercion, misrepresentation or undue influence; the court therefore declined to set it aside. On quantum, the court found the grievants had been laid off in 2008 and paid terminal dues, so any claim on pre-2008 service was time-barred under section 90 of the Employment Act; severance was awarded only for post-2009 contracts at 21 days' wages per completed year under CBA clause 20(e), with notice pay of one or two months under clause 17. The court reassessed dues on CBA minimum wages under clause 27. Issues of leave days and salary arrears had already been settled between the parties. Judgment was entered for the claimant in the aggregated sum of Ksh 1,488,266.85, with monies deposited at the labour office released to the claimant as part payment, plus costs of the suit.

Key legal issues

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01

Validity of the conciliation settlement agreement of 18.6.2014

Holding

The court declined to set it aside; the parties voluntarily submitted to the labour officer's jurisdiction and signed the agreement in good faith intending to be bound

Reasoning

Although the conciliation process was not founded on Part VIII of the LRA since the dispute was not commenced under section 62, the parties voluntarily submitted to the labour officer's jurisdiction. The agreement was unambiguous and not tainted by mistake, coercion, misrepresentation or undue influence, so it bound the parties and the court would not interfere.

p. 2
02

Entitlement to severance for pre-2008 service

Holding

Grievants were laid off in 2008 and paid terminal dues; severance was awarded only for contracts from 2009

Reasoning

Vouchers dated between 31.3.2008 and 31.7.2008 evidenced payment of terminal dues following the 2008 lay-off, contested only from the bar. Any claim for unpaid dues from 2008 was time-barred under section 90 of the Employment Act (3 years). Fresh contracts from 2009 entitled grievants to severance at 21 days per completed year under the CBA.

p. 3
03

Pay in lieu of notice

Holding

Awarded at one or two months' wages depending on year of appointment, limited to post-2008 service

Reasoning

Under CBA clause 17, employees with up to 5 years' service get one month's notice, and those with 5 to 10 years get two months. Since the court found fresh contracts were entered after the 2008 termination, the longest service counted was slightly above 5 years, so notice pay was limited accordingly.

p. 3
04

Correct wage basis for assessment

Holding

Terminal dues reassessed on minimum wages under CBA clause 27, as the respondent's assessment used wages lower than the CBA minima

Reasoning

The parties did not plead the job group of each grievant, but where job groups could reasonably be matched with CBA clause 27, the respondent's assessment fell below the prescribed minimum wages. The court therefore reassessed dues on CBA minimum wages, the CBA being in force at the 3.6.2014 termination under clause 30.

p. 3

Legal principles established

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  • A settlement agreement reached in conciliation, signed voluntarily by the parties without mistake, coercion, misrepresentation or undue influence, binds the parties and the court will not interfere with it absent compelling reason
  • There is no statutory power for a labour officer who learns of a trade dispute from the mass media to summon parties by phone for conciliation under Part VIII of the LRA
  • Employees who have worked continuously for two or more years are converted to regular employees under section 37 of the Employment Act and are entitled to severance pay at 21 days' wages per completed year of service as per the CBA

Court orders

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  1. 1.Judgment entered for the claimant on behalf of the grievants in the aggregated sum of Ksh 1,488,266.85 to be shared as summarized per grievant
  2. 2.Money deposited by the respondent at the labour office Mombasa for notice and severance pay to be released to the claimant forthwith as part payment of the sum awarded
  3. 3.Money deposited for leave and salary to be released to the claimant forthwith as it is not in dispute
  4. 4.Claimant to have costs of the suit

Authorities

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Legislation

  • Labour Relations Actsection 62
  • Employment Actsection 37
  • Employment Actsection 90
Jurisdiction invoked
Dispute referred to the Employment and Labour Relations Court under section 62 of the Labour Relations Act and the court's rules

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, "Tailors and Textile Workers Union v African Cotton Industries [2015] KEELRC 372 (KLR)", Case Analysis (2015). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/372/eng@2015-10-23

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