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ELRCPartially AllowedCause No. 641 of 2013· [2015] KEELRC 1067 (KLR)

Banking, Insurance & Finance Union (Kenya) v Commercial Bank of Africa Ltd [2015] KEELRC 1067 (KLR)

Employment and Labour Relations Court of Kenya
25 May 2015
MMM. Mbaru
2,211 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~9 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that a fixed-term contract simply ends when it expires, but the bank still had to pay a Kshs.126,000 house allowance underpayment.

What this practically means

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Executive summary

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The Banking, Insurance & Finance Union (Kenya) claimed on behalf of two grievants, Samuel Kimani Muigai and Shadrack Mburu Wambui, that Commercial Bank of Africa Ltd unfairly declared redundancies and violated the collective bargaining agreement by underpaying them. The claim by Shadrack Mburu was settled and withdrawn, leaving only Samuel Kimani's claim. The grievant was employed as a Messenger in December 1998 on successive fixed-term contracts and was later issued a three-month contract ending March 2013, on expiry of which his engagement ceased with payment of gratuity. He alleged unfair redundancy and breach of the CBA, seeking declarations of unfair termination, reinstatement with benefits, payment of due salaries and compensation. The respondent maintained that the grievant was at all times on fixed-term contracts that expired and were not renewed, paid with gratuity, and that no redundancy or unfair termination occurred; it admitted a house allowance underpayment of Kshs.126,000.00 from 1999 to 2013 and offered to pay it. The court held that a fixed-term contract terminates automatically on expiry by effluxion of time, that the respondent used the short contract to cushion what would otherwise have been a redundancy in a lawful manner, and that there was no unfair redundancy. The court confirmed the admitted underpayment of Kshs.126,000.00 and refused all other claims. For continued industrial peace, each party was ordered to bear its own costs.

Key legal issues

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01

Whether the non-renewal of the grievant's fixed-term contract amounted to unfair redundancy

Holding

No unfair redundancy found; the employer took advantage of the expiring contract to cushion the grievant through a 3-month contract while reducing staff, and all agreed dues were settled and acknowledged

Reasoning

The court found the respondent was reducing staff and used the lapse of the grievant's contract in January 2013 with a short 3-month contract to cushion what would otherwise be a redundancy process. The respondent's supportive measures - extended medical cover and offer to pay training fees - were good efforts. All agreed terms and dues were settled and acknowledged by the grievant.

p. 4
02

Whether there was a violation of the CBA through underpayment

Holding

The only underpayment was as admitted by the Respondent at Kshs.126,000.00 due from 1999 to 2013, being the house allowance shortfall

Reasoning

The CBA between the claimant and the Kenya Bankers Association applied to the unionisable grievant. The grievant's salary was in some respects higher than the CBA scale, but his house allowance was lower - Kshs.4,000 instead of Kshs.5,000. The respondent admitted this and was willing to pay. The court confirmed Kshs.126,000.00 as due from 1999 to 2013.

p. 4
03

Applicability of sections 40 and 45 of the Employment Act to expiry of a fixed-term contract

Holding

The Employment Act does not extinguish the contractual power; a fixed-term contract terminates automatically on expiry, and the redundancy and unfair termination provisions did not apply on the facts

Reasoning

The court held that the right to contract is inherent in labour relations and enhanced by the written-contract provisions of the Employment Act. The grievant was under written contracts at all material times. Expiry of the fixed term amounted to automatic termination, distinct from redundancy-based termination, so the sections relied on by the claimant did not avail it.

p. 3

Legal principles established

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  • Where an employee is on a fixed-term contract, its expiry results in automatic termination by effluxion of time
  • The right to contract in employment is not extinguished but enhanced by the Employment Act's requirement of written contracts

Court orders

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  1. 1.Confirmation of the admitted underpayment of Kshs.126,000.00 due to the grievant from 1999 to 2013
  2. 2.Dismissal of all other claims
  3. 3.Each party to bear their own costs

Authorities

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Legislation

  • Employment Actsections 7, 8, 9, 10, 35, 40, 45
  • Labour Relations Actsection 60
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; Labour Relations Act)

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 Commercial Bank of Africa Ltd [2015] KEELRC 1067 (KLR)", Case Analysis (2015). Cause No. 641 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1067/eng@2015-05-25

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