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ELRCPartially AllowedCause 338 of 2014· [2015] KEELRC 1656 (KLR)

Kenya Ferry Services Limited v Dock Workers Union [Ferry Branch] (Cause 338 of 2014) [2015] KEELRC 1656 (KLR)

Employment and Labour Relations Court
22 May 2015
5,561 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~22 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court awarded ferry workers a 17.5% pay rise and permanent contracts, but refused to strip the union of its right to strike.

What this practically means

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Executive summary

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This first-instance Award by the Employment and Labour Relations Court at Mombasa resolved a collective bargaining deadlock between Kenya Ferry Services Limited and the Dock Workers Union (Ferry Branch) arising from a Deadlock Agreement signed at their Joint Industrial Council on 12th June 2014. After the Union issued a strike notice, the Claimant obtained an interim order stopping the strike and sought declarations that any strike was unlawful and unprotected, that there be no strike at the ferry service, a permanent restraint on strike action, and adoption of its CBA proposals. The Court first determined that the Claimant is essentially a State Corporation, though the employer's legal form is irrelevant to wage determination. On the nine disputed items, the Court found the Claimant lacked financial ability to meet the Union's demands, based on uncontradicted Audit Office and Ministry of Transport reports showing a Kshs. 115,927,375 deficit. It awarded a 17.5% across-the-board basic salary increment, intermediate house, leave travel, duty travel and commuter allowances, extraneous allowance at 35%, and double-time pay on public holidays. It ordered absorption of casual and contract employees doing work of unlimited duration onto permanent and pensionable terms, upheld outsourcing as a managerial prerogative, and declined to introduce hardship allowance given the employer's finances and existing accident insurance. The Court declined to direct charging of pedestrians, holding that to be a Government policy decision. It rejected the permanent injunction against strikes, holding the right to strike fundamental to collective bargaining, doubting the essential services list under Article 24, and recommending a Minimum Service Agreement within the CBA. It made no order on costs.

Key legal issues

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01

Legal character of the Claimant for wage determination

Holding

The Claimant is essentially a State Corporation, but the legal or business form of the employer is irrelevant to wage determination

Reasoning

The Claimant is a company under the Companies Act but wholly owned and controlled by the Government in partnership with a State Corporation, and discharges public services. However, the factors governing wage determination remain largely unaffected by whether the employer is a State Corporation or a private limited liability company.

p. 5
02

Wage determination criteria in a CBA deadlock

Holding

The Court retains discretion in wage determination; the principal criterion is ability to pay, alongside cost of living, comparability, productivity and the public interest; the Respondent's demands were not sustainable

Reasoning

The Claimant demonstrated a deficit of Kshs. 115,927,375 in 2012/2013 through Audit Office and Ministry of Transport reports which the Respondent did not contradict with financial documents. The Respondent's own submission that pedestrians should be charged acknowledged the Claimant's inability to pay the demands. Inflation averaged 5% and a cautious approach was warranted.

p. 7
03

Casual employment and outsourcing

Holding

Casual and contract employees doing work of unlimited duration must be absorbed on permanent and pensionable terms; outsourcing remains a management prerogative subject to challenge of individual contracts

Reasoning

Section 37 of the Employment Act 2007 requires engagement of employees who have worked continuously for not less than one month on regular terms; the law favours de-casualization and public bodies must lead. However, a blanket caveat on outsourcing would unreasonably limit managerial discretion exercised reasonably.

p. 8
04

Hardship allowance

Holding

Not introduced into the CBA despite being ordinarily merited, due to the employer's financial position and existing insurance cover

Reasoning

Ferry workers operate in an environment exposing them to bodily harm, as shown by the Mtongwe Ferry Disaster, and would ordinarily merit hardship allowance. However the Claimant is not financially healthy enough to shoulder additional allowances, and the group personal accident insurance cover already mitigates the risk.

p. 8
05

Permanent restraint of the right to strike in an essential service

Holding

Refused; the right to strike is fundamental to collective bargaining and the essential services list is questionable under Article 24; a Minimum Service Agreement is the less restrictive means

Reasoning

The right to strike under Article 41(2)(d) is a bedfellow of the right to bargain collectively, recognized by ILO Conventions 87 and 98. Citing Section 81(3) and Schedule 4 of the Labour Relations Act alone is insufficient to justify limitation under Article 24(1). The ferry's essential status may change with changing infrastructure, and permanent restraint would be senseless.

p. 9

Legal principles established

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  • The principal criteria in wage determination is the ability of the Employer to pay, and wage determination transcends the interests of the bargaining parties
  • The right to strike is a bedfellow of the right to bargain collectively and should not be permanently outlawed even in essential services
  • Outsourcing is a management prerogative and should not be subject to a blanket caveat
  • Public bodies must take the lead in de-casualization of labour

Court orders

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  1. 1.Basic Salary awarded at 17.5% across the Board
  2. 2.House allowance: FU1 at Kshs. 19,000; FU2 at Kshs. 17,000; FU3 at Kshs. 15,000; FU4 at Kshs. 13,000; and FU5 at Kshs. 11,000
  3. 3.Existing Employees engaged on casual or contract terms doing work of unlimited duration shall be absorbed on permanent and pensionable terms
  4. 4.Overtime compensation for work done during Public Holidays to be double time
  5. 5.Extraneous allowance at 35% of the basic salary
  6. 6.Leave travel allowance: FU1 and 2 at Kshs. 14,750; FU3 and 4 at Kshs. 14,250; and FU5 at Kshs. 13,750
  7. 7.Duty travel allowance: Subsistence - FU1 and 2 at Kshs. 3,000; FU3, 4 and 5 at Kshs. 2,700; Daily transport FU1 and 2 at Kshs. 1,000 and FU3, 4 and 5 at Kshs. 700; Taxi and overseas rates at Kshs. 1,500 and US Dollars 90 for all grades
  8. 8.Transport/Commuter allowance for FU1 at Kshs. 7,000; FU2 at Kshs. 6,500; and FU3, 4 and 5 at Kshs. 5,500
  9. 9.No hardship allowance to be introduced in the CBA
  10. 10.The prayer for a permanent injunction restraining the Respondent Union and its Members from engaging in strike action is rejected; Parties may negotiate a Minimum Service Agreement to be included in the CBA
  11. 11.No order on the costs

Authorities

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Legislation

  • Constitution of KenyaArticle 41; Article 41(2)(d); Article 41(5); Article 24(1); Article 24(5); Sixth Schedule Clause 7
  • Labour Relations Act 2007Section 60(6)(b); Section 81; Section 81(3); Fourth Schedule
  • Employment Act 2007Section 37
  • State Corporations Act Cap 466Section 3 (definition of State Corporation)
  • Companies Act Cap 486General

Cases cited (3)

  • George S. Onyango v. Board of Directors, Numerical Machining Complex Limited
    Petition Number 35 of 2012, [2013] e-KLR
  • National Union of Water & Sewerage Employees v Mathira Water & Sanitation Company and 2 ors
    [2013] e-KLR
  • Teachers Service Commission v Kenya National Teachers Union
    Petition Number 23 of 2013
Jurisdiction invoked
Dispute reported under the Labour Relations Act 2007 after failed conciliation; the Industrial/ELRC mandate to adjudicate collective bargaining deadlocks and disputes in essential services

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, "Kenya Ferry Services Limited v Dock Workers Union [Ferry Branch] (Cause 338 of 2014) [2015] KEELRC 1656 (KLR)", Case Analysis (2015). Cause 338 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/1656/eng@2015-05-22

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