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ELRCPartially AllowedMemorandum of Claim dated 21st April, 2015· [2016] KEELRC 249 (KLR)

Kenya Plantation & Agricultural Workers Union v Siret Tea Co. Ltd & 2 others [2016] KEELRC 249 (KLR)

Employment and Labour Relations Court
14 November 2016
2,789 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan tea company must pay workers a 15% wage rise for each of 2014 and 2015, plus set redundancy and gratuity rates, after the court mostly sided with the union.

What this practically means

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Executive summary

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The claimant union and the respondent tea company failed to agree on three items in the 2014-2015 CBA negotiations: wages, redundancy pay and gratuity. After failed negotiations and conciliation, the union claimed a 22% wage increase for each of 2014 and 2015, 26 days' redundancy pay per completed year of service and 26 days' gratuity per completed year of service. The respondent denied the claim, asserting inability to pay given declining tea prices, rising production costs, labour costs rising from 39% to 53% of production costs, the enhanced NSSF contributions under the NSSF Act No. 45 of 2013, and lack of productivity improvements; it offered 7% per year, 19 days' redundancy pay, and proposed deletion of the gratuity clause. It filed a counter-claim seeking a 7% increase, a 915 Kgs monthly plucking productivity rate, amendment of the redundancy clause and deletion of the gratuity clause 36. The claimant relied on pleadings and documents only; the respondent called three witnesses, including an economist and an agricultural economist. Noting that this suit formed part of a series of like matters against sector employers decided the same year, the court wholly adopted the reasoning in those authorities, found for the claimant, awarded a 15% wage increase for each of 2014 and 2015, redundancy pay of 20 days per completed year of service, gratuity retained at 21 days per completed year of service, ordered implementation within 30 days, dismissed the counter-claim, and ordered each party to bear its own costs.

Key legal issues

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01

Wage increase for 2014-2015 CBA

Holding

A wage increase of 15% for each of 2014 and 2015 was awarded, less than the 22% sought by the union but more than the 7% offered by the respondent.

Reasoning

The court relied on its own recent decisions in a series of like matters involving the same parties, sector and counsel (Unilever Tea, James Finlay, KTGA). The respondent's expert evidence on inflation (43.7% from 2009 to 2013 versus 54% wage growth), labour cost ratios, price-taking position and declining tea prices mirrored the earlier cases, so the court adopted the same reasoning and outcome rather than re-analysing the evidence.

p. 6
02

Redundancy and gratuity rates

Holding

Redundancy pay fixed at 20 days per completed year of service (up from 18, below the 26 sought); gratuity retained at 21 days per completed year of service (the 26-day enhancement refused).

Reasoning

The court applied the same rationale as in the series of related tea and flower sector judgments, enhancing redundancy marginally and leaving gratuity unchanged, balancing the claimant's proposals against the respondent's evidence of economic constraints, the introduction of enhanced NSSF contributions and the risk to the sustainability of the tea business.

p. 6
03

Respondent's counter-claim

Holding

The counter-claim seeking a 7% wage increase, a 915 Kgs monthly plucking productivity rate, amendment of the redundancy clause to 19 days and deletion of the gratuity clause was dismissed.

Reasoning

The court found the counter-claim lacked legal basis and sense. Although the respondent led expert evidence on productivity and ability to pay, the court concluded the claimant should prevail on the contested items, consistent with its prior rulings in the sector, and thus rejected the respondent's proposed terms in their entirety.

p. 6

Legal principles established

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  • Wage determination must consider inflation, productivity, ability to pay and sector trends, weighed against employee welfare; redundancy and gratuity rates in the CBA should be enhanced in line with prior decisions of the court.

Court orders

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  1. 1.Wage increase of 15% for 2014 and 15% for 2015 for unionisable staff
  2. 2.Redundancy pay at 20 days salary for every completed year of service
  3. 3.Gratuity at 21 days salary for every completed year of service
  4. 4.Respondent to implement the terms of the judgment within thirty (30) days
  5. 5.Each party to bear its own costs of the claim
  6. 6.Respondent's counter-claim dismissed

Authorities

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Legislation

  • Employment Act2007
  • NSSF ActNo. 45 of 2013
  • Collective Bargaining Agreement (2013-2015 and 2012-2013)Appendices 2 and 3; clauses 31(g) and 36

Cases cited (3)

  • Kenya Plantation & Agricultural Workers Union V Unilever Tea (K) Limited
    (2016) eKLR
  • Kenya Plantation and Agricultural Workers Union V James Finlay Kenya Limited (Finlay Flowers)
    (2016) eKLR
  • Kenya Plantation and Agricultural Workers Union V Kenya Tea Growers Association (KTGA)
    (2016) eKLR
Jurisdiction invoked
Dispute referred under the Labour Relations framework following failed conciliation of the 2014-2015 CBA negotiations (wages, redundancy and gratuity)

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 Plantation & Agricultural Workers Union v Siret Tea Co. Ltd & 2 others [2016] KEELRC 249 (KLR)", Case Analysis (2016). Memorandum of Claim dated 21st April, 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/249/eng@2016-11-14

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