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ELRCPartially AllowedCause No. 1997 of 2014, consolidated with Cause No. 15 of 2015 (Kericho)· [2016] KEELRC 559 (KLR)

Kenya Plantation & Agricultural Workers Union v Kenya Tea Growers Association [KTGA] (Cause 1997 of 2014) (Employment and Labour) [2016] KEELRC 559 (KLR)

Employment and Labour Relations Court of Kenya at Nairobi
20 June 2016
12,886 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~52 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court awarded tea plantation workers a 15% pay rise, confirming employers claiming they can't afford increases must prove it with financial records.

What this practically means

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Executive summary

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The Union and the KTGA, bound by a Recognition Agreement and a 2012-2013 CBA, failed to agree on nine items of the 2014-2015 CBA after conciliation produced a Certificate of Disagreement on 22nd October 2014. Both parties filed suits, now consolidated. The Union sought a 25%:25% wage increase, enhanced gratuity, annual leave travelling allowance, medical and sick leave benefits, retirement at 60, observance of the day of worship, baggage allowance and a paid rest day. KTGA offered 2%:2%, sought deletion of the gratuity clause citing the NSSF Act, 2013, retention of existing terms, and a productivity (tea yield) increase from 862 to 1170 kgs. KTGA challenged the Court's jurisdiction to impose CBA terms or award wages above the legal minimum. The Court held it has exclusive jurisdiction under Article 162(2)(a), section 12 of the ELRC Act and the Labour Relations Act, a CBA not being an ordinary commercial contract. It found the employer bears the burden of proving inability to pay through audited financial statements, which KTGA failed to produce. Applying the Wage Guidelines and CPI, the Court awarded 15%:15% wage increase, retirement at 60 with voluntary retirement at 55, a paid rest day weekly, 6% annual leave travelling allowance, Kshs.30,000 medical/sick allowance, Kshs.30,000 baggage allowance on termination, and review of policy on the day of worship. Annual leave and gratuity remain as under the 2012/2013 CBA. The tea yield increase was not awarded, being outside the negotiated items.

Key legal issues

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01

Jurisdiction of the ELRC over wage disputes and imposition of CBA terms

Holding

The Court has jurisdiction under Article 162(2)(a), section 12 of the ELRC Act and sections 62-73 of the Labour Relations Act to arbitrate unresolved CBA items including wages; KTGA's jurisdictional challenge lacked merit

Reasoning

The right to collective bargaining is entrenched in Article 41(5) of the Constitution. Parties followed the conciliation route under sections 62-73 of the Labour Relations Act and received a Certificate of Disagreement, giving the Court original jurisdiction. A CBA is not an ordinary commercial contract; where parties fail to agree, the Court must arbitrate guided by fair labour practice and the Wage Guidelines.

p. 14
02

Rate of pay for the 2014/2015 CBA

Holding

An award of 15%:15% across the board was appropriate given the CPI and wage determination factors

Reasoning

The Court applied the Wage Guidelines, computing the correct CPI for outside Nairobi as 8.89. KTGA's experts failed to produce audited financial statements to demonstrate inability to pay despite the duty resting on the employer. Statutory benefits cannot be offset against wages. The Union's 25%:25% demand was tempered by the applicable CPI and KTGA's 2%:2% offer was unsustainable.

p. 17
03

Burden of demonstrating inability to pay

Holding

The employer bears the duty to submit financial statements to establish inability to pay or non-sustainability

Reasoning

In CBA negotiations an employer alleging inability to afford wage increases must demonstrate trends from current financial statements for the past 3-5 years, showing wage bill, number of employees and profit margins. The KTGA experts shielded the employer by relying on comparatives and unit costs without producing income, expense or balance sheet data, leaving the Court unable to verify claims of loss.

p. 16
04

Retirement age

Holding

Retirement at 60 years with option for voluntary retirement at 55 years

Reasoning

Relying on the approach in David Mwangi Gioko, the Court held that rigid employer positions on retirement age are not best practice; the public sector norm of 60 years may be adopted while allowing voluntary retirement at 55 to serve both parties.

p. 18
05

Day of worship

Holding

Day of worship is a constitutional right under Article 32 and must be secured as a right in the CBA

Reasoning

Article 32 of the Constitution governs the day of worship while section 27 of the Employment Act governs rest days; they are distinct. A blanket employer policy that does not accommodate individual circumstances and exceptions is unreasonable where constitutional rights are engaged; the Constitution prevails over conflicting workplace policy.

p. 18
06

Gratuity versus NSSF Act contributions

Holding

Gratuity remains a negotiable CBA item and may coexist with NSSF contributions; the rate remains at 22 days

Reasoning

The NSSF Act is statutory and non-negotiable but does not forbid parties from agreeing on gratuity. The 6% deduction under the NSSF Act, 2013 had not come into force. The two provide distinct benefits and may run concurrently, so KTGA's duplication argument failed.

p. 18

Legal principles established

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  • A CBA or contract of service under the Labour Relations Act or Employment Act cannot be equated to an ordinary commercial contract for sale of goods; disputes from collective agreements must go to the ELRC
  • The ELRC has jurisdiction to arbitrate unresolved CBA negotiation items, including wage increases, guided by affordability, comparability, ability to pay and cost of living
  • An employer alleging inability to pay bears the duty to submit financial records to prove it
  • Where an employer's workplace policy conflicts with the Constitution, the Constitution must prevail
  • Statutory benefits under the Employment Act (housing, water, food, medical attention) cannot be applied to justify non-negotiation of a CBA or to renegotiate terms downwards

Court orders

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  1. 1.The CBA for the period 2014/2015 shall be reviewed with rate of pay (basic wage/salary) awarded at 15%:15% for the 2014/2015 CBA across the board
  2. 2.Retirement shall be at 60 years with the option to voluntarily retire at 55 years
  3. 3.On hours of work there shall be 1 rest day with pay in every working week
  4. 4.Annual leave travelling allowance awarded at 6%
  5. 5.Medical treatment and sick allowance awarded at Kshs.30,000.00
  6. 6.Baggage allowance awarded at Kshs.30,000.00 upon termination of employment
  7. 7.Parties shall review the CBA 2014/2015 and any antecedent policy to accommodate the Union member's right to observe their day of worship within reasonable limitations
  8. 8.Annual leave shall remain as under the CBA 2012/2013
  9. 9.Gratuity shall remain as under the CBA 2012/2013

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)(a); Article 41(5); Article 32
  • Employment and Labour Relations Court ActSection 12(1)(b), (f), (j); section 15(5)
  • Labour Relations ActSection 2; sections 57, 58, 60, 60(6)(b), 62-73
  • Employment ActSections 27(1), 27(2), 31, 32, 33, 34, 37
  • NSSF Act, 20136% contributions provisions
  • Wage Guidelines, 2005Guideline No.1 and Guideline No.2

Cases cited (11)

  • TSC versus KNUT & Others
    [2015] eKLR
  • Evelyne Shivachi versus Thara Trading Co & Francis Murage & Another versus Pauline Gitau
    [2015] eKLR
  • Rajab Barasa & Others versus Kenya Meat Commission
    [2016] eKLR
  • Kenya Ferry Services Ltd versus Dock Workers Union (Ferry Branch)
    [2015] eKLR
  • Elijah Tonui versus Ngara Optician
    [2014] eKLR
  • KPAWU versus Unilever Tea Kenya Limited, Cause No.1148 of 2011
  • David Mwangi Gioko & 51 Others versus Nairobi City Water & Sewerage Company Limited
    [2013] eKLR
  • Kituo Cha Sheria & 8 Others Vs Attorney General
    [2013] eKLR
  • Kenya Union of Commercial Food and Allied Workers and Twentieth Century Fox Organisation (East Africa), Cause No. 89 of 1966
  • Kenya Teachers Service Commission versus Kenya National Union of Teachers & Others, Petition No.3 of 2014
  • Teachers Service Commission (TSC) versus Kenya Union of Teachers (KNUT) & 3 Others, Civil Appeal No.196 of 2014
    [2015] eKLR
Jurisdiction invoked
Article 162(2)(a) of the Constitution; section 12 of the Employment and Labour Relations Court Act; sections 57, 60 to 73 of the Labour Relations Act

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Kenya Plantation & Agricultural Workers Union v Kenya Tea Growers Association [KTGA] (Cause 1997 of 2014)  (Employment and Labour) [2016] KEELRC 559 (KLR)", Case Analysis (2016). Cause No. 1997 of 2014, consolidated with Cause No. 15 of 2015 (Kericho). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/559/eng@2016-06-20

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