Kenya Plantation and Agricultural Workers Union v James Finlay Kenya Limited (Finlay Flowers) [2016] KEELRC 1008 (KLR)
The bottom line
#A Kenyan court awarded flower farm workers a 30% pay rise over two years after the employer failed to prove it couldn't afford it.
What this practically means
#Executive summary
#Key legal issues
#Whether the court has jurisdiction to set wage increases and CBA terms in the absence of an agreed collective agreement
The court has jurisdiction; the jurisdictional objection was dismissed. Disputes referred after conciliation before the Minister fail fall squarely within the court's exclusive original jurisdiction under Article 162(2)(a) and Section 12 of the Industrial Court Act.
The court held that a CBA under the Labour Relations Act or Employment Act is not an ordinary commercial contract which a court cannot rewrite. Upon a stalemate in negotiations and a failed conciliation before the Minister, the dispute properly comes to the court, which determines the contested items guided by affordability, comparability, ability to pay and cost of living. The respondent's reliance on the TSC case was distinguished as concerning public officers and contracts generally.
Whether the CPI as computed from KNBS data was a proper criterion for the wage increase
Yes; the CPI data as applied by the CPMU report was correctly applied and appropriate, and the respondent's critique failed.
The claimant relied on the KNBS New Consumer Price Index users' guide defining CPI and noting its use as a tool in wage negotiation and indexation in trade disputes. The court found the rubbishing of the claimant's CPI computation fell short of expectation given the KNBS definition, and the respondent adduced no effective controverting evidence.
Whether the respondent had ability to pay and whether the wage increase was sustainable
All indicators pointed to a healthy economic position which the respondent failed to rebut; the claimant was entitled to a wage increase.
The respondent, a price taker, claimed stagnated flower prices, exchange losses and competitive disadvantage, but never produced financial statements or audited accounts. The claimant's expert evidence showed profits and increased production. The respondent's case amounted to mere denial and evasion of responsibility to the unionisable workforce.
Whether fringe benefits (housing, water, medical care, education) should offset wage increases
No; these are statutory entitlements and cannot inhibit a pay rise.
The court held that housing, water, medical facilities, education and play areas are benefits entitled by law and therefore cannot be inhibiting factors for a pay rise. Even the respondent's own expert admitted in cross-examination that benefits do not take away the entitlement to wages rising out of CPI, since benefits are part of the CPI basket.
Retirement age (Clause 27): whether to enhance from 55 to 60 years
Awarded to the claimant: mandatory retirement age of 60 years with an option to retire at 55.
Relying on David Mwangi Gioko & 51 Others v Nairobi City Water & Sewerage Company Ltd, the court held that an employer's rigid stance on retirement age is not best practice. Enhancement of the retirement age in line with public policy and practice would not prejudice the respondent.
Gratuity (Clause 28): whether to increase computation from 22 to 24 days or delete the clause upon commencement of the NSSF Act
Status quo retained: gratuity computation remains as in the subsisting CBA; neither party's proposal adopted.
The court found the NSSF Act question controversial and not an emergency, and opted to retain the existing gratuity provision in readiness for negotiations in the future CBA. This declined both the claimant's enhancement and the respondent's counter-claim for deletion of Clause 28.
Legal principles established
#- The Employment and Labour Relations Court has original jurisdiction over employment and labour disputes and may determine disputed CBA items where parties fail to agree, guided by affordability, comparability, ability to pay and cost of living.
- An employment contract or CBA under the Employment Act and Labour Relations Act cannot be equated with an ordinary commercial contract, and courts are not barred from determining CBA terms in the manner of ordinary contract law.
- Fringe benefits such as housing, water, medical facilities and education are benefits entitled by law and cannot be used to deny a wage increase.
- A party asserting inability to pay wage increases must produce financial statements and audited accounts; failure to do so leaves the claimant's evidence of a healthy economic position unrebutted.
- An employer's rigid position on retirement age is not best practice and the court should exercise caution in acceding to such rigidity; an enhancement of retirement age consistent with public policy and practice would not prejudice the employer.
Court orders
#- 1.Unionisable employees' rates of pay: 15% increase for 2014 and 15% increase for 2015
- 2.Mandatory retirement age for unionisable employees set at 60 years with an option to retire at 55 years
- 3.The time for computation of gratuity payable shall remain as in the subsisting CBA
- 4.The respondent to implement the terms of the judgment within thirty (30) days
- 5.Each party to bear its own costs of the claim
- Jurisdiction invoked
- Article 162(2)(a) and (3) of the Constitution of Kenya, 2010; Section 12 of the Industrial Court Act (Industrial Court Act, 2011)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Plantation and Agricultural Workers Union v James Finlay Kenya Limited (Finlay Flowers) [2016] KEELRC 1008 (KLR)", Case Analysis (2016). Memorandum of Claim dated 14th August, 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1008/eng@2016-06-30
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.