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ELRCDismissedCause No. 1302 of 2012· [2016] KEELRC 1218 (KLR)

Kenya Union of Commercial Food and Allied Workers v Corn Products Kenya Limited [2016] KEELRC 1218 (KLR)

Employment and Labour Relations Court of Kenya
2 March 2016
MBMbaru
3,930 words in judgment
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The bottom line

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Kenya's Employment Court confirmed that a registered CBA's severance formula beats long-standing workplace practice when computing redundancy pay.

What this practically means

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Executive summary

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The claimant union, recognised under a recognition agreement and CBAs with the respondent, challenged the redundancy of 105 unionisable employees declared on 23rd July 2012 following the respondent's shutdown of its Eldoret production plant. By the time of hearing before Rika J and later arbitration before Mbaru J, the only surviving issue was the formula for computing severance pay: the union urged an hourly-rate formula (basic salary x 8 hours x 24 days x years served ÷ 182 hours, the 182 hours derived from 52 weeks of 42 hours divided by 12 months), relying on past practice and the Conciliator's recommendation, while the respondent computed severance on a daily rate (basic x 24 days x years served ÷ 30 days) in line with clause 31 of the CBA 2010-2012. The court held that the registered CBA is the primary and binding document; a long-standing practice, however repeated, cannot override it, and referral to the Minister and a Conciliator does not displace the CBA or the law. The CBA rate of 24 days per completed year on terminal basic pay exceeds the statutory minimum of 15 days under section 40(1)(g) of the Employment Act and was therefore the applicable rate. The court found the respondent's own computations in the termination letters were more favourable than the CBA-based figures for the sampled employees. A discrimination finding by the Conciliator was held to lack evidential foundation. The claim was dismissed with each party bearing its own costs.

Key legal issues

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01

Applicable formula for computing severance pay

Holding

Severance pay falls to be computed at 24 days for each completed year of service on the employee's terminal basic pay per clause 31 of the CBA 2010-2012, calculated on a 30-day month, not on an hourly rate

Reasoning

The court compared clause 31(c) of the CBA (24 days per completed year) with section 40(1)(g) of the Employment Act (minimum 15 days). All dues under the CBA were computed on monthly wages, with no basis for hourly computation. The CBA rate being more favourable to employees than the statutory minimum, it governs. The Respondent's own computations in the termination letters were already higher than the CBA-based computation.

p. 5
02

Effect of past practice and the Conciliator's recommendation

Holding

The Conciliator's recommendation of an hourly-rate formula, based on long practice, cannot override the registered CBA; the discrimination finding lacked evidential basis

Reasoning

The court held that reference of a dispute to the Minister and appointment of a Conciliator does not render primary documents of reference inapplicable. Practice, however long applied, does not override a binding agreement. The Conciliator's finding of discriminatory practice under section 5 of the Employment Act was a serious finding that required firm and uncontroverted evidence, which was absent.

p. 4
03

Status and enforceability of a registered CBA

Holding

Upon registration a CBA becomes binding and enforceable for its duration and is the primary document of reference before any other document

Reasoning

Relying on sections 2, 59 and 60 of the Labour Relations Act, the court held that a CBA is not an ordinary commercial contract; it acquires legal force upon registration and binds the parties and all unionisable employees. Its terms must be enforced unless there is an inherent illegality.

p. 4

Legal principles established

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  • A registered collective bargaining agreement is the primary document of reference and is binding and enforceable for its duration; a long-standing practice does not override it
  • Where the CBA provides a severance rate higher than the statutory minimum under section 40(1)(g) of the Employment Act, the more favourable CBA rate applies

Court orders

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  1. 1.The claim is dismissed
  2. 2.Each party shall bear their own costs

Authorities

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Legislation

  • Employment Actsection 40, section 40(1)(g), section 5
  • Labour Relations Actsection 2, section 59(1), 59(2), 59(5), section 60

Cases cited (2)

  • Kenya Airways Ltd versus Aviation & Allied Workers Union Kenya & Others
    Civil Appeal No.46 of 2013
  • David Byagudi Okoth & Another versus Corn Products Kenya Ltd
    Cause No.254 of 2013 (Nakuru)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment and Labour Relations Court Act and the Labour Relations Act over the reported employment dispute referred for arbitration

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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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 Union of Commercial Food and Allied Workers v Corn Products Kenya Limited [2016] KEELRC 1218 (KLR)", Case Analysis (2016). Cause No. 1302 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1218/eng@2016-03-02

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