Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedCause No 2298 of 2014· [2018] KEELRC 809 (KLR)

Banking, Insurance & Finance Union (Kenya) v Maisha Bora Sacco Society Ltd [2018] KEELRC 809 (KLR)

Employment and Labour Relations Court
26 October 2018
BOByram Ongaya
2,257 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~9 min to read original · ~4 min brief

The bottom line

#

Kenyan employers must notify a worker's trade union before a redundancy — even without a recognition agreement — or face compensation payouts.

What this practically means

#

Executive summary

#
The claimant trade union, on behalf of 57 grievants (out of an initial 63, six having been reinstated), sued the respondent alleging unprocedural, unlawful and unfair termination of employment on account of redundancy. By consent, partial judgment was entered on 21.06.2018 and the parties agreed remaining issues, including the union's locus standi, the procedural fairness of the redundancy, compensation, and ancillary claims. The court held that once a union recruits unionisable employees as members it may sue on their behalf on the basis of individual contracts and statutory provisions, even without a recognition agreement, citing section 3 of the ELRC Act and the desirability of avoiding multiplicity of suits. On the redundancy, the court followed Thomas De La Rue and held that section 40(1)(a) of the Employment Act requires the employer to serve the union with not less than one month's notice where employees are union members, irrespective of any recognition agreement; failure to do so rendered the terminations procedurally unfair. Compensation of 3 months' gross salaries (less tax) per grievant was awarded under sections 45(2)(c) and 49, individual notification and the genuineness of the redundancy being mitigating factors. House allowance at 15% of basic pay was awarded (Kshs. 14,434,946.00), the claim being a continuing injury within limitation and the employer failing to prove wage consolidation. One month's pay in lieu of notice (Kshs. 1,151,840.00) was awarded under section 40(1)(f). Claims for annual leave travelling allowance (no statutory provision cited) and service pay (time-barred under section 90) failed. Judgment was entered for the claimant with costs, payment due by 31.12.2018 failing interest at court rates.

Key legal issues

#
01

Trade union standing absent a recognition agreement

Holding

The claimant union had locus to sue for its 57 members despite the absence of a recognition agreement

Reasoning

The court held that recruitment of unionisable employees as members suffices for standing, with claims urged on individual contracts and statutory or constitutional provisions. Section 3 of the ELRC Act favours just and expeditious determination; one union suit avoids multiplicity of suits from a single transaction, and the union's sector of recruitment was not disputed.

p. 2
02

Procedural fairness of redundancy - notice to the union

Holding

The redundancy was procedurally unfair because the respondent failed to serve the union with the statutory one-month notice under section 40(1)(a)

Reasoning

The grievants were union members at material times; section 40(1)(a) contains no requirement of a recognition agreement before notice is served on the union. Following Thomas De La Rue, the employer was bound to notify the union not less than one month before termination. Failure to do so rendered the redundancy procedurally unfair under section 45(2)(c).

p. 2
03

Compensation for unfair termination

Holding

Each grievant awarded 3 months' gross salaries (less tax) as at termination

Reasoning

The procedural unfairness amounted to unfair termination under sections 45(2)(c) and 49(1). Mitigating factors included that individual grievants were notified and the redundancy reason was genuine under section 43. The grievants did not contribute to the termination and wished to remain employed, balancing to 3 months' gross salaries each.

p. 2
04

House allowance

Holding

Claim succeeded; underpayments for housing allowance at 15% of basic salary awarded (Kshs. 14,434,946.00)

Reasoning

The claim was a continuing injury within section 90 and filed within 12 months of cessation. No waiver was established. The claimants proved no consolidated wage incorporating rent, and the employer bore the burden of proving consolidation, following Joshua Lihanda. The 15% housing allowance under the Regulation of Wages (General) Order was due throughout service.

p. 2
05

One month's salary in lieu of notice

Holding

Claim succeeded; Kshs. 1,151,840.00 awarded

Reasoning

The section 40(1)(a) notice is a preparatory notice; section 40(1)(f) separately requires payment of not less than one month's notice or wage in lieu. It was not established that such payment was made consequent to the redundancy, so the prayer succeeded.

p. 3

Legal principles established

#
  • A trade union has standing to sue on behalf of its member employees even without a recognition agreement, based on the individual contracts of service and statutory or constitutional provisions
  • Under section 40(1)(a) of the Employment Act, an employer must serve the prescribed redundancy notice on the trade union where the employees are union members, regardless of the absence of a recognition agreement

Court orders

#
  1. 1.Declaration that the termination of the grievants' employment by way of redundancy was procedurally unfair
  2. 2.Respondent to pay each of the 57 grievants 3 months' salaries for unfair termination as per the schedule marked 1 on the submissions
  3. 3.Grievants to be paid one month salary or wages in lieu of notice amounting to Kshs. 1,151,840.00
  4. 4.Grievants to be paid underpayments for housing allowance at 15% of basic salary amounting to Kshs. 14,434,946.00
  5. 5.Payments to be made by 31.12.2018 failing interest at court rates from the date of judgment till full payment
  6. 6.Respondent to pay the claimant's costs of the suit

Authorities

#

Legislation

  • Employment Actsection 40(1)(a)
  • Employment Actsection 40(1)(f)
  • Employment Actsections 43, 45(2)(c), 49(1)
  • Employment Actsections 31, 35, 63(2), 90
  • Employment Act, 2007section 9
  • Labour Relations Actsection 56
  • Labour Institutions Act, 2007section 63(2)
  • Employment and Labour Relations Court Actsection 3
  • Regulation of Wages (General) Orderregulation 4
  • Regulation of Wages and Conditions of Employment (General) Orderannual leave travelling allowance provisions (not specifically cited)

Cases cited (5)

  • Employees of Voluntary and Charitable Organisations (KUEVACO) – Versus – Board of Governors & Maina Wanjigi Secondary School
    [2015]eKLR
  • Communication Workers Union – Versus – Safaricom Ltd
    [2014]eKLR
  • Kenya Hotels and Allied Workers Union – Versus – Well-come Inn Hotels Ltd and Another
    [2015]eKLR
  • Thomas De La Rue (K) Ltd – Versus – David Opondo Omutelema
    [2013]eKLR
  • Joshua Lihanda – Versus – Outdoor Occassions Limited
    [2014]eKLR
Jurisdiction invoked
Employment and Labour Relations Court Act, section 3

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Banking, Insurance & Finance Union (Kenya) v Maisha Bora Sacco Society Ltd [2018] KEELRC 809 (KLR)", Case Analysis (2018). Cause No 2298 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/809/eng@2018-10-26

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