Kenya Engineering Workers Union v Nyanza Engineering and Hardware Limited [2018] KEELRC 1174 (KLR)
The bottom line
#Kenya's Employment Court awarded workers a 14% pay rise and higher house allowance, but trimmed the union's demands because the employer had recent losses.
What this practically means
#Executive summary
#Key legal issues
#General wage increase
7% increase for each of the two years, totalling 14%, instead of the union's proposed 20% per year.
The court considered the CPI of 13.75 for the county over the CBA period, the decline in overall staff numbers to only 4 unionisable staff, current unionisable labour cost of Kshs.1,075,812, the Respondent's financial performance showing profit in 2014 and huge losses in 2015, and the parties' submissions, before settling on a moderate award of 7% per year.
Housing allowance
Award of Kshs.2,700 or 15% of basic salary whichever is higher.
Guideline No.2(a)(ii) of 2005 provides for separate compensation for housing cost increases of up to half of the cost increase for the period. Applying the 7.45% CPI on housing to the existing entitlement of Kshs.2,500 under the current CBA, the court increased the allowance to Kshs.2,700 or 15% of basic salary, whichever is higher.
Safari allowance
Union's proposals awarded: Kshs.170 breakfast, Kshs.230 lunch, Kshs.280 dinner, Kshs.1,500 accommodation.
The court found the expenses on this item are occasional, arising when an employee is on duty away from the workplace, and are largely transportation costs. Given that the number of staff has considerably reduced, the financial impact on the Respondent would be minimal, and the union's proposals were therefore found reasonable and awarded.
Effective date and duration of the CBA
Effective date set at 1st May 2016 to 30th April 2018 rather than the union's sought 1st May 2015.
The Respondent pleaded inability to pay for the full period sought. Considering the small number of unionisable staff remaining, the Recognition Agreement requirement that CBAs be renewed every two years, and the 12% minimum wage increase already implemented in 2015, the court adjusted the effective date of the new CBA to 1st May 2016.
Basic minimum wage
No review awarded.
The Respondent had already adjusted the basic minimum wage bill upwards, raising statutory rates by 12% in line with the 2015 General Wage Order with effect from 1st May 2015, and was therefore already in conformity, leaving no basis for further review of this head.
Leave travelling allowance
No award made.
The current CBA provides Kshs.2,300 and the union sought Kshs.2,500 in the first year and Kshs.3,000 in the second. Weighing the modest cost increase against the Respondent's financial performance, which showed some profit in 2014 but huge losses in 2015, the court declined to make any award on this head.
Legal principles established
#- In economic disputes the court balances union demands against the employer's financial capacity, guided by CPI and the economic report of the CPMU.
- Housing allowance awards may be pegged to the CPI increase on housing costs as per Guideline No.2(a)(ii) of 2005.
Court orders
#- 1.No Review of basic minimum wage
- 2.7% General Wage increase for the 1st year and 7% increase for the 2nd year, total 14%
- 3.Kshs.2,700 house allowance or 15% of the basic salary whichever is higher
- 4.Safari Allowance: Kshs.170 for Breakfast, Kshs.230 for lunch, Kshs.280 for Dinner and Kshs.1,500 for accommodation
- 5.Effective date of the new CBA is 1st May, 2016 (running to 30th April, 2018)
- Jurisdiction invoked
- First-instance economic dispute referred to the court under the Labour Relations Act framework after failed conciliation by the Ministry of Labour (Hellen Maneno appointed conciliator)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Engineering Workers Union v Nyanza Engineering and Hardware Limited [2018] KEELRC 1174 (KLR)", Case Analysis (2018). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1174/eng@2018-09-20
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.