Amalgamated Union of Kenya Metal Workers v Amazon Motors Limited [2018] KEELRC 2372 (KLR)
The bottom line
#A Kenyan employment court ruled that retrenched workers under a collective bargaining agreement are entitled to both statutory severance pay and CBA gratuity.
What this practically means
#Executive summary
#Key legal issues
#Whether employees declared redundant under a CBA are entitled to both severance pay and gratuity
Yes. Redundancy is a form of termination of employment; Clause 20(2) of the CBA grants gratuity to employees 'terminated' without excluding redundancy, and statutory severance under Section 40(g) is a basic minimum that does not displace negotiated enhanced terms.
The Court applied the rule that contractual instruments are construed according to the expressed intention of the parties. The phrase 'termination of employment through redundancy' in Clause 21(1) showed the parties treated redundancy as a form of termination. Since Clause 20(2) excluded gratuity only for termination on disciplinary grounds, no exclusion of redundancy could be implied. Section 26 of the Employment Act makes statutory provisions basic minimums, so negotiated enhancements such as CBA gratuity survive compliance with Section 40 of the Employment Act.
Whether the validity of the redundancy declaration was in issue
No. Notice and selection criteria were not contested; the only live issue was the make-up and level of redundancy dues.
The matter had gone through lengthy conciliation both directly between the parties and with Ministry of Labour intervention. From the pleadings and evidence, notice and selection criteria appeared resolved, and the Claimant made no claim on those accounts. The Court therefore confined itself to quantum of dues, specifically whether gratuity under Clause 20(2) of the CBA was payable on top of severance pay.
Whether prejudgment interest was payable
No. The Court declined prejudgment interest due to both parties' delay, confining interest to post-judgment default.
The Court noted that both parties appeared to have prevaricated on speedy conclusion of the matter, for instance the Respondent's failure to honour the May 2014 settlement undertaking and the matter's protracted conciliation history. In the exercise of discretion, prejudgment interest was refused; instead, interest at court rates runs only from the date of judgment on any unpaid balance after 30 days.
Legal principles established
#- Where a CBA clause on gratuity refers to 'termination of employment' without excluding redundancy, redundancy being a form of termination, gratuity is payable in addition to severance pay
- Section 26 of the Employment Act makes the Act's provisions basic minimum conditions; employees cannot be denied negotiated enhanced terms merely because statutory minimums have been complied with
- If parties to a CBA intended to exclude gratuity for a category of termination, they would expressly do so, as they did for termination on disciplinary grounds
Court orders
#- 1.The Respondent is directed to re-tabulate the dues payable to the affected employees, taking into account the finding on payment of gratuity, within fifteen (15) days from the date of delivery of the judgment
- 2.The said dues shall be paid in full, less statutory deductions, to each employee within thirty (30) days from the date of delivery of the judgment
- 3.Any amount remaining unpaid after the said thirty (30) days will attract interest at court rates from the date of delivery of the judgment until payment in full
- 4.Each party will bear their own costs
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment disputes (Labour Relations Act, Section 62 conciliation having been exhausted; Employment Act, 2007)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Amalgamated Union of Kenya Metal Workers v Amazon Motors Limited [2018] KEELRC 2372 (KLR)", Case Analysis (2018). Memorandum of Claim dated 2nd October 2014, filed 11th November 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/2372/eng@2018-03-02
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.