Kenya Petroleum Oil Workers Union v National Oil Corporation of Kenya [2021] KEELRC 1635 (KLR)
The bottom line
#A Kenyan court refused petroleum workers a pay rise because their employer was losing money, but ordered the parties to sign their delayed collective bargaining agreement.
What this practically means
#Executive summary
#Key legal issues
#Whether to award a basic salary increment to the unionisable staff for the 2016-2018 CBA.
No increment awarded. Although the CPI established erosion of purchasing power (6.36% per year), the employer's inability to pay prevailed.
The court accepted that the CPI rise of 12.72% over two years eroded the workers' purchasing power, which would ordinarily justify an increment. However, the CPMU and SRC reports showed the Respondent made losses from 2014 to 2017 and that any increment was fiscally unsustainable. The Claimant produced no documentary evidence of alleged mismanagement. The court balanced the need to cushion workers against the employer's ability to pay and declined any increment, warning of redundancy or company collapse.
Whether Job Grade NOC 5-10 should be classified as unionisable.
Reclassification declined; the Claimant's material was insufficient.
The Claimant argued that NOC 5-10 staff are not policy makers and lack capacity to hire, promote, discipline or handle confidential information, and that 84% management against 16% unionisable staff was contrary to global practice. The court found the material insufficient and declined the order, directing the Claimant to raise the issue in future negotiations or through relevant legal channels. The court also held it cannot dictate management composition or policy to an employer.
Whether the parties should sign the 2016-2018 CBA and commence the 2018-2022 CBA.
Ordered: parties to sign and register the 2016-2018 CBA retaining previous CBA terms within 45 days, then commence negotiations for the 2018-2022 CBA under the 4-year SRC cycle.
The CBA was long overdue, having expired on 30 June 2016. To regularise the CBA cycle as per the SRC's 4-year guidelines, the court directed execution of the 2016-2018 CBA without the salary increment and immediate commencement of negotiations for the next 4-year cycle CBA for 2018-2022.
Legal principles established
#- A court faced with a question of wage increment ought to take into account productivity, cost of living and the ability of the employer to pay.
- The SRC's report under Rule 37(2) of the ELRC (Procedure) Rules, 2016 is an advice and not binding on the court in discharging its adjudication duty.
- Compensation for inflation must not result in an unsustainable wage bill; a wage increment that would trigger the collapse of an organization is harmful to the very workers it was intended to benefit.
- The court cannot dictate to employers on the composition or operational management and policy matters.
Court orders
#- 1.Declined to award any salary increment to the claimant's members for the 2016-2018 CBA period.
- 2.Directed the parties to sign and register the 2016-2018 CBA retaining all the terms in the previous CBA, without the intended salary increment, within 45 days of the judgment.
- 3.Directed that immediately after signing the 2016-2018 CBA, the parties commence negotiations for the 2018-2022 CBA to regularise their CBA cycle to the 4-year cycle under the SRC's Guidelines.
- 4.Declined to grant the order for reclassification of Job Grade NOC 5 and 6 as unionisable staff, leaving the matter to the parties to negotiate or pursue other legal channels.
- 5.Ordered that each party bear its own costs of the suit.
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over the trade dispute reported to the Ministry of Labour after failed conciliation, under the Employment and Labour Relations Court (Procedure) Rules, 2016 (including Rule 37(2))
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Petroleum Oil Workers Union v National Oil Corporation of Kenya [2021] KEELRC 1635 (KLR)", Case Analysis (). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1635/eng@2021-06-03
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.