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ELRCPartially AllowedELRC Cause (Nairobi)· [2021] KEELRC 1848 (KLR)

Banking Insurance and Finance Union (K) v Mua Insurance (Kenya) Limited [2021] KEELRC 1848 (KLR)

Employment and Labour Relations Court
16 April 2021
4,001 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~16 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that paying bonuses only to non-union staff was discrimination, so Monarch Insurance must pay union members the same bonuses.

What this practically means

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Executive summary

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The claimant, a trade union representing employees in the banking and financial sector, sued its recognised employer, an insurance company, alleging discrimination against union members in the distribution of bonuses. On 13th May 2020 the respondent's CEO announced that following a 7% growth and profits, the Board had approved bonuses based on the company's Performance Management System (PMS). Non-unionised employees were paid at the end of May 2020, but union members were not, the respondent contending that no CBA was in force, that bonuses were not provided for in the expired 2017 CBA, and that it had no assessment tool because the union had challenged the inclusion of the PMS in the pending CBA negotiations (ELRC Cause No. 1583 of 2018). The claimant also alleged that the HR Manager pressured members to leave the union to access the bonus. Maureen Onyango J framed three issues: validity of the CBA, discrimination, and entitlement to relief. The court held the 2017 CBA remained in force until amended or terminated per its duration clause and Section 59(3) of the Labour Relations Act. It held that terms not covered by a CBA are governed by employer policy, and that denying union members a bonus paid to others under company policy amounted to discrimination prohibited by Section 5 of the Employment Act. The claimant's claim substantially succeeded; the respondent was directed to assess and pay bonuses per the policy used for non-unionised staff, file computations within 30 days, and pay the claimant's costs. The prayers for interest from May 2020 and computation within seven days were not granted as sought.

Key legal issues

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01

Whether a CBA expires on the date stated on its face

Holding

The CBA remained valid and in force despite its stated duration ending 31st December 2017, because its duration clause provided continuation until amended or terminated by one month's notice, and its terms are incorporated into employment contracts under Section 59(3) of the Labour Relations Act and Section 26 of the Employment Act.

Reasoning

The court examined the CBA's duration clause which provided that after the one-year period the agreement continues in force until amended or terminated by notice. Combined with the statutory incorporation of CBAs into individual contracts, the expiry date did not end the obligations. Thus the respondent's argument that no valid CBA existed failed.

p. 5
02

Whether non-payment of bonus to union members while non-unionised employees were paid constitutes discrimination

Holding

Yes. The respondent paid bonuses to non-unionised employees but withheld them from union members on the ground that the CBA did not provide for bonuses or the PMS assessment tool. The court held that terms not covered by a CBA are governed by employer policy, and denying a benefit because it is not in the CBA is discrimination under Section 5 of the Employment Act.

Reasoning

The respondent admitted paying non-unionised staff but not union members, citing absence of an assessment tool given the union's rejection of the PMS. The court found this illogical: the employer must have used a tool or policy to assess non-unionised staff, and any employment term not covered by the CBA falls under workplace policy. The union had even requested payment per company policy.

p. 5
03

Whether the respondent's estoppel argument (union challenging PMS in the pending CBA suit) justified withholding bonuses

Holding

No. The court held the estoppel argument illogical because the CBA covers only its clauses, and a pending dispute over introducing the PMS into the CBA does not justify denying union members a bonus paid under company policy to others.

Reasoning

The respondent argued it was estopped from applying the PMS to union members since the union had challenged its inclusion in the CBA in ELRC Cause No. 1583 of 2018. The court rejected this, holding that the CBA only covers its own clauses; benefits outside the CBA are governed by employer policy, and the dispute over the PMS could not be used to withhold bonuses altogether.

p. 5

Legal principles established

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  • A CBA continues in force beyond its stated duration until amended or terminated, and its terms are incorporated into employees' contracts by virtue of Section 59(3) of the Labour Relations Act
  • Denying employees a benefit because it is not covered by the CBA, where it is provided by employer policy to others, amounts to prohibited discrimination under Section 5 of the Employment Act

Court orders

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  1. 1.The Respondent is directed to forthwith assess and pay bonus to the unionisable employees in accordance with the bonus policy used for assessment and payment of the same to non-unionised employees
  2. 2.The Respondent to file the computation of bonuses payable in court within 30 days
  3. 3.The Respondent shall pay costs of this suit to the Claimant

Authorities

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Legislation

  • Labour Relations ActSection 59(3)
  • Employment ActSection 26
  • Employment ActSection 5, including 5(2) and 5(3)
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure Act (Chapter 21, Laws of Kenya)Section 1B
  • Civil Procedure RulesOrder 21 Rule 1
  • International Labour Convention No. 111

Cases cited (5)

  • NEC Corporation v Samuel Gitau Njenga
    Civil Appeal No. 127 of 2016 (2018) eKLR
  • Communication Workers Union of Kenya v Telkom Kenya Limited
    ELRC No. 2105 of 2014 (2018) eKLR
  • Kenya Chemical & Allied Workers Union v Bamburi Cement Ltd
    (2013) eKLR
  • Kenya Union of Domestic Hotels Educational Institutions and allied workers v M. P Shah Hospital
    (2018)
  • Belgian Linguistics (No. 2)
    (1979-1980) 1 EHRR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment and Labour Relations Court Act and Labour Relations Act

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Banking Insurance and Finance Union (K) v Mua Insurance (Kenya) Limited [2021] KEELRC 1848 (KLR)", Case Analysis (2021). ELRC Cause (Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1848/eng@2021-04-16

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