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ELRCPartially AllowedCause No 354 of 2019· [2023] KEELRC 1149 (KLR)

Kenya Chemical and Allied Workers Union v East African Portland Cement Company Ltd (Cause 354 of 2019) [2023] KEELRC 1149 (KLR)

Employment and Labour Relations Court
12 May 2023
BOByram Ongaya
2,015 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court upheld a nil wage increase in a CBA dispute because Athi River Mining proved financial distress through redundancies and pay cuts.

What this practically means

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Executive summary

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The claimant union, in a recognition agreement with the respondent company, referred a trade dispute to the Cabinet Secretary on June 14, 2017. After conciliation, seven unresolved items in the negotiation of the CBA to replace the 2012–2015 CBA came before the court: wage increase, safari allowance, baggage allowance, leave travel allowance, commuter allowance, inconvenience allowance and retirement benefits. The claimant proposed wage increases of 10%, 9% and 10% across the three years and enhanced allowances; the respondent countered with 5%, 5% and 7% but later pleaded financial crisis, redundancy programmes and adherence to the Salaries and Remuneration Commission's advisory of nil wage increments, urging retention of out-going CBA rates. The court directed the Central Planning and Monitoring Unit of the Ministry of Labour to render an economic report, which showed the respondent's declining revenue, declining gross profits, shrinking workforce and planned redundancies with re-employment at up to 40% pay cuts. Determined on the material on record by consent, the court held that since redundancies had occurred on the basis of prevailing CBA terms, the just consequence was to bind the parties to those prevailing terms for the in-coming CBA; the SRC advisory of nil increments was reasonable. The claimant's other proposals were declined for lack of justification. The court ordered the parties to forthwith conclude the 2015–2018 CBA on the respondent's proposals, then immediately renegotiate the next CBA, with the found terms forming a fair base in view of the CPI rise. Each party was to bear its own costs given the continuing industrial relationship. Judgment entered and delivered on May 12, 2023 by Byram Ongaya, Principal Judge.

Key legal issues

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01

Whether the claimant's wage increase proposals should be upheld

Holding

The nil increment per the SRC advisory was adopted

Reasoning

The CPMU economic report showed the respondent's declining revenue, gross profits and massive redundancies including re-employment at 40% pay cut. The court found the respondent had established inability to pay increments. Taking judicial notice of COVID-19 effects on enterprises, the court held the SRC advisory of nil, nil, nil increments reasonable and justified, and ordered the disputed clauses drawn per the respondent's proposals.

p. 4
02

Whether the concluded CBA should form the base for future negotiations

Holding

Yes, the in-coming CBA terms as found should constitute the fair and most favourable base for renegotiating the next CBA

Reasoning

The court found the three years in issue had lapsed and the respondent had restructured and refurbished its plant. In view of the CPI rise of 22.10% per the CPMU report, employees would deserve compensation consideration in the next negotiation cycle, notwithstanding the 40% pay cut accompanying re-employment after redundancy.

p. 4
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Costs of the suit

Holding

Each party to bear own costs given the continuing industrial relationship

Reasoning

The court recognised that the parties remain in a continuing industrial relationship and must immediately negotiate the next CBA. Awarding costs against either side would be counterproductive to that relationship, so it ordered each party to bear its own costs of the suit.

p. 4

Legal principles established

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  • Where redundancies occurred on the basis of prevailing CBA terms due to demonstrated financial incapacity, the just consequence is that parties be bound by the prevailing terms for the in-coming CBA
  • An SRC advisory on nil wage increment is reasonable where an employer has established inability to meet increments

Court orders

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  1. 1.The parties to forthwith conclude the in-coming CBA for 2015 – 2018 with the disputed clauses drawn as per the respondent's proposals and the advisory by the Salaries and Remuneration Commission on nil wage increase for each of the three years of the CBA
  2. 2.The parties, after concluding the CBA, to forthwith embark upon re-negotiations for the next cycle of CBA
  3. 3.Each party to bear own costs of the suit

Authorities

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Legislation

  • Wage Guideline No.2productivity as major factor for additional wage compensation
Jurisdiction invoked
Trade dispute referred to the Cabinet Secretary and conciliated; adjudication of unresolved CBA negotiation items by the Employment and Labour Relations Court

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, "Kenya Chemical and Allied Workers Union v East African Portland Cement Company Ltd (Cause 354 of 2019) [2023] KEELRC 1149 (KLR)", Case Analysis (2023). Cause No 354 of 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1149/eng@2023-05-12

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