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ELRCPartially AllowedNot stated in the judgment· [2023] KEELRC 1542 (KLR)

Banking, Insurance & Finance Union v Kenya Post Office Savings Bank Ltd (Employment and Labour Relations Cause E822 of 2021) [2023] KEELRC 1542 (KLR)

Employment and Labour Relations Court
16 June 2023
2,412 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan employment court confirmed a union's right to wage increments but left the actual amounts to negotiation because the employer's ability to pay was unproven.

What this practically means

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Executive summary

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The claimant union, holding a recognition agreement with the respondent whose last CBA expired on 30th June 2017, claimed salary, wage and allowance revisions for the CBA period 1 July 2017 to 30 June 2021. It forwarded CBA proposals in February 2019, reported a trade dispute to the Cabinet Secretary in June 2019, and after conciliation failed, filed this claim seeking an 8% annual wage increment for four years plus 4% annual increments on housing and other allowances, anchored on the CPMU report and Wages Guidelines of 23rd November 2005. The respondent pleaded financial incapacity, relying on a qualified auditor-general opinion, declining income, and SRC advice to retain existing remuneration levels. The court found the union holds a constitutional right to collective bargaining under Article 41, and criticised the respondent for its indifference and failure to negotiate or produce audited accounts since 2017. However, it held that it could not grant wage review prayers in the abstract without proof that the respondent could sustain the increments. Finding the claimant had established its case, the court granted the prayers on the listed heads - salary and wages, housing, owner occupier, subsistence, annual leave, medical, car, commuter, hardship and sundry allowances - but directed the parties to finalise the revised CBA within 60 days and agree the parameters of the revisions, with mention on 18th September 2023 for a report and final orders. The claim was thus allowed in principle while quantification was deferred to negotiated finalisation.

Key legal issues

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01

Constitutional right to collective bargaining versus employer's financial capacity

Holding

The claimant has a constitutional right under Article 41 to bargain collectively and had established its case, but any award must be sustainable against the respondent's ability to pay, which was not proved by audited accounts

Reasoning

The court accepted the union's Article 41 right and found the respondent had shown indifference and made no effort to negotiate since 2017. However, neither party supplied audited accounts or sufficient submissions proving the respondent could sustain the increments, so the court declined to grant the prayers in the abstract and instead directed the parties to conclude the revised CBA within 60 days.

p. 4
02

Weight of the SRC report

Holding

The SRC report was of informational use only and did not persuade the court to its determination

Reasoning

Both parties had accepted the SRC report and treated the matter as an economic dispute, yet the claimant later attacked the report. The court held the report could inform but not determine the outcome, and observed that the SRC cannot give itself authority it does not have when dealing with independent organisations.

p. 4
03

Employer's failure to negotiate in good faith

Holding

The respondent made no genuine effort to negotiate the revised CBA and bore responsibility for the deadlock

Reasoning

The respondent merely returned a report that its financial situation had not changed, produced no audited accounts, and made no effort to meet the claimant. The court found the respondent's attitude of indifference unfair given the claimant's patience since 2017 and its request to start negotiations afresh, which the court found did not ring genuine.

p. 4

Legal principles established

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  • A wage increment must be grounded on the employer's demonstrated financial capacity and sustainability of the wage bill
  • Collective bargaining is voluntary and founded on social dialogue, freedom of contract and party autonomy
  • In economic disputes the court is guided by information presented by the parties and expert opinion, including audited accounts of capacity to pay

Court orders

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  1. 1.The court found the claimant had established its case and granted its prayers for increment of dues on the listed heads (salary and wages; housing allowance; owner occupier allowance; subsistence allowance; annual leave allowance; medical (outpatient); car allowance; commuter allowance; hardship allowance; sundry (extraneous) allowance)
  2. 2.The parties ordered to finalise the revised collective bargaining agreement within 60 days and agree on the perimeters of the revisions or as otherwise agreed
  3. 3.Mention on 18/9/2023 to give a report on the revised CBA and to make final orders

Authorities

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Legislation

  • Constitution of KenyaArticle 41
  • Constitution of KenyaArticle 41(5)
  • Constitution of KenyaArticle 260
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Labour Relations Act
  • Employment and Labour Relations Actsection 15 (cap 234)
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B (Chapter 21)
  • Wages Guidelines2(a)(i) and 2(a)(ii) issued 23rd November 2005

Cases cited (5)

  • Kenya Union of Commercial Food and Allied Workers versus Salaries and Remuneration Commission and 2 others
    Petition No. 30 of 2014
  • Kenya National Union of Nurses versus the Chairperson, Salaries and Remuneration Commission
    Petition Number 51 of 2015
  • Kenya Game Hunting and Safari Workers Union versus Micato Safaris
    [2016] eKLR
  • Teachers Service Commission vs Kenya Union of Teachers (KNUT) & 3 Others
    (2015) eKLR
  • Kenya Hotels & Allied Works Union vs Nyanza Club
    case 118 of 2017
Jurisdiction invoked
Original jurisdiction under the Employment and Labour Relations Act over trade disputes (references to section 15 of the Employment and Labour Relations Act cap 234); Article 41 of the Constitution on collective bargaining

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 & Finance Union v Kenya Post Office Savings Bank Ltd (Employment and Labour Relations Cause E822 of 2021) [2023] KEELRC 1542 (KLR)", Case Analysis (2023). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1542/eng@2023-06-16

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