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ELRCDismissedNot stated in judgment· [2024] KEELRC 309 (KLR)

Amalgamated Union of Kenya Metal Workers v Crater Automobiles(Nairobi) Nathu Khan Ltd (Employment and Labour Relations Cause E036 of 2023) [2024] KEELRC 309 (KLR)

Employment and Labour Relations Court
22 February 2024
HWHellen Wasilwa
2,641 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court refused to force an employer to sign a CBA with a flat house allowance, ruling it must be at least 15% of basic salary.

What this practically means

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Executive summary

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The claimant trade union sued the respondent, a Nakuru motor vehicles trading company, seeking to compel it to sign and rubberstamp a negotiated CBA covering 2022–2023. The parties had a recognition agreement and prior CBAs in which wages and a Kshs 5,800 house allowance were negotiated separately; owing to Covid-19 they agreed to forgo 2021 and negotiate for 2022 and 2023. All clauses were agreed except the respondent refused to sign over the flat-rate Kshs 5,800 house allowance applicable across all cadres, contending it paid consolidated salaries and that the figure exceeded 15% of basic pay for some employees. The respondent also alleged previous CBAs were signed under coercion by an unauthorized officer and that it was never invited to conciliation. The union's witness maintained the figure came from prior signed CBAs and an economic survey. The court held that while a CBA, being a negotiated agreement, attracts minimal judicial interference, section 60(6) of the Labour Relations Act bars registration of agreements conflicting with law. Section 31(1) of the Employment Act requires house allowance payable in addition to wages, and the established practice is 15% of basic salary. A uniform Kshs 5,800 irrespective of salary could not be sanctioned. The claim was dismissed with parties directed to continue negotiating the clause before signing a new CBA, each party bearing its own costs.

Key legal issues

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01

Whether the court should compel the respondent to sign a CBA containing a flat house allowance of Kshs 5,800 for all employees

Holding

No. The clause as negotiated conflicts with the law and cannot be sanctioned by the court; the claim fails and parties must continue negotiating on that clause.

Reasoning

The court held a CBA is a negotiated agreement warranting minimal interference, but section 60(6) of the LRA bars registration of agreements conflicting with law. Section 31(1) of the Employment Act requires house allowance payable in addition to wages, and practice fixes it at 15% of basic salary. A uniform Kshs 5,800 irrespective of salary could exceed or distort lawful entitlements, so the insistence is not pegged on the law.

p. 5
02

Whether the respondent's allegations of coercion and lack of authority in signing previous CBAs defeated the claim

Holding

Not decisive; the claim failed on the legality of the house allowance clause, and no evidence of coercion was tabled.

Reasoning

RW-1 admitted Mr. Karanja was allegedly coerced but produced no evidence of it. The claimant pointed out the same signatory had signed CBAs dating back to 2006. The court did not found its decision on coercion but on the illegality of the flat-rate house allowance clause.

p. 3

Legal principles established

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  • A CBA provision that conflicts with the Labour Relations Act or any other law cannot be sanctioned or registered
  • House allowance is payable in addition to wages or salary, and the notoriety practice is 15% of basic salary; a CBA may provide a percentage or at least 15% of basic salary, whichever is greater
  • The court should ordinarily have minimum interference in a CBA as a negotiated agreement between parties

Court orders

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  1. 1.The claim is dismissed
  2. 2.The parties must continue negotiating on the house allowance clause before a new CBA is signed
  3. 3.Each party will bear its costs

Authorities

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Legislation

  • Labour Relations ActSection 57(1)
  • Labour Relations ActSection 59(4)
  • Labour Relations ActSection 59(5)
  • Labour Relations ActSection 60(1)
  • Labour Relations ActSection 60(6)
  • Labour Relations ActSection 62(2)
  • Constitution of Kenya, 2010Article 41(1)
  • Constitution of Kenya, 2010Article 47(1)
  • Constitution of Kenya, 2010Article 162(2)(a)
  • Employment ActSection 31(1)
  • Employment ActSection 26
  • Employment and Labour Relations Court ActSection 12
  • Regulation of Wages (General) (Amendment) Order2022 Order

Cases cited (4)

  • Amalgamated Union of Kenya Metal Workers v Load Trailer
    ELRC Cause No 1340 of 2016
  • Kenya Quarry and Workers Union v Mineral Enterprises Limited
    Cause E891 of 2022 [2023] KEELRC 681 (KLR) 16 March 2023 Ruling
  • Kenya Union of Printing Publishing Paper Manufacturers & Allied Workers v Highlands Paper Mills Ltd
    [2013] eKLR
  • Arasa & another v Benori Agencies and Services Limited
    Cause 242 of 2017 [2022] KEELRC 116 (KLR) 17 May 2022 Judgment
Jurisdiction invoked
Articles 41(1), 47(1) and 162(2)(a) of the Constitution and Section 12 of the Employment and Labour Relations Court 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, "Amalgamated Union of Kenya Metal Workers v Crater Automobiles(Nairobi) Nathu Khan Ltd (Employment and Labour Relations Cause E036 of 2023) [2024] KEELRC 309 (KLR)", Case Analysis (2024). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/309/eng@2024-02-22

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