Kenya Commercial Food and Allied Workers Union v London Distillers (K) Ltd (Cause E490 of 2020) [2024] KEELRC 897 (KLR)
The bottom line
#Kenya's Employment Court ruled that CBA service pay counts as severance and must be paid per year of service, awarding workers over Ksh.44 million.
What this practically means
#Executive summary
#Key legal issues
#Entitlement to severance pay where the CBA is silent
Redundant employees are entitled to severance pay tabulated at the rate of service pay under clause 6 of the CBA, which the parties agreed would apply in lieu of severance pay, and which prevails as the agreed (more favourable) term.
Section 40(1) of the Employment Act sets minimum redundancy entitlements including severance at not less than fifteen days' pay per completed year. The parties' CBA (clause 23 as read with clause 6) provided that a redundant employee is entitled to service pay per clause 6(c). Section 26 of the Employment Act requires more favourable agreed terms to apply. The court therefore treated the agreed service pay as the measure of severance and tabulated it accordingly per completed year of service.
Interpretation of clause 6(c) of the CBA - days per year or lumpsum
The 30/50/60 days in clause 6(c) are payable per completed year of service.
The Respondent argued the clause lacked the words 'per completed year of service' and so was a lumpsum. The court held that the Respondent's reading would breach section 40(1)(g) of the Employment Act (minimum 15 days per completed year). The Claimant demonstrated through examples that the Respondent had always paid service on a per-year basis for resignations, terminations and retirements. The court adopted the only interpretation consistent with statute and past practice.
Deduction of amounts already paid
Employees who received terminal benefits while the suit was pending are to be paid as tabulated less amounts already received.
The Respondent pointed to agreements signed by employees who received terminal benefits during the pendency of the suit. The court noted that the Judgment had already provided for deduction of payments already made, and confirmed that such employees are paid per the tabulation less what they received, preserving the judgment's original direction.
Costs for an unrepresented claimant
Costs assessed at Ksh.200,000 in lieu of a bill of costs.
Having awarded the Claimant costs of the suit, the court noted that a claimant not represented by an advocate is not eligible to file a bill of costs under the Advocates Remuneration Order. To give effect to the costs award, the court assessed reasonable expenses and disbursements since the institution of the suit and fixed costs at Ksh.200,000.
Legal principles established
#- Where a CBA provides for service pay in lieu of severance pay on redundancy, the severance pay entitlement under section 40(1)(g) of the Employment Act is tabulated at the CBA service pay rate, per completed year of service.
- The number of days stated in clause 6(c) of the CBA are payable per completed year of service, not as a lumpsum, an interpretation supported by the Respondent's own past practice and by the requirement in section 40(1)(g) of the Employment Act that severance be not less than fifteen days' pay per completed year of service.
- Where a claimant union is not represented by an advocate and cannot file a bill of costs, the court may assess costs taking into account reasonable expenses and disbursements.
Court orders
#- 1.That the severance pay for employees declared redundant be tabulated at the rate of service pay as set out in clause 6 of the CBA, per completed year of service
- 2.That notice or pay in lieu thereof for redundant employees be as provided in clause 6 of the CBA
- 3.That the days referred to in clause 6(c) of the CBA are per completed year of service
- 4.That the Claimant's tabulation is the correct one; award to each Grievant as per Tables A and B (redundant employees total Ksh.28,652,475; retired employees total Ksh.16,039,857)
- 5.That costs of the Claimant are assessed and awarded at Ksh.200,000
- 6.Orders accordingly
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act and Labour Institutions Act (as exercised in the original suit)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Commercial Food and Allied Workers Union v London Distillers (K) Ltd (Cause E490 of 2020) [2024] KEELRC 897 (KLR)", Case Analysis (2024). Not stated in excerpt. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/897/eng@2024-04-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.