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ELRCPartially AllowedNot stated in excerpt· [2024] KEELRC 897 (KLR)

Kenya Commercial Food and Allied Workers Union v London Distillers (K) Ltd (Cause E490 of 2020) [2024] KEELRC 897 (KLR)

Employment and Labour Relations Court
12 April 2024
3,004 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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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

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Executive summary

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This is a tabulation judgment following the court's judgment of 19th January 2022, in which the court declared that redundancies and retirements effected by the Respondent amounted to unfair termination of employment for failure to comply with statutory and CBA provisions. The parties agreed on most heads of the tabulation (basic pay, gross pay, years worked, notice pay and leave) but disputed severance pay and notice. The Respondent contended that severance pay was not provided for in the CBA and should not be tabulated, and further that the days specified in clause 6(c) of the CBA (30/50/60 days) constituted a one-off lumpsum because the words 'per completed year of service' were absent from the clause. The Claimant maintained the days are per completed year of service, demonstrating through examples that the Respondent had always paid service on that basis. The court held that the parties' CBA substituted service pay (clause 6) for severance pay, so redundant employees are entitled to severance tabulated at the clause 6 rate; and that, read against section 40(1) of the Employment Act (minimum fifteen days' pay per completed year) and the Respondent's own past practice, the clause 6(c) days are per completed year of service. The court adopted the Claimant's tabulation, awarding each of the fifteen grievants amounts set out in Tables A and B, totalling Ksh.28,652,475 for redundant employees and Ksh.16,039,857 for retired employees, subject to deduction of amounts already paid. Because the Claimant, a union, was not represented by an advocate and could not file a bill of costs, the court assessed costs at Ksh.200,000.

Key legal issues

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01

Entitlement to severance pay where the CBA is silent

Holding

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.

Reasoning

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.

p. 7
02

Interpretation of clause 6(c) of the CBA - days per year or lumpsum

Holding

The 30/50/60 days in clause 6(c) are payable per completed year of service.

Reasoning

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.

p. 8
03

Deduction of amounts already paid

Holding

Employees who received terminal benefits while the suit was pending are to be paid as tabulated less amounts already received.

Reasoning

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.

p. 8
04

Costs for an unrepresented claimant

Holding

Costs assessed at Ksh.200,000 in lieu of a bill of costs.

Reasoning

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.

p. 9

Legal principles established

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  • 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

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  1. 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. 2.That notice or pay in lieu thereof for redundant employees be as provided in clause 6 of the CBA
  3. 3.That the days referred to in clause 6(c) of the CBA are per completed year of service
  4. 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. 5.That costs of the Claimant are assessed and awarded at Ksh.200,000
  6. 6.Orders accordingly

Authorities

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Legislation

  • Employment ActSection 40(1)
  • Employment ActSection 40(1)(a)
  • Employment ActSection 40(1)(g)/(i) (severance pay at not less than fifteen days pay per completed year)
  • Employment ActSection 26
  • Labour Institutions ActSection 48
  • Advocates Remuneration OrderNot specified
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and Labour Institutions Act (as exercised in the original suit)

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 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.