Kenya Union of Domestic Workers, Hotels, Educational Institutions and Hospital Workers Union (KUDHEIHA) v Kima Mission Hospital (Employment and Labour Relations Cause E004 of 2023) [2024] KEELRC 1376 (KLR)

The MOU between the Church of God and Port Florence was a management partnership, not a takeover, and employees were to revert to the Respondent after 10 years. The Respondent produced no evidence that employees were informed of the MOU's terms, that the requirement to sign new contracts was explained, or of the fate of their existing contracts with existing salary arrears. Requiring execution of new contracts changing the employer's identity without consultation violated section 10(5) of the Employment Act and amounted to unilateral termination of existing contracts.

The decision to terminate was reached at a joint meeting between the Church of God's General Assembly and Port Florence management, adopted by boards, without hearing the grievants. Section 41 requires explanation of reasons and an opportunity for the employee to have a representative present before termination. The Court of Appeal's decision in Pius Machafu Isindu was upheld: the employer must prove reasons under sections 43 and 45 and follow the mandatory notification and hearing process under section 41.

The appointment letters of CW1 stated that conditions and wages had been negotiated by the KUDHEIHA workers on behalf of its members. Under the contra proferentem rule the Respondent, as maker of those letters, was estopped from denying the CBA's applicability. The Respondent produced no other CBA. The Conciliator's Certificate of Unresolved Issues also observed the CBA was binding. The court found the grievants were entitled to benefit from the CBA including notice pay under clause 16 and service gratuity under clause 17(b).

Section 35(6) of the Employment Act excludes service pay where the employee is a member of a gratuity or service pay scheme established under a collective agreement or a pension/provident fund under the Retirement Benefits Act. The court held NSSF is not the equivalent of a pension or provident fund regulated by the Retirement Benefits Act, and since the CBA provided for service gratuity at 28 days per year worked, the grievants as CBA beneficiaries were entitled to it. The Athman Imbwana Adenya decision was distinguished as that contract had no gratuity provision.

The court considered the statutory factors under section 49, including length of service, the circumstances of termination, expectation of continued employment, and likelihood of securing comparable employment. CW1's 26 years of service made it unlikely he would secure similar employment, justifying 10 months. CW2 and CW3 did not testify that they were unable to secure jobs, so lesser awards of 6 and 8 months were made. The employer's failure to keep pay records under section 74 worked to its disadvantage.