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ELRCPartially AllowedNot stated in judgment· [2025] KEELRC 194 (KLR)

Banking, Insurance & Finance Union [Kenya] v Harambee Sacco Society Limited (Cause E122 of 2024) [2025] KEELRC 194 (KLR)

Employment and Labour Relations Court
31 January 2025
JRJames Rika
1,820 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court awarded workers 4% annual wage increases from 2023 and blocked an employer's attempt to replace their one-month salary leave allowance with a flat Kshs. 15,000.

What this practically means

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Executive summary

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The Employment and Labour Relations Court at Nairobi (James Rika, J) determined a collective bargaining dispute between a trade union (Claimant) and its employer (Respondent), bound by a 1996 Recognition Agreement and successive CBAs, the last covering 2019-2022. The parties disagreed on two subjects for the proposed 2023-2026 CBA: general wage increment and annual leave allowance. The Claimant sought a 10% annual wage increment and preservation of the outgoing CBA clause 17[b] granting annual leave allowance equivalent to 1-month basic salary; the Respondent offered 1% per year (2% in the fourth year) and proposed a standardized Kshs. 15,000 leave allowance across the board, citing sustainability challenges. The dispute was referred to the Court's Central Planning and Project Monitoring Department, whose economist (Benson Okwayo) produced a report analysing the Respondent's finances, wage bill, CPI and productivity. The Court found the Respondent's financial position stable, that staff in different grades and lengths of service cannot be assigned a standardized leave allowance, and that the proposal would infringe Sections 10para 3 and 26 of the Employment Act; clause 17[b] was preserved. On wages, the Court applied the wage guidelines, anchored in Article 43 of the Constitution, and noted the outgoing CBA already contains a 5% annual COLA mechanism. It awarded 4.0% per year for each of the 4 years from 1st January 2023 (2.5% CPI, 1.5% productivity), making no order as to costs.

Key legal issues

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01

Annual leave allowance - whether the Respondent could replace 1-month basic salary with Kshs. 15,000 across the board

Holding

The proposal was unjustified and would infringe Sections 10para 3 and 26 of the Employment Act; Clause 17[b] of the outgoing CBA is preserved

Reasoning

The Respondent's financial position was assessed as stable and nothing had changed or was projected to change to justify standardizing the allowance. Unionisable staff occupy different job grades with different basic salaries and differing years of service; a flat allowance would be distortive and would infringe the Employment Act.

p. 3
02

General wage increment for the 2023-2026 CBA period

Holding

Awarded at 4.0% per year (2.5% on CPI and 1.5% on productivity) effective 1st January 2023

Reasoning

Using the CPPMD expert report, the Court took the New Kenya CPI of 28.99 translating to 7.5% annual cost-of-living compensation, but noted that clause 34 of the outgoing CBA already grants a 5% annual salary increment (COLA) cushioning members against CPI rise. Productivity was 20.6% in 2022. Balancing these against the Respondent's ability to pay, the Court awarded 4% per year.

p. 4
03

Role of wage guidelines and Article 43 of the Constitution in wage determination

Holding

Wage guideline 1 obliges the Court to protect minimum standards of living and prevent 'starvation wages', anchored in Article 43 economic and social rights

Reasoning

The guideline requires the Court to guarantee workers an existence worthy of human dignity while delicately balancing wage increments with the employer's ability to pay. Guideline 2 makes productivity a major compensatory factor, entitling workers to a share of the wealth they help create.

p. 4

Legal principles established

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  • An employer seeking to shift an existing CBA benefit must justify the change; a standardized leave allowance irrespective of grade distorts differential remuneration
  • Wage guidelines bind the Court to protect a minimum standard of living and an existence worthy of human dignity, balancing increments with the employer's ability to pay

Court orders

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  1. 1.General Wage Increment is awarded at 4.0% for each of the 4 years, beginning 1st January 2023
  2. 2.Clause 17[b] of the outgoing CBA is preserved, with annual leave allowance to continue being paid at the rate of equivalent of 1-month basic salary
  3. 3.No order on the costs
Jurisdiction invoked
Dispute on collective bargaining subjects referred to the Court after conciliation before the Ministry of Labour under the Labour Relations Act; wage guidelines with anchorage in Article 43 of the Constitution applied

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 [Kenya] v Harambee Sacco Society Limited (Cause E122 of 2024) [2025] KEELRC 194 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/194/eng@2025-01-31

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