Kenya Building, Construction, Timber, Furniture & Allied Industries Employees’ Union v Silentnight (Kenya) Ltd (Cause 10 of 2000) [2003] KEIC 30 (KLR)
The bottom line
#A Kenyan Industrial Court gave Silentnight workers a 10% wage rise over two years plus housing and retirement benefits, but rejected bigger pay and family medical demands because the company was struggling financially.
What this practically means
#Executive summary
#Key legal issues
#Whether employees earning above statutory minimum rates are entitled to a further increase in basic monthly minimum rates of pay
Demand rejected because employees already earn over and above statutory minimum rates
The EPD report showed employees earn above the statutory Minimum General Order of 2000 and their rates are favourable compared to those offered by the Furniture Manufacturers Group of F.K.E. The Company had made a nil offer, arguing the demand was vague. The Court found no justification for the increase.
What general wage increase is appropriate for the two-year period
5% for the first year and a further 5% for the second year, totalling 10%
Considering the Company's poor business performance - declining employment levels, labour costs and wage bills, losses of Kshs.2.5 million in 1997 and Kshs.9.2 million in 1998, and productivity dropping from 80% to 20% - the Court found the Company's offer of 10% over two years adequate.
The appropriate housing allowance
Kshs.1,500/= per month across the board awarded
The Union revised its demand from 25% of monthly wages (minimum Kshs.2,000) to Kshs.1,500 across the board. The Court considered s.9 of the Employment Act, the prevailing rents of Kshs.1,500 to 3,000 for single rooms in Nairobi estates, the Company's dismal performance, and the F.K.E. group rates of Kshs.1,099 to 1,571, and accepted the revised demand.
The appropriate rate of retirement benefit per completed year of service
16 days pay for each completed year of service awarded
The existing rate was 10 days, increased to 17 days since May 1995 per the EPD, but the Company had in practice given two months' notice pay plus 16 days per year to 65 employees declared redundant. The Union sought 25 days; the Company offered 16 days. The Court found the Company's offer reasonable given its financial position and practice.
Whether the Company should be compelled to adopt a medical scheme covering the employee's family
Demand disallowed; current arrangement to stay
While accepting that an employee's family welfare affects work performance, the Court noted the Company's bleak business performance and its inability to sustain cover for a spouse and four children under 18. The existing arrangement - a daily medical practitioner plus referral to consulting hospitals - was held sufficient under s.12(1) of the Employment Act for the time being.
Legal principles established
#- Section 9 of the Employment Act obliges an employer either to provide reasonable housing accommodation or to pay a sufficient rent sum to enable the employee obtain reasonable accommodation
- Section 12(1) of the Employment Act requires every employer to provide proper medicines during illness and medical attendance during serious illness
- In collective bargaining awards, the court weighs the parties' demands against the employer's financial capacity and business performance as shown by the Economic Planning Division report
Court orders
#- 1.Rejected the Union's demand on basic monthly minimum rates of pay
- 2.Awarded general wage increase of 5% for the first year and a further 5% for the second year (10% for the two years' period)
- 3.Awarded housing allowance of Kshs.1,500/= per month across the board
- 4.Awarded retirement benefit of 16 days pay for each completed year of service
- 5.Disallowed the demand for a new medical scheme; the current arrangement to stay
- 6.Directed that the award, except on general wage increase, will not apply retrospectively
- Jurisdiction invoked
- Trade Disputes Act, Cap.234 - Notification of Dispute with statutory certificate of the Labour Commissioner under Section 14(7) and (9)(e); dispute reported under Section 4 and conciliation under Section 6(2)(a)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Building, Construction, Timber, Furniture & Allied Industries Employees’ Union v Silentnight (Kenya) Ltd (Cause 10 of 2000) [2003] KEIC 30 (KLR)", Case Analysis (2003). Cause 10 of 2000. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2003/30/eng@2003-04-02
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.