Kenya Engineering Workers Union v Morals Business Consulting Ltd & another

5. Any other relief the court may deem t to grant. 2. In response, the 1st Respondent led a Memorandum of Response dated 13th January 2026. It avers that it had been engaged to provide human resource services to the 2nd Respondent under an outsourcing agreement pursuant to which it recruited the Grievants and deployed them to work at the 2nd Respondent's premises. It denies any involvement in the trade dispute referred to by the Claimant and maintains that the monthly deduction of Kshs. 300/- was not union dues but an agency fee payable under clause 4.5 of the outsourcing agreement. According to the 1st Respondent, the fee was intended to compensate it for recruitment, placement and other agency services rendered to both the employees and the principal. It further contends that the Grievants were informed of the deduction before engagement, voluntarily accepted the arrangement and cannot now challenge it. The 1st Respondent adds that the fee was applied towards its administrative, operational and legal expenses. It further disputes the Grievants' alleged union membership, contending that the check-o forms fail to comply with section 48 of the Labour Relations Act as they lack individual membership numbers, bear similar handwriting for several employees, particularly members numbered 1 to 8, and are unsupported by evidence of payment of union entrance fees. It also asserts that the forms were not accompanied by the statutory authority signed by the Claimant's Secretary General authorising deduction and remittance of union dues. Lastly, the 1st Respondent contends that the claim is time-barred under section 90 of the Employment Act because some of the impugned deductions date back to 2010 and 2016, whereas the outsourcing agreement was executed on 27th February 2020 and the present suit was only led in 2025. It therefore urges the Court to dismiss the claim with costs. 3. The 2nd Respondent led its Memorandum of Response dated 2nd March 2026 denying any employment or labour relations with the Claimant. It maintains that its only relationship with the 1st Respondent arose from an outsourcing agreement under which the latter supplied employees to work at its premises. The 2nd Respondent further contends that the claim against it is premised solely on its refusal to furnish the Claimant with a copy of the outsourcing agreement, which it maintains is a private contract to which the Claimant is not privy. It therefore asserts that the Claimant has disclosed no reasonable cause of action against it and that the suit is misconceived, devoid of merit and an abuse of the court process. Accordingly, it prays that the claim against it be dismissed with costs. 4. At the hearing, the Claimant called one witness, Mr. George Okoth, one of the Grievants. The Respondents did not call any witnesses. Mr. Okoth testied that upon receiving their payslips, the Grievants discovered a monthly deduction of Kshs. 300/- despite not having joined any trade union. He stated that they had initially been informed that the deduction related to union bank and insurance contributions, but they were never informed where the money was remitted. During crossexamination, he testied that the Respondents later claimed that the deductions were intended for the Textile Union, although no evidence was produced to support that assertion and the Grievants had never joined that union. He further conrmed that he was employed by the 1st Respondent. 5. Upon the close of the hearing, the parties led written submissions. Claimant's Submissions 6. The Claimant identies the following issues for determination: 1. Whether the deduction of Kshs. 300/- from each Grievant monthly as union dues was legal; 2. Whether the 2nd Respondent was improperly joined in the suit; and https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2109/eng@2026-07-22 2

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3. Whether the reliefs sought in the Memorandum of Claim should be granted. 7. On the rst issue, the Claimant submits that the deductions were unlawful as the Grievants were neither members of any trade union nor had they consented to the deduction of union dues. It asserts that the deductions contravened sections 19(2) and (3) of the Employment Act and section 48 of the Labour Relations Act, which regulate deductions from employees' wages and the deduction of trade union dues. The Claimant maintains that the Respondents failed to produce any evidence showing that the deductions were remitted to a registered trade union, that the Grievants had executed checko forms, or that they had authorized the deductions. The Claimant further submits that the 1st Respondent's assertion that the deductions constituted agency fees is unsupported by evidence. It maintains that the payslips expressly described the deductions as "union dues" and, absent any lawful basis or employee consent, the deductions were illegal. 8. On the 2nd Respondent's joinder, the Claimant submits that it was proper because it reimbursed or paid the deductions pursuant to the outsourcing arrangement between the Respondents. It relies on the denition of "employer" under section 2 of the Employment Act to argue that the 2nd Respondent falls within the statutory meaning of an employer. The Claimant further asserts that the 2nd Respondent had previously engaged another outsourcing company before the 1st Respondent assumed responsibility for the Grievants without notifying them. It therefore contends that, under section 54(1) of the Labour Institutions Act, the 2nd Respondent is deemed to be a joint employer together with the 1st Respondent and is jointly liable for the impugned deductions. 9. On the merits of the claim, the Claimant submits that the declarations sought should issue because the deductions were eected without the Grievants' consent and without any legal basis. It contends that if the deductions were indeed agency fees as alleged by the 1st Respondent, the Respondents were obliged under section 10(5) of the Employment Act to consult the employees, revise their contracts of employment, and notify them of the change in writing. Since no such variation was made and the payslips continued to reect the deductions as union dues, the Claimant contends that the deductions remained unlawful. The Claimant further submits that the Grievants are entitled to a refund of all unlawfully deducted sums as tabulated in the Memorandum of Claim, together with interest at court rates and costs pursuant to Rule 70 of the Employment and Labour Relations Court (Procedure) Rules, 2024. 1st Respondent's Submissions 10. 11. On its part the 1st Respondent identies the following issues for determination: 1. Whether the Claimant has locus standi to institute this matter; 2. Whether the deductions were union fees or agency fees; 3. Whether Mr. George Okoth who testied on behalf of the Grievants was properly before court; and 4. Whether the prayers sought should be granted. On the rst issue, the 1st Respondent submits that the Claimant lacks the requisite locus standi to represent the Grievants because they are not bona de members of the union. It highlights ELRC Cause No. E098 of 2025 where the Claimant's recognition was denied on account of defective check-o forms that did not contain individual membership numbers. It contends that, having been declared invalid, the same check-o forms cannot confer standing upon the Claimant in the present https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2109/eng@2026-07-22 3

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proceedings. The 1st Respondent further submits that the Claimant failed to demonstrate that the Grievants were validly recruited into the union, as it neither produced valid check-o forms nor evidence of payment of the union entrance fee prescribed under Rule 3(B) of its Constitution. It asserts that a trade union can only derive the mandate to represent employees if the employees are bona de union members. It cites Article 36 and Article 41(2)(c) of the Constitution, ILO Conventions Nos. 87 and 98, section 4 of the Labour Relations Act, and the Industrial Relations Charter (1984). In support of this position, the 1st Respondent relies on Communication Workers Union v Safaricom Limited [2014] KELRC 1302, where the Court held that a union must prove that the aected employee is genuinely its registered member before acquiring standing to litigate on the employee's behalf. It also cites Transport Workers Union v Crown Bus Services Limited [2017] KEELRC 788 (KLR), where the Court armed that a union acquires standing to pursue a dispute only on behalf of its members. 12. On whether the deductions were union dues or agency fees, the 1st Respondent reiterates that it was agency fees lawfully charged to compensate it for recruiting, placing and facilitating employment for the Grievants under the outsourcing arrangement with the 2nd Respondent. It adds that agency fees are lawful charges intended to compensate an agent for the expertise, time and resources expended in facilitating employment services. It maintains that the Grievants were informed of and voluntarily accepted the deduction before their engagement, without coercion, undue inuence or inducement. Additionally, it asserts that the description of the deduction as "union dues" on some payslips was a typographical error and that the deduction should have been reected as agency fee. 13. As to whether the Mr George Okoth was properly before the court, the 1st Respondent submits that Mr. George Okoth lacked the capacity to testify on behalf of the Grievants because, his name did not appear in the schedule of employees claiming refunds of the alleged unlawful deductions. The 1st Respondent further asserts that the Claimants tabulation of deductions is unreliable because it indicates deductions dating back to 2010, 2016 and 2019, yet the outsourcing agreement between the Respondents was only executed on 27th February 2020. 14. Lastly on whether the Claimant is entitled to the reliefs sought, it submits that it is not, given the evidentiary inconsistencies in the Claimant's case. Accordingly, it urges the court to dismiss the suit with costs. Disposition 15. The deductions made against the salaries of the Grievants were made pursuant to an outsourcing agreement. It is denied that the Union Claimant has any locus standi to initiate the suit. In my considered view, the Union has a right to pursue the matter having been involved in the Conciliation process that brought about the suit. The challenge to the appearance of Mr. George Okoth is similarly disingenuous on the part of the Respondents. 16. Under the Labour Relations Act, under Part VI thereof, the issue of Agency Fees is addressed in section 49 as follows:49. Deduction of agency fees from unionisable employees covered by collective agreements (1) A trade union that has concluded a collective agreement registered by the Employment and Labour Relations Court with an employer, group of employers or an employers’ organisation, setting terms and conditions of service for all unionisable employees covered by the agreement may request the Cabinet https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2109/eng@2026-07-22 4

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Secretary to issue an order requiring any employer bound by the collective agreement to deduct an agency fee from the wages of each unionisable employee covered by the collective agreement who is not a member of the trade union. 17. The Respondents are NOT trade unions and have no business deducting and retaining any agency fees. The sums deducted from the Grievants are to be paid to the Claimant for onward distribution to the Grievants within 14 days of todays date. The Respondents who have the unholy alliance known as outsourcing have to bear the costs of the suit as well as interest at 14% pa on the sum of Kshs. 410,702/claimed from 25th June 2025 the date the matter was brought to the attention of the Cabinet Secretary of Labour till payment in full. 18. In the nal result a judgment is entered for the Claimant against the Respondents jointly and severally for:- a. Kshs. 410,702/- deducted as agency fees b. Costs of the suit c. Interest at 14% per annum on the sum in (a) above from 25th June 2025 till payment in full. It is so ordered. DATED AND DELIVERED AT KISUMU THIS 22ND DAY OF JULY 2026 NZIOKI WA MAKAU, MCIARB. JUDGE https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2109/eng@2026-07-22 5

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