[2014] KEELRC 809 (KLR)

REPUBLIC OF KENYA

IN THE INDUSTRIAL COURT OF KENYA AT NYERI

INDUSTRIAL CAUSE NO. 6 OF 2013

BANKING INSURANCE&FINANCE UNION (KENYA).....................................................................CLAIMANT

VERSUS

KIRINYAGA

DISTRICT COOPERATIVE UNION LTD …..................RESPONDENT

KENYA UNION OF COMMERCIAL,FOOD & ALLIED WORKERS UNION.............................INTERESTED PARTY

JUDGMENT

a) Background

The claimant in this suit is a registered trade union representing workers in the Money Market Sector, Financial Institutions, Building Societies and other related institutions. It brought this action on behalf of its members who were former employees of the respondent. The interested party is also a registered trade union who until the registration of the claimant, was representing workers in the sector taken over by the claimant hence the respondent's former employees on whose behalf this action has been brought. Prior to the commencement of the trial of the suit, the interested party applied to withdraw from acting for the same grievants as the claimant, stating rightly so, that two unions could not represent workers in the same sector. The Court granted the application with the consequence that the claimant continues with the prosecution of the suit on behalf of the grievants.

By a memorandum of claim dated 8th February, 2012 and filed in Court the following day, the claimant avers that the respondent wrongfully declared redundant its members who were at the material time the respondent's employees in that the respondent failed to follow the redundancy procedure as laid down under section 40(a) of the Employment Act, 2007. As a consequence, the claimant sought the order of the Court invalidating the purported redundancy and ordering compensation to its affected members for unfair and wrongful termination of employment.

When the Interested Party withdrew from the suit, the claimant sought and was granted leave, to amend its memorandum of claim which it did and filed on 8th October, 2013. The respondent too filed its amended memorandum of defence on 27th November, 2013.

In the amended memorandum of claim, the claimant introduced the issue of underpayment of wages. The claimant averred that the grievants were not being paid as per the prescribed minimum statutory wages with the result that the terminal benefits already paid to the claimants was less as the salary used to calculate them was below statutory minimum. The claimant therefore sought an order of the Court that the grievants be additionally paid the balance of the underpaid salaries and that their terminal benefits be recalculated on the basis of the prescribed minimum statutory salary and the difference be paid to them as well.

The respondent in its amended memorandum of defence refutes the claimant's claim contending that during the years 2008-2009, the respondent faced with acute liquidity problems was issued with instructions from the Ministry of Co-operative Development and Marketing to reduce its staff from 133 to 35 employees.

Pursuant to the directive by the Ministry, the respondent held a meeting with the Interested Party who was then the representative union, to discuss the issue. According to the respondent, the Interested Party insisted that the employees should be paid benefits under the clause of gratuity which was more beneficial than the redundancy clause and that the respondent obliged and paid the employees under the gratuity clause.

According to the respondent therefore, the claimant had no basis to demand that the former employees be paid in accordance with the redundancy clause since they had already been paid under the more favourable gratuity clause.

The respondent additionally averred that the former employees were members of the interested party at the material time and that they only joined the claimant Union after termination of their employment with the respondent and their terminal dues fully paid. According to the respondent therefore, the matter was concluded between itself and the Interested Party hence the claimant could not reopen it.

The respondent denied that its former employees concerned were arbitrarily terminated without consultations. They averred that it was through consultation that the parties agreed not apply clause 17 of the CBA on redundancy but clause 29 on gratuity.

Apart from their defences on the issue of redundancy and underpayment of former employees terminal dues, the respondent also raised a preliminary objection to the effect that the claim on underpayments was incompetent, fatally defective and an abuse of the court process as the same was statute barred and offended the provisions of section 4(1) of the Limitation of Actions Act, section 90 of the Employment Act and section 4(4) of the Trade Disputes Act. It was the respondent's contention that leave of court ought to have been sought and obtained prior to filling of the suit.

On 27th November, 2013 when the matter came up for hearing and upon consultation with the parties representatives, the Court gave directions that the respondent would lead evidence on whether there was finality of negotiations between the respondent and the Interested Party thereby prohibiting the claimant from re-opening such negotiations.

The Court further gave directions that at the conclusion of the evidence on the issue of finality of negotiations, the parties would prepare submissions on four issues, namely:

a) Whether the termination of employment of the grievants on account of redundancy was procedural as provided in law and the CBA.

b) What remedy is available if the redundancy exercise was found to be unlawful and/unprocedural.

c) Whether the grievants were paid their severance pay equivalent to 17 days' salary for every year worked as per the provisions of clause 17 of the CBA.

d) Whether the grievants were being underpaid contrary to the statutory minimum wage/salary prescribed by law.

In respect of issue number (d) the Court directed that submissions be made by either side on whether or not this claim was statute barred and that if a finding was reached that the issue was not statute barred, any additional wage would be computed with the assistance of the County Labour Officer-Nyeri.

The respondent called Mr. Henry Njiru Ngari and Mr. Stanely Karani as directed by Court to give evidence and be cross-examined by the claimant, on the issue whether there was finality of negotiations between the respondent and the Interested Party thereby prohibiting the claimant from re-opening such negotiations.

Mr. Ngari testified that he was the acting Administrator of the respondent at the material time but as at the time of giving evidence, he was the acting General Manager. It was his evidence that he participated in the events that gave rise to the suit before the Court. He stated that the respondent faced financial difficulties at the material time especially the Banking Section which he said had collapsed. As a consequence the Ministry of Cooperative Development and Marketing instituted investigations and came with recommendation that the respondent among others, undertake major restructuring of the collapsed banking section.

Mr. Ngari further testified that the respondent's Board invited (KUCFAW) the Interested Party, which was then the representative union, to discuss the way forward based on the Ministry's report. According to him KUCFAW's Branch Secretary attended the meeting and was asked to comment on the way forward on the impending redundancy. He referred the Court to appendix 5 of the respondent's bundle of documents, which were minutes, to show KUCFAW was represented at the meeting. He further referred to appendix 6 which he said was a letter inviting KUCFAW to a meeting with the respondent. He stated that a discussion was held on reduction of staff level which then stood at 133 yet the respondent could only retain 37.

According to him KUCFAW participated in the identification of who to retrench. It was further his evidence that it was agreed at the meeting that instead of following the redundancy clause as per the CBA, the gratuity clause be followed. According to him KUCFAW felt the gratuity clause was more favourable than the redundancy clause. He stated that the redundancy clause had no provision for gratuity and that the grievants were not entitled to gratuity. According to him the respondent could not pay both gratuity and redundancy. In conclusion he stated that no complaint was raised by KUCFAW after the payment of the grievants dues.

In cross-examination by Mr. Munoru, he stated that the notice convening the Board meeting was copied to KUCFAW. He admitted that the minutes did not show that KUCFAW Branch Secretary was present he however reiterated that the Branch Secretary attended the meeting of 28th February, 2009. He stated that the Board resolved on 4th February, 2009 to invite KUCFAW to the meeting of 28th February, 2009. On being questioned why KUCFAW's Branch Secretary did not sign the minutes, he stated that minutes are usually not signed by all invited to a meeting but are signed by the Chairman and the Secretary to the Board.

Mr. Karani for his part testified that he was the Branch Secretary of KUCFAW at the material time. He stated that he remembered the meeting of 28th February, 2009 and that he was invited by a letter and later called on telephone. According to him, he only heard there was redundancy so he wrote a letter and that it was not the first time the respondent carried out redundancy exercise. He stated that he was invited for the meeting on 28th February, 2009 since the respondent needed advice on the procedure to use in the redundancy. According to him it was agreed that the gratuity clause be used as it was more favourable as it cushioned the employees better for job loss. He concluded his evidence in chief by stating that KUCFAW had no claim against the respondent on the issue.

In cross-examination by Mr. Munoru, he stated that he was not called to the meeting by letter but by telephone. On signing the minutes, he stated that he never used to sign anywhere in the minutes and that he used to attend Board meetings to give advice. On redundancy, he stated that the grievants were not declared redundant but were terminated. He denied knowledge of any complaints by the grievants and according to him the respondent's management paid the grievant's according to the CBA.

b) Submissions

In his final submissions to the Court, Mr. Munoru submitted that the grievants lost their employment involuntarily and at the initiative of the employer and that is redundancy. According to him redundancy is a technical term with its own definition in law both in terms of benefit and procedure. According to Mr. Munoru, the respondent failed to comply with due process under section 40(a) of the Employment Act. The provisions of this section, he submitted, were couched in mandatory terms and different from one month's notice or one month's pay in lieu of notice under section 40(f).

According to Mr. Munoru, the alleged Committee minutes of 28th February, 2009 could not form a basis for misapplication of the strict requirements of section 40(a) of the Employment Act and clause 17(a) of the CBA. He submitted that the minutes are a creation of the respondent and they cannot be construed to constitute written notice to the Union and Labour Officer as per Employment Act. According to him the minutes are not signed by the Trade Union Official and the Labour Officer. It was his position that the predecessor Union was not invited to the meeting. In support of the submissions on this point, Mr. Munoru referred the Court to the case ofBIFU vs Monarch Insurance Company; Charles Kambo Wamai vs- Bamburi Cement Ltd and KUJ & Allied Workers vs Nation Media Group. As a result, Mr. Munoru urged the Court to award the grievants the maximum 12 months wages as provided under section 49(c) of the Employment Act.

Concerning compensation under gratuity clause, Mr. Munoru submitted that the contention that the terms were favourable was misplaced since gratuity was part of terminal benefits and could not be substituted with redundancy pay.

On the issue of statutory minimum salary, Mr. Munoru submitted that salary as per legal notices issued on 9th May, 2006 was not being implemented by the respondent. He further submitted that respondent admitted the issue of underpayment but pleaded limitation of action. According to him, the underpayment meant that the terminal benefits already paid to the grievants was less to the extent of the underpayment.

Regarding applicable law, Mr. Munoru submitted that his Union took over representation from KUCFAW on 1st March, 2011 and that the redundancy was in March, 2009 and not in 2006 as claimed by the respondent. The applicable law then was Labour Relations Act and not Trade Disputes Act. He further submitted that the law recognizes the uniqueness of labour matters and sets procedures to be followed before coming to court. In this regard he submitted that the parties failed to agree in-house and the claimant reported a trade dispute on 8th November, 2011 in accordance with section 62 of the Labour Relations Act. The parties failed to agree before the Conciliator and were issued with a certificate of disagreement dated 16th November, 2012. According to Mr. Munoru therefore, the cause of action accrued on 18th January, 2012 when it became clear that the respondent was not willing to settle the dispute through conciliation. In support of this submission, Mr. Munoru relied on the case ofKenya Plantation Agricultural Workers Union vs- Mununga Leaf Base Cause No. 91 of 2012.

Ms. Gladwell Mumia for the respondent for her part submitted that the respondent was issued with instructions from the Ministry of Cooperative Development and Marketing to reduce its staff to a manageable level in the payroll. It therefore had no option but to declare 80 employees redundant as a way of streamlining its workforce in the face of liquidity problems. According to Ms. Mumia, KUCFAW was informed of the intention to declare the grievants redundant.

She further submitted that on 26th February, 2009 the respondent and the Interested Party (KUCFAW) held a meeting to discuss inter alia the issue of the redundancy of the employees. At the meeting, KUCFAW insisted that the grievants be paid their terminal benefits under the clause on gratuity which was more beneficial than the redundancy clause. In the circumstances, she submitted that the claimant had no basis demanding that the grievants be paid in accordance with the redundancy clause since they were already paid under a more favourable gratuity cause. According to Ms. Mumia, the CBA that was in force at the time of the redundancy provided that gratuity was only payable when an employee retired, resigned or died. It did not provide for gratuity to be paid on termination since redundancy is a form of termination of employment.

Ms. Mumia submitted that the effect of the negotiations with KUCFAW as was demonstrated at the hearing, was to increase the amount of the redundancy pay so that instead of being paid 17 days salary for each year of completed service as was provided in the CBA in force at that time, the grievants were paid 2 month's salary for each year completed. It was therefore unfair for the claimant's to demand that they should be paid again. Ms. Mumia further relied on the ruling of this Court delivered on 26th July, 2013 in which the Court stated that the claimant was bound by concluded agreements or settlements entered into by its predecessor and that the predecessor indicated at the hearing that they had no claim against the respondent. In support of her submissions, she cited the cases of Mary Wairimu Gitonga & 29 Others Vs- Ken Knit ( Kenya) Ltd Cause No. 84 of 2010, Kenya Hotel & Allied Workers Union vs. Laico Regency (Grand Regency Hotel) Cause No. 109(N) of 2008 and Transport & Allied Workers Union & KAA vs. John Delfino Ntoruru Cause No. 82 of 2002. In the last case, she submitted that the grievant who was not happy with what his union had accepted as compensation was nonetheless bound by the settlements between his Union and the employer. In the same breath, she submitted that the Claimant could not revive matters that had already been settled with the respondent. It was bound by the agreements made by its predecessor and the respondent.

According to Ms Mumia, the grievants in this case did not demonstrate that they were shortchanged nor did they show they objected to the payment of their terminal dues through gratuity clause. The suit was therefore an afterthought and the claimant having taken over from its predecessor was estopped from recanting the advice given to the respondent about payment of terminal dues.

On the issue of underpayment of salaries, Ms. Mumia submitted that the claim was fatally defective and an abuse of the Court process as the same was statutorily time barred and offended section 4(1) of the Limitation of Actions Act. It was her contention that the claimant's action on underpayments was an action that took place in the year 2006 which was 7 years before the commencement of the present action. She further submitted that the claim offended the provisions of section 90 of the Employment Act which prohibits commencement suits based on the Act or arising from contract of service, more than three years after the accrual of the cause of action. She argued that to permit the claim out of time without leave, would deny the respondent the protection of the law against unreasonable delay in bringing legal action. To support her contention on this point, she referred the Court to the cases of KPLC vs. Mutava Nzanu Nakuru HCCA No. 65 of 2005; Ayub Samba vs. Telkom Kenya IC Cause No. 164(N) of 2009 and Maria Machocho vs. Total Kenya Limited IC Misc. App. No.2 of 2012.

Regarding the applicable law, Ms. Mumia submitted that the 5th Schedule to the Labour Relations Act provided that matters commenced before the coming into force of the Act would be determined in accordance with the repealed Trade Disputes Act. According her therefore, the claim if at all lies, ought to have been processed in accordance with the repealed Trade Disputes Act. That is to say the claimant ought to have reported the dispute to the Minister within 28 days as provided under section 4(4) of that Act. To support this limb of argument, she relied on the case Martin Maku Kitheka vs. Uchumi Supermarkets Cause No. 2440 of 2012.

c) The decision

Having reviewed the pleadings and submissions by the parties in this dispute, the following issues stand to be determined by the Court.

a) What was the applicable law at the time the grievants were declared redundant?

b) Did the respondent follow the applicable law in declaring the grievants

redundant?

c) Is the claim on underpayment of salaries herein as raised statutorily barred?

d) What is the appropriate order to make?

The issue of limitation is important and will have to be resolved first since it is a matter that goes to the jurisdiction of the Court. If the Court reaches the conclusion that the claim was filed outside of the time prescribed by the relevant limitation law without the leave first having been sought and obtained, the suit becomes incompetent simpliciter.

Issue of limitation and applicable law.

According to the claimant, the grievants were declared redundant in March, 2009 and despite several interventions by the claimant, the respondent failed to adhere to the provisions of the law and the CBA while paying the grievants their terminal dues. The Claimant subsequently reported the matter to the Minister for Labour & Human Resource Development on 8th November, 2011 and the Chief Industrial Relations Officer, Kerugoya was appointed as Conciliator. The parties failed to reach any agreement leading to the issuance of a certificate of disagreement dated 18th January, 2012. The respondent does not dispute the foregoing facts. Hence it is safe to conclude that the grievants were retrenched in March, 2009 hence the applicable statute was the Employment Act 2007 and Labour Relations Act, 2007.

Section 90 of the Employment Act provides as follows:

“Notwithstanding the provisions of section 4(1) of the Limitation of Actions Act, no civil action or proceedings based or arising out of this Act or a contract of service in general shall lie or be instituted unless it is commenced within three years after the act, neglect or default complained or in the case of continuing injury or damage within twelve months after cessation thereof”.

What this means is that the Act removes from the purview of the Limitation of Actions Act, any civil action (whether in tort or contract) arising out of the Employment Act, and actions founded on a contract of service generally and sets different timelines for their prosecution. It is further noteworthy that unlike Limitation of Actions Act, the Employment Act makes no provision for extension of time to file actions arising out of the Act or contract of service generally.

With regard to this case, the grievants were declared redundant in March, 2009 therefore any action or dispute arising out of the redundancy ought to have been filed in Court by March, 2013. The claimant filed the present action on 9th February, 2012 which was within the limitation period set by the Act. To this extent the issue of limitation does not arise. However, there is the issue of underpayment of salary which was raised in the claimant's amended statement of claim. The claimant averred that the grievants were being paid below statutory minimum wage since 2006 as a consequence, the exit pay that was given to the grievants was less to the extent of the underpayment. The respondent has refuted this claim and in the alternative averred that even if the claim were true, the same could not be sustained at this stage because of limitation of action as provided both in the Employment Act and Limitation of Action Act.

Apart from mere allegation in the amended pleadings and submissions, the claimant did not call any evidence or exhibit any Gazette Notice to support the allegation that the grievants were being underpaid by the respondent. The grievants were Unionizable employees and were members of the KUCFAW prior to the take over by the claimant. There exists no documentation or claim for underpayment of wages prior to October, 2013 when the claimant filed its amended claim.

In its letter dated 15th September, 2011 addressed to the respondent, the claimant only raises the issue of procedure for declaring the grievents redundant and demands that the grievants be paid the balance of their dues. The same is repeated in its letter dated 18th October, 2011. Further, the certificate of disagreement issued by the Ministry of Labour and Human Resource dated 18th January, 2011 which referred the dispute to the Court only makes reference to unprocedural declaration of redundancy. There is no mention of the issue of underpayment of wages due to the grievants.

If there were claims for underpayment prior to 2007, the applicable procedure to follow would have been as set out in Part II of the repealed Trade Disputes Act and for claims starting 2007, the applicable procedure would have been as set out in the Labour Relations Act, 2007. As stated above, nothing was exhibited either in the pleadings or evidence that any attempt was made to raise the issue of underpayment of wages within the laid down legal channels.

Underpayment of wages is a violation of workers rights as recognized by the ILO Covention (Convention No. 131 of 1970) and one of the core mandates of the Union movement. Further under section 56 of the Labour Relations Act, officials or authorized representatives of a trade union are entitled to reasonable access to employers' premises to represent their members in any dealings with the employer. It is therefore ineffective worker representation and unreasonable for a Union to fail to detect that its members are being paid below statutory minimum wages, only to raise the claim after the termination of employment relationship between its members and an employer and more so when the entire claim or part of it has been caught by limitation of action as prescribed by relevant statute.

In concluding the issue about underpayment of wages therefore, the Court holds that the claim is unsustainable at this stage since the same was not processed, where applicable, as required by either the Trade Disputes Act or Labour Relations Act. Further, the issue is foreclosed by reason of the provisions section 90 of the Employment Act which prohibits commencement of actions based on the Act or contract of service generally, more than three years after the accrual of the cause of action.

Did the respondent follow the applicable law in declaring the grievants redundant?

Having found that the applicable law at the time of declaration of redundancy was the Employment Act, 2007, the question that arises and which has been contested by the parties is whether the in declaring the grievants redundant, the respondent complied with section 40 of the Employment Act.

Section 40 of the Employment Act provides in the relevant portions, as follows:

(1) An employer shall not terminate a contract of service on account of redundancy unless the employer complies with the following conditions—

(a) where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labour officer in charge of the area where the employee is employed of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination on account of redundancy;

(b) where an employee is not a member of a trade union, the employer notifies the employee personally in writing and the labour officer;

(c) the employer has, in the selection of employees to be declared redundant had due regard to seniority in time and to the skill, ability and reliability of each employee of the particular class of employees affected by the redundancy;

(d) where there is in existence a collective agreement between an employer and a trade union setting out terminal benefits payable upon redundancy; the employer has not placed the employee at a disadvantage for being or not being a member of the trade union;

(e) the employer has where leave is due to an employee who is declared redundant, paid off the leave in cash;

(f) the employer has paid an employee declared redundant not less than one month’s notice or one month’s wages in lieu of notice; and

(g) the employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days pay for each completed year of service.

The claimant's main complaints were that the respondent did not notify KUCFAW (the Union then representing the grievants) of the intention to declare the grievants redundant as per section 40 of the Employment Act and that the decision to pay the grievants under the gratuity clause did not absolve the respondent from paying the grievants under the redundancy clause as provided in the CBA and the Act.

To support this contention, Mr. Munoru submitted that the respondent did not send any notice to KUCFAW and the Labour Office expressing the intention to declare the grievants redundant. According to him, the alleged Executive Committee Minutes of 28th August, 2009 could not suffice since the provisions of section 40 were couched in mandatory terms. He argued that the minutes not being signed by KUCFAW representative could not be relied on as proof that the Union was notified.

The respondent for its part through Ms. Gladwell Mumia contended that the law was followed in declaring the grievants redundant and that the gratuity clause which was more favourable than the redundancy clause was agreed on between KUCFAW and the respondent. To vouch for this, the respondent called Mr. Henry Njiru Ngari and Mr. Stanely Karani who testified that there was consultation between KUCFAW and the respondent. Mr. Karani particularly testified that the respondent's Board invited (KUCFAW which was then the representative union to discuss the way forward based on the Ministry's report and as KUCFAW's Branch Secretary then, he attended the meeting and was asked to comment on the way forward on the impending redundancy. According to him KUCFAW participated in the identification of who to retrench. It was further his evidence that it was agreed at the meeting that instead of following the redundancy clause as per the CBA, the gratuity clause be followed. In conclusion he stated that no complaint was raised by KUCFAW after the payment of the grievants dues.

Mr Munoru in his cross-examination did not question or suggest that Mr. Karani who claimed to have been present and participated in the proceedings leading to the declaration of redundancy of the grievants was not a credible witness. The testimony of Mr. Karani that he was present and participated in the meeting of 28th February, 2009 where the issue of redundancy was considered and discussed therefore reduces Mr. Munoru's complaint to one of technicality. In other words, his complaint can only be construed in the sense that, in the absence of a letter or notice specifically addressed to a Union and Labour Officer on the issue of redundancy, the process cannot be said to have adhered to the provisions of section 40(1) of the Employment Act. But is this the position of the Law? Does the Employment Act insist that the notice must be in writing and in the form of a specific letter? Further it appears unclear if any Labour Officer participated the redundancy process or not. Neither party provided any evidence in that regard. How does this impact on the process?

Section 40(1) of the Employment Act provides that an employer shall not terminate a contract of service on account of redundancy unless the employer complies with the conditions listed thereunder. A purposive interpretation of the section however seems to favour as most important of all, the requirement that a declaration of redundancy ought to be notified, where employees are unionized, to their union and where they are not, to individual employees affected but in both cases the local labour officer must be notified, at least, one month before effecting the redundancy.

The purpose of the notification is to enable the Union and the Labour Officer to understand and appreciate the purpose of the redundancy. It is aimed at calling into participation, the Union and Labour Official, to ensure the other provisions of section 40(1) are observed in carrying out the redundancy. It is further meant to ensure that the employees affected are compensated, on the minimum, as provided in the Employment Act or the CBA and that the exercise is being carried in a transparent manner and does not amount to unfair labour practice.

Whereas, the Employment Act talks of notification about the extent of the intended redundancy not less than a month prior to the date of the intended termination on account of redundancy, it does not however provide for the form and manner in which such notification should be made.

Black's Law Dictionary defines “notify” as to inform (a person or group) in writing or by any method that is understood. It would therefore mean that a notification as provided under section 40(1)(a) above, need not be in a specific format provided it sufficiently communicates the intended redundancy and in not less than the period delimited by the section.

The respondent called Mr. Karani who testified that he was the then Branch Secretary of KUCFAW ( the representative union at the time) and that he was invited to a meeting where the redundancy issue was discussed. He further testified that it was the Union's position at that meeting that the workers to be declared redundant be paid under the gratuity clause in the CBA as it was more favourable than the redundancy clause. This evidence was not sufficiently controverted by the claimant hence on a balance of probabilities, it becomes more probable that the Union participated in the redundancy process than not and that the minutes of 28th February, 2009 were a true record of those who attended the meeting and what transpired therein. To this extent the Court holds that the representative union then, was notified of the intended redundancy and they participated in the process. On the question of participation of the local labour officer, whereas this remains unclear, the Court does not think any prejudice was occasioned to the grievants as their interest were adequately represented by their Union.

Concerning the issue whether the gratuity clause was more favourable than the redundancy clause in compensating the grievants, this Court has recently observed in the case ofAgnes Wachu & 104 others v. Barclays Bank of Kenya IC No. 806 of 2011 that:

“The preamble to the Employment Act states:

“An Act of Parliament to repeal the Employment Act, declare and define the fundamental rights of employees, to provide basic conditions of employment of employees, to regulate employment of children, and to provide for matters connected with the foregoing ( emphasis added)

Section 3(6) further provided that: “...subject to the provisions of this Act, the terms and conditions of employment set out in this Act shall constitute minimum terms and conditions of employment of an employee and any agreement to relinquish vary or amend the terms herein set shall be null and void”.

From the reading of the preamble and section 3(6) it is plainly clear that the Act prescribes minimum terms and conditions of service below which parties cannot contract...The respondent offered the claimants one and a half months salary which is almost three times the statutory minimum of fifteen days. The question however is: does the payment of one and a half times the statutory minimum subject to a ceiling amount to a variation or a relinquishing of the minimum terms prescribed by the Act?...Counsel has submitted that the use of 45 days (one and a half months) with a limit of sixteen years would yield a scenario that would have required a claimant to work for 48 years in order to be entitled to the exit package claimed by the respondent. This submission has not been mathematically rebutted by the claimant's Counsel. All he says is that once the respondent offered to make a payment over and above the statutory minimum, its hands became tied and it could not put a ceiling on the number of years to be paid even if the consolidated sum was over and above what would otherwise have been paid if the statutory minimum was applied for the entire period of service...The respondent is a business entity and has corporate responsibility not to engage in unfair labour practices. Whereas the respondent was trying to mitigate the claimants' job loss, such endavour must be guided by financial prudence. It is the Court's view that the exit package offered to the claimants was not only over and above the statutory minimum, but also sensitive to the fact that the claimants needed to be reasonably cushioned from the vagaries of unemployment. In the circumstances the claimants argument that once the respondent offered to pay one and a half times the compensation provided by statute it had no right to cap such compensation to a given number of years of service, is not only flawed but unreasonable. As stated earlier in this judgment, the Employment Act at section 3(6) states that the provisions of the Act constitute the bare minimum below which parties cannot contract out, vary or modify. To argue that once an employer offers a favourable term in one aspect it cannot set the extent to which such favourable term should apply, is oppressive and would discourage any employer from making any offer that would have the effect of cushioning employees facing redundancy from the rough world of unemployment...”

The respondent and its witness Mr. Karani, who was then the Branch Secretary to the representative union, informed the Court that the decision to pay the grievants based on the gratuity clause and not redundancy clause in the CBA was reached on the basis that the former was more favourable.

Clause 17(d) of the CBA provided that an employee who was declared redundant would be paid severance pay at the rate of 17 days salary for completed year of service from the date of engagement at the current rate of pay earned at the time the employee is being declared redundant. Clause 29 on gratuity provided that an employee who retires or resigns or dies will be paid gratuity at the rate of 2 months salary for every year worked at current salary rate. And for any part gratuity, this will be calculated on pro rata basis. From the foregoing it is clear that whereas severance pay was payable to employees declared redundant, gratuity was payable on account of employees who retire, resign or die. What this means is that the grievants could not have possibly been paid under the gratuity clause as a matter of fact but that the formula for calculating gratuity was imported to the redundancy clause and applied in calculating their terminal dues. The implication is therefore readily discernible that by paying the grievants at the rate of two months salary for each year of completed service at their current salaries, they were getting a better package than provided under section 40(1)(g) of the Employment Act and clause 17 of the operational CBA.

As stated in the case of Agnes Wachu referred to above, the Employment Act at section 3(6) states that the provisions of the Act constitute the bare minimum below which parties cannot contract out, vary or modify. To argue that once an employer offers a favourable term in one aspect, it cannot set the extent to which such favourable term should apply, is oppressive and would discourage any employer from making any offer that would have the effect of cushioning employees facing redundancy from the rough world of unemployment. To this extent the Court finds that the respondent did not breach section 40 of the Employment Act.

In conclusion the Court finds the claimant's claim unmerited and hereby dismisses the same with costs.

The Court however is grateful to both Mr. Munoru and Ms Mumia for their very able submissions and research on authorities in support of their respective arguments. The Court found the authorities very useful in determining this dispute and thanks the duo for their very hard work.

It is so ordered.

Dated at Nyeri this 21st day of February, 2014.

Abuodha N. J.

Judge

Delivered in open Court in the presence of Isaiah Munoru Advocate for the Claimant and Gladwel Mumia Advocate for the Respondent.

Abuodha N.J.

Judge