[2014] KEELRC 1078 (KLR)
The court found that the deduction of a 5% facilitation fee by the respondent from employees' loan repayments was not authorised by the employees, as the relevant clause only permitted deductions payable to the bank and not to the respondent. The respondent's reliance on the clause was misplaced, and the deduction...
Source-derived case information.
- Citation
- [2014] KEELRC 1078 (KLR)
- Parties
- Applicant: Kenya Building, Construction, Timber & Furniture Industries Employees Union; Respondent: Rai Plywood (Kenya) Limited
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Nakuru
- Jurisdiction
- Kenya
- Case Number
- Cause 338 of 2013
- Procedural Posture
- Employment Cause / Judgment
- Outcome
- Judgment for the claimant.
- Judges
- B Ongaya
- Legal Topics
- Unlawful Deductions, Check Off Systems, Employee Consent, Facilitation Fees, Remedies for Illegal Deductions
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Kenya Building, Construction, Timber & Furniture Industries Employees Union
Applicant
Rai Plywood (Kenya) Limited
Respondent
Procedural Posture
Employment Cause / Judgment
Legal Issues
- 1 Whether the respondent's unilateral deduction of 5% facilitation fee from employees' loan repayments was lawful.
- 2 Whether the employees consented to the 5% deduction as required by law.
- 3 Whether the respondent should refund the deducted amounts to the affected employees.
Ratio Decidendi
The court found that the deduction of a 5% facilitation fee by the respondent from employees' loan repayments was not authorised by the employees, as the relevant clause only permitted deductions payable to the bank and not to the respondent. The respondent's reliance on the clause was misplaced, and the deduction constituted an unfair labour practice. The deduction was not established to be lawful under section 19 of the Employment Act. Consequently, the court held that the respondent's actions were unlawful, and the claimant was entitled to the remedies sought, including a declaration of unlawfulness, an order restraining further deductions, and a refund of all amounts deducted.
Court Disposition
Judgment for the claimant.
Orders
- Declaration that the respondent's unilateral deduction of 5% of loan repayment instalments was unlawful.
- The respondent, its agents or employees are restrained from effecting further deductions of the 5% of the loan repayment instalments.
Full Case Text
Judgment text and source record
30 paragraphs
REPUBLIC OF KENYA
IN THE INDUSTRIAL COURT OF KENYA AT NAKURU
CAUSE NO. 338 OF 2013
KENYA BUILDING, CONSTRUCTION, TIMBER &
FURNITURE INDUSTRIES EMPLOYEES UNION......CLAIMANT
- VERSUS -
RAI PLYWOOD (KENYA) LIMITED.......................RESPONDENT
(Before Hon. Justice Byram Ongaya on Friday 20th June, 2014)
JUDGMENT
The claimant union filed the memorandum of claim on 11. 10. 2013. The claimant prayed for judgment against the respondent for:
An order of declaration by the honourable court that the respondent’s actions of unilaterally awarding itself 5% of the loan repayment instalment is unlawful and an order to issue restraining the respondent from effecting further deductions.
Respondent be ordered to refund to each and every grievant all the monies so illegally deducted from the date of commencement till the full determination of this suit.
Costs of this suit.
Any other relief the honourable court may deem fit to grant.
The memorandum of response was filed on 28. 11. 2013 through Kalya & Company Advocates.
The facts of this case are straight forward. The respondent’s employees took bank loans from National Bank of Kenya. The repayments were to be effected by monthly deductions from each employee through a check-off system. In that process, the respondent apportioned itself a 5% of the loan being the repayment instalment facilitation fee as defined for the respondent. The claimant filed suit for a declaration that the 5% loan repayment facilitation fees were an illegal deduction and all the monies illegally deducted be refunded.
The respondent’s case was that the deductions were authorised by the workers in their loan application forms which were approved by the bank and consented to by the affected workers.
The claimant’s evidence was by George Mosati Nyangweso (CW1) and Simon Gitau (CW2). They both took the loans in issue. In both cases, the loan they had applied for in the loan acceptance form had been increased by 5% without their knowledge and the respondent had imposed the 5% as the charge for the respondent’s check-off system services.
The relevant provision stated as follows:
“I hereby authorise Rai Plywoods (employer) to deduct a sum of Kshs....(the amount stated including 5% administration fees) every month from my pay with effect from ... and pay National Bank of Kenya Limited... These instructions will remain in force until National Bank of Kenya Limited discharges me in writing from liability.”
The claimant’s witnesses stated that the amount was inserted without their knowledge long after they had agreed with the bank on the amount of money to be loaned and the repayment instalments.
One thing that is clear is that under the clause, the amount to be deducted was payable to the bank and not the respondent. The court finds that the respondent cannot therefore rely on that provision to justify the workers’ consent for the respondent to recover the 5% repayment facilitation fees as alleged for the respondent. It was, in the court’s opinion, an unfair labour practice for the respondent to impose the 5% charge and to deduct it without the consent of the workers and the deduction has not been established to have been lawful under section 19 of the employment Act. Accordingly, the court finds that the claimant is entitled to the remedies as prayed for.
In conclusion, judgment is entered for the claimant against the respondent for:
The declaration that the respondent’s action of unilaterally awarding itself 5% of the loan repayment instalments was unlawful.
The respondent by itself, its agents or employees is restrained from effecting further deductions of the 5% of the loan repayment instalments.
The Respondent to refund to each and every affected employee all the monies so illegally deducted from the date of commencement till the date of determination of the judgment and to refund all the deductions by 1. 08. 2014 and failing, interest to be payable at court rates from the date of the judgment till full payment.
The respondent to pay the claimant’s costs of the suit.
Signed, datedanddeliveredin court atNakuruthisFriday 20th June, 2014.
BYRAM ONGAYA
JUDGE