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ELRCPartially AllowedNot stated in the excerpt provided· [2023] KEELRC 3325 (KLR)

Kenya Post Office Savings Bank v Banking Insurance and Finance Union (Employment and Labour Relations Cause E822 of 2021) [2023] KEELRC 3325 (KLR)

Employment and Labour Relations Court
21 December 2023
AMAnna Ngibuini Mwaure
742 words in judgment
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The bottom line

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What this practically means

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Executive summary

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The Employment and Labour Relations Court in Nairobi, per Anna Ngibuini Mwaure, J, finalised an award arising from its judgment of 16th June 2023, which had ordered upward revision of salaries, wages and various allowances of the respondent bank's employees based on a revised collective bargaining agreement that was never furnished to the court. Despite repeated engagements with the parties, an inquiry to the Commissioner for Labour (whose 5th December 2023 letter gave no direction), and a report from the Salaries and Remuneration Commission dated 30th November 2023, the revised CBA never materialised. The SRC advised that the bank's position was neither sustainable nor affordable, that customer deposits might be financing operating expenses, and that the entity's going concern was in question, recommending negotiation rather than upward revision. Weighing the claimant's submissions and proposed revisions against the risk of the bank collapsing, the court granted only nominal revisions effective 1st July 2024: 0.5% on salaries and wages, 0.2% on housing allowance, 0.2% on owner occupier allowance and 0.2% on sundry allowance. Subsistence, annual leave, medical (outpatient), car, commuter and hardship allowances were retained as they were, with the respondent directed to source a medical cover of the same amount. The parties were advised to negotiate a revised CBA within two years. Each party was ordered to bear its own costs. The award was thus only partially allowed relative to the earlier revision orders.

Key legal issues

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01

Finalisation of the 16th June 2023 award in the absence of the revised CBA

Holding

The court granted only nominal revisions on some items, effective 1st July 2024, and advised the parties to negotiate a revised CBA

Reasoning

The revised CBA that was to anchor the 2023 award was never furnished despite repeated court engagements, inquiries to the Commissioner for Labour, and a detailed report from the SRC. The SRC concluded that the respondent's position was unsustainable and could not finance upward revision, warning that customer deposits may be funding operating expenses and that the entity's going concern was at risk. The court therefore adopted nominal, deferred revisions to avoid collapsing the bank to the detriment of all employees.

p. 2
02

Financial capacity as a limit on wage revision

Holding

Upward revision was confined by the going-concern risk identified by the SRC

Reasoning

The court consciously considered the claimant's proposed revisions but accepted the SRC's advice that raising salaries and allowances could bring the bank to a halt, destroying value for all employees. It balanced the earlier award obligation against the survival of the employer, granting minimal increases on salaries, housing, owner occupier and sundry allowances only.

p. 2

Legal principles established

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  • A court may temper a prior award for upward revision where the employer's financial capacity does not sustain it, granting nominal revisions with deferred implementation

Court orders

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  1. 1.Salaries and wages revised by 0.5% effective 1/7/2024
  2. 2.Housing allowance revised by 0.2% from 1/7/2024
  3. 3.Owner occupier allowance revised by 0.2% from 1/7/2024
  4. 4.Subsistence allowance not to be revised
  5. 5.Annual leave allowance to be retained as it is
  6. 6.Medical (outpatient) cover to be retained and respondent to source a medical cover of same amount
  7. 7.Car allowance to be retained
  8. 8.Commuter allowance to be retained
  9. 9.Hardship allowance to remain as is
  10. 10.Sundry allowance to be revised by 0.2% from 1st July 2024
  11. 11.Parties advised to revise their CBA within the next two years
  12. 12.Each party to meet its own costs
Jurisdiction invoked
Jurisdiction to review and finalise the earlier award revising the collective bargaining agreement (prior judgment of 16th June 2023); specific constitutional/statutory basis not stated in the judgment

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, "Kenya Post Office Savings Bank v Banking Insurance and Finance Union (Employment and Labour Relations Cause E822 of 2021) [2023] KEELRC 3325 (KLR)", Case Analysis (2023). Not stated in the excerpt provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/3325/eng@2023-12-21

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