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ELRCPartially AllowedNot stated in judgment

Banking, Insurance & Finance Union [Kenya] v Harambee Sacco Society Limited (Cause E122 of 2024) [2025] KEELRC 194 (KLR)

Employment and Labour Relations Court
31 January 2025
1,820 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court awarded workers 4% annual wage increases from 2023 and blocked an employer's attempt to replace their one-month salary leave allowance with a flat Kshs. 15,000.

What this practically means

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Executive summary

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The Employment and Labour Relations Court at Nairobi (James Rika, J) determined a collective bargaining dispute between a trade union (Claimant) and its employer (Respondent), bound by a 1996 Recognition Agreement and successive CBAs, the last covering 2019-2022. The parties disagreed on two subjects for the proposed 2023-2026 CBA: general wage increment and annual leave allowance. The Claimant sought a 10% annual wage increment and preservation of the outgoing CBA clause 17[b] granting annual leave allowance equivalent to 1-month basic salary; the Respondent offered 1% per year (2% in the fourth year) and proposed a standardized Kshs. 15,000 leave allowance across the board, citing sustainability challenges. The dispute was referred to the Court's Central Planning and Project Monitoring Department, whose economist (Benson Okwayo) produced a report analysing the Respondent's finances, wage bill, CPI and productivity. The Court found the Respondent's financial position stable, that staff in different grades and lengths of service cannot be assigned a standardized leave allowance, and that the proposal would infringe Sections 10para 3 and 26 of the Employment Act; clause 17[b] was preserved. On wages, the Court applied the wage guidelines, anchored in Article 43 of the Constitution, and noted the outgoing CBA already contains a 5% annual COLA mechanism. It awarded 4.0% per year for each of the 4 years from 1st January 2023 (2.5% CPI, 1.5% productivity), making no order as to costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.What general wage increment should apply for the CBA period 1st January 2023 to 31st December 2026 - Claimant's 10% per year or Respondent's 1% (2% in the 4th year) per year?
  2. 2.Whether the Respondent's proposal to replace the annual leave allowance of 1-month basic salary with a standardized Kshs. 15,000 across the board is justified

Key legal issues

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01

Annual leave allowance - whether the Respondent could replace 1-month basic salary with Kshs. 15,000 across the board

Holding

The proposal was unjustified and would infringe Sections 10para 3 and 26 of the Employment Act; Clause 17[b] of the outgoing CBA is preserved

Reasoning

The Respondent's financial position was assessed as stable and nothing had changed or was projected to change to justify standardizing the allowance. Unionisable staff occupy different job grades with different basic salaries and differing years of service; a flat allowance would be distortive and would infringe the Employment Act.

p. 3
02

General wage increment for the 2023-2026 CBA period

Holding

Awarded at 4.0% per year (2.5% on CPI and 1.5% on productivity) effective 1st January 2023

Reasoning

Using the CPPMD expert report, the Court took the New Kenya CPI of 28.99 translating to 7.5% annual cost-of-living compensation, but noted that clause 34 of the outgoing CBA already grants a 5% annual salary increment (COLA) cushioning members against CPI rise. Productivity was 20.6% in 2022. Balancing these against the Respondent's ability to pay, the Court awarded 4% per year.

p. 4
03

Role of wage guidelines and Article 43 of the Constitution in wage determination

Holding

Wage guideline 1 obliges the Court to protect minimum standards of living and prevent 'starvation wages', anchored in Article 43 economic and social rights

Reasoning

The guideline requires the Court to guarantee workers an existence worthy of human dignity while delicately balancing wage increments with the employer's ability to pay. Guideline 2 makes productivity a major compensatory factor, entitling workers to a share of the wealth they help create.

p. 4

Legal principles established

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  • An employer seeking to shift an existing CBA benefit must justify the change; a standardized leave allowance irrespective of grade distorts differential remuneration
  • Wage guidelines bind the Court to protect a minimum standard of living and an existence worthy of human dignity, balancing increments with the employer's ability to pay

Court orders

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  1. 1.General Wage Increment is awarded at 4.0% for each of the 4 years, beginning 1st January 2023
  2. 2.Clause 17[b] of the outgoing CBA is preserved, with annual leave allowance to continue being paid at the rate of equivalent of 1-month basic salary
  3. 3.No order on the costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

Jurisdiction invoked
Dispute on collective bargaining subjects referred to the Court after conciliation before the Ministry of Labour under the Labour Relations Act; wage guidelines with anchorage in Article 43 of the Constitution applied

Relief refused

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Claimant's demand for 10% wage increment for each of the 4 years

The Court balanced cost-of-living (CPI) and productivity factors and awarded 4% per year instead, noting the existing CBA clause 34 already grants a 5% annual salary increment cushioning members against CPI rise

p. 4

Respondent's counter-offer of 1% increment per year

The Court did not adopt the Respondent's offer, awarding 4% based on CPI and productivity considerations

Costs

No order on the costs

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

General Wage Increment is awarded at 4.0 % for each of the 4 years, beginning 1st January 2023.
p. 4Final orders - wage increment
Clause 17 [b] of the outgoing CBA is preserved, with annual leave allowance to continue being paid, at the rate of equivalent of 1-month basic salary.
p. 4Final orders - annual leave allowance
The Respondent has not justified its proposal for a shift in the payable annual leave allowance.
p. 3Burden of justification on employer seeking to vary CBA benefit
It is the role of the Court under the guidelines to ensure that Employees are not paid what historically, has been pejoratively described as 'starvation wages,' while delicately balancing wage increment, with the Employer's ability to pay.
p. 4Wage guidelines and human dignity
No order on the costs.
p. 4Costs

Issues in the judgment

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minor

The Claimant's demand appears inconsistently pleaded: the wage increment table lists two consecutive entries for 1st January 2024 and none for 2025

minor

Inconsistency between the Claimant's pleaded 10% demand and the 2% per year demand recorded in the CPPMD expert report, which the Claimant attributed to error in the Report

minor

Productivity figures differ between the Claimant's submission (29.9%) and the CPPMD finding (20.6%)

minor

The names of the parties are not stated in the judgment text

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, "Banking, Insurance & Finance Union [Kenya] v Harambee Sacco Society Limited (Cause E122 of 2024) [2025] KEELRC 194 (KLR)", Case Analysis (2025). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/194/eng@2025-01-31

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