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IndustrialPartially AllowedCause 10 of 2000

Kenya Building, Construction, Timber, Furniture & Allied Industries Employees’ Union v Silentnight (Kenya) Ltd (Cause 10 of 2000) [2003] KEIC 30 (KLR)

Industrial Court of Kenya
2 April 2003
2,872 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan Industrial Court gave Silentnight workers a 10% wage rise over two years plus housing and retirement benefits, but rejected bigger pay and family medical demands because the company was struggling financially.

What this practically means

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Executive summary

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This is an award of the Industrial Court at Nairobi by Chemmuttut, J, dated 2 April 2003, in a dispute reported to the Minister for Labour on 8 June 1999 under the Trade Disputes Act, Cap.234. Following failed conciliation before Mr. J.N. Kiraguri, five issues remained for determination between the Union and Silentnight (Kenya) Ltd: basic minimum rates of pay, general wage increase, housing allowance, retirement benefits and a medical scheme. The Court relied heavily on the Economic Planning Division report, which showed sharply declining employment, labour costs and productivity, and losses of Kshs.2.5 million in 1997 and Kshs.9.2 million in 1998, with the Company considering closing loss-making divisions. The Court rejected the Union's demand for increases in basic minimum rates, holding that all employees already earned above the statutory Minimum General Order and at rates comparable to the Furniture Manufacturers Group of F.K.E. It awarded a general wage increase of 5% per year over two years (10% total), accepted the Union's revised housing allowance demand of Kshs.1,500 per month across the board in light of section 9 of the Employment Act and prevailing rents, and awarded retirement benefits of 16 days pay per completed year of service. The demand for a family medical scheme of up to Kshs.15,000 per annum per employee was disallowed given the Company's bleak financial position, the existing medical arrangement remaining in place. Except for the general wage increase, the award was not to apply retrospectively.

Questions the Court framed

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

  1. 1.Basic Monthly Minimum Rates of Pay
  2. 2.General Wage Increase
  3. 3.Housing Allowance
  4. 4.Retirement of Employees
  5. 5.Medical Scheme

Key legal issues

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01

Whether employees earning above statutory minimum rates are entitled to a further increase in basic monthly minimum rates of pay

Holding

Demand rejected because employees already earn over and above statutory minimum rates

Reasoning

The EPD report showed employees earn above the statutory Minimum General Order of 2000 and their rates are favourable compared to those offered by the Furniture Manufacturers Group of F.K.E. The Company had made a nil offer, arguing the demand was vague. The Court found no justification for the increase.

p. 3
02

What general wage increase is appropriate for the two-year period

Holding

5% for the first year and a further 5% for the second year, totalling 10%

Reasoning

Considering the Company's poor business performance - declining employment levels, labour costs and wage bills, losses of Kshs.2.5 million in 1997 and Kshs.9.2 million in 1998, and productivity dropping from 80% to 20% - the Court found the Company's offer of 10% over two years adequate.

p. 4
03

The appropriate housing allowance

Holding

Kshs.1,500/= per month across the board awarded

Reasoning

The Union revised its demand from 25% of monthly wages (minimum Kshs.2,000) to Kshs.1,500 across the board. The Court considered s.9 of the Employment Act, the prevailing rents of Kshs.1,500 to 3,000 for single rooms in Nairobi estates, the Company's dismal performance, and the F.K.E. group rates of Kshs.1,099 to 1,571, and accepted the revised demand.

p. 5
04

The appropriate rate of retirement benefit per completed year of service

Holding

16 days pay for each completed year of service awarded

Reasoning

The existing rate was 10 days, increased to 17 days since May 1995 per the EPD, but the Company had in practice given two months' notice pay plus 16 days per year to 65 employees declared redundant. The Union sought 25 days; the Company offered 16 days. The Court found the Company's offer reasonable given its financial position and practice.

p. 5
05

Whether the Company should be compelled to adopt a medical scheme covering the employee's family

Holding

Demand disallowed; current arrangement to stay

Reasoning

While accepting that an employee's family welfare affects work performance, the Court noted the Company's bleak business performance and its inability to sustain cover for a spouse and four children under 18. The existing arrangement - a daily medical practitioner plus referral to consulting hospitals - was held sufficient under s.12(1) of the Employment Act for the time being.

p. 6

Legal principles established

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  • Section 9 of the Employment Act obliges an employer either to provide reasonable housing accommodation or to pay a sufficient rent sum to enable the employee obtain reasonable accommodation
  • Section 12(1) of the Employment Act requires every employer to provide proper medicines during illness and medical attendance during serious illness
  • In collective bargaining awards, the court weighs the parties' demands against the employer's financial capacity and business performance as shown by the Economic Planning Division report

Court orders

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  1. 1.Rejected the Union's demand on basic monthly minimum rates of pay
  2. 2.Awarded general wage increase of 5% for the first year and a further 5% for the second year (10% for the two years' period)
  3. 3.Awarded housing allowance of Kshs.1,500/= per month across the board
  4. 4.Awarded retirement benefit of 16 days pay for each completed year of service
  5. 5.Disallowed the demand for a new medical scheme; the current arrangement to stay
  6. 6.Directed that the award, except on general wage increase, will not apply retrospectively

The bench

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

Wrote the judgment

Jurisdiction invoked
Trade Disputes Act, Cap.234 - Notification of Dispute with statutory certificate of the Labour Commissioner under Section 14(7) and (9)(e); dispute reported under Section 4 and conciliation under Section 6(2)(a)

Relief refused

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Basic monthly minimum rates of pay increase (Union demand of 40% over two years)

Employees already earn over and above the statutory Minimum General Order rates and rates comparable to the Furniture Manufacturers Group of F.K.E.

p. 3

Medical scheme covering employee's spouse and four children under 18 years

The Company's business performance is bleak and it pleaded inability to sustain the scheme; existing medical arrangement deemed adequate

p. 6

Costs

No order as to costs recorded in the judgment.

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.

This being the case, the demand is rejected.
p. 3basic minimum rates of pay
Keeping in view the poor business performance of the Company as observed hereinabove, I consider that the ofier by the Company of 5% general wage for the first year, and a further 5% for the second year, or 10% for the two years’ period, is adequate for now, and I so award.
p. 4general wage increase
On careful consideration of the dismal business performance of the Company, the exorbitant rents charged by unscrupulous landlords and the above legal provision on this matter, I am inclined to accept the revised demand by the Union of Kshs.1,500/= across the board, and I award accordingly.
p. 5housing allowance
Keeping in view the submissions of the parties, and the findings of the EPD on this issue, I am firmly persuaded that the ofier by the Company of 16 days pay for each completed year of service is reasonable, and I so award.
p. 5retirement benefit
With these observations in view, I am unable to concede to the demand at the moment, which is hereby disallowed. The current arrangement should stay.
p. 6medical scheme
This award, except on general wage increase, will not apply retrospectively.
p. 6final orders - retrospectivity

Issues in the judgment

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minor

The coram lists counsel as 'W.D. Wambua for the Claimants' while the body repeatedly refers to 'Mr. Wambua' - a minor internal naming inconsistency, not a substantive contradiction

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 Building, Construction, Timber, Furniture & Allied Industries Employees’ Union v Silentnight (Kenya) Ltd (Cause 10 of 2000) [2003] KEIC 30 (KLR)", Case Analysis (2003). Cause 10 of 2000. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2003/30/eng@2003-04-02

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