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IndustrialPartially AllowedCause 13 of 2004

Kenya Union of Sugar Plantation Workers v Sugar Employers Group of FKE (Cause 13 of 2004) (Civ) [2004] KEIC 4 (KLR)

Industrial Court of Kenya
28 September 2004
4,897 words in judgment
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The bottom line

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Kenya's Industrial Court split the difference on sugar workers' pay, awarding 9% yearly increases but rejecting bigger allowances because the employers could not afford them.

What this practically means

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Executive summary

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This was an award by the Industrial Court at Nairobi in a trade dispute referred under the Trade Disputes Act, Cap 234, between the Kenya Union of Sugar Plantation Workers and the Sugar Employers Group of FKE, comprising Chemelil, Sony and Nzoia Sugar Companies, with about 3,000 unionisable employees. The parties had a recognition agreement and were renegotiating their collective agreement for 1st May 2001 to 30th April 2003; having failed to agree on wages, house allowance and shift allowance after conciliation failed, the dispute came before the court. The court considered the EPD report on staffing, labour costs, losses and the sugar industry's financial crisis, alongside the parties' submissions. Applying the principle that the employer's ability to pay is paramount, the court awarded a general wage increase of 9% per year (18% over two years) across the board, rejecting the Union's 25%/20% demand as unreasonable and unaffordable and the Group's 3.5% offer as too low. On house allowance, invoking Section 9 of the Employment Act and the Wage Guidelines, the court improved the rates by 2% across the board to 14% for the lower income group and 13% for the upper income group, refusing the 15% demand; the award was not retrospective. The demand to raise the night shift allowance from Kshs 3.00 to Kshs 5.00 per hour was refused, with status quo maintained in view of the Group's poor business performance. No order as to costs was made.

Questions the Court framed

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

  1. 1.Whether the unionisable employees should be granted a general wage increase (Union demanded 25%/20% over two years; Group offered 3.5% per year)
  2. 2.Whether the house allowance rates (12% lower income group, 11% upper income group) should be increased to 15% as demanded by the Union
  3. 3.Whether the night shift allowance should be raised from Kshs 3.00 to Kshs 5.00 per hour

Key legal issues

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01

Entitlement to general wage increase

Holding

A general wage increase of 9% per year (18% over two years) across the board awarded, rejecting both the Union's 25%/20% demand and the Group's 3.5% offer.

Reasoning

Applying the Wages Guidelines and the EPD report, the court weighed cost of living indices (16.05% for lower income group), the employer's ability to pay, and the huge losses suffered by all members of the Group. The Union's demand was found unreasonable and unaffordable; the Group's offer was too low. A mid-point of 9% per year was held to meet the ends of justice.

p. 6
02

House allowance rates

Holding

House allowance improved by 2% across the board, to 14% for the lower income group and 13% for the upper income group, rejecting the Union's demand for 15%.

Reasoning

The court considered Wage Guideline 2(ii) and (iv), the statutory housing obligation under Section 9 of the Employment Act, the EPD evidence on rents paid by non-housed employees, and the fact that Chemelil and Sony house up to 80% of employees. The competing positions of 15% (Union) and 13%/11% (Group) were split by a 2% across-the-board improvement.

p. 8
03

Night shift allowance

Holding

Demand for increase from Kshs 3.00 to Kshs 5.00 per hour refused; status quo maintained.

Reasoning

The court found the Group's business performance too poor to justify the increase, holding that the demand should await better economic conditions. Comparable concerns cited by the Union (United Textiles Mills, Pan Paper Mills, Mumias Sugar) were rejected by the Group as irrelevant, being different industries.

p. 8

Legal principles established

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  • The most important consideration in awarding additional benefits to employees is the financial position of the employer, including its ability to pay.
  • The primary objective in awarding wage increases is the employer's ability to pay and the restoration of peace and harmony in the industry, doing justice to the interests of both labour and capital.
  • Every employer is under a statutory duty to provide reasonable housing accommodation or pay sufficient rent to each employee under Section 9 of the Employment Act.

Court orders

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  1. 1.A general wage increase of 9% each year, or 18% for the two years' period, across the board
  2. 2.Improvement of current house allowances by 2% across the board, to stand at 14% for the lower income group and 13% for the upper income group
  3. 3.Status quo to be maintained on the night shift allowance (Kshs 3.00 per hour)
  4. 4.The award on house allowance will not apply retrospectively but will come into force henceforth

The bench

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

Wrote the judgment

Jurisdiction invoked
Section 14(7) and (9)(e) of the Trade Disputes Act, Cap 234 (Notification of Dispute and statutory certificate from the Labour Commissioner)

Relief refused

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Night shift allowance increase from Kshs 3.00 to Kshs 5.00 per hour

Given the poor business performance of the members of the Group, the demand should await better economic conditions

p. 8

Retrospective application of the house allowance award

The court limited the house allowance improvement to prospective effect

p. 8

Costs

No order as to costs was made in the award; costs were not addressed.

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.

a general wage increase of 9% each year, or 18% for the two years’ period, across the board will meet the ends of justice. I so award and order.
p. 6Wage increase award
the current house allowances be improved by 2% across the board to stand at 14% for the lower income group and 13% for the upper income group. I award accordingly.
p. 8House allowance award
In the result, I award that status quo be maintained.
p. 8Night shift allowance refused
Finally, I wish to observe that the award on house allowance will not apply retrospectively, but will come into force henceforth.
p. 8No retrospectivity on house allowance
what matters in awarding additional benefits to the employees is most importantly the financial position of the employer
p. 6Ability to pay principle

Issues in the judgment

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minor

The coram mentions two members who constituted the coram with the judge, but they are not named in the judgment.

minor

The Union's wage demand is stated inconsistently in the judgment - once as 25% and 20% spread over two years (an average of 22.5%), and later as 25% each year for two years.

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 Union of Sugar Plantation Workers v Sugar Employers Group of FKE (Cause 13 of 2004)  (Civ) [2004] KEIC 4 (KLR)", Case Analysis (2004). Cause 13 of 2004. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2004/4/eng@2004-09-28

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