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IndustrialPartially AllowedCause 98 of 2005· [2007] KEIC 4 (KLR)

Tailors & Textiles Workers Union v African Cotton Industries Ltd (Cause 98 of 2005) [2007] KEIC 4 (KLR)

Industrial Court of Kenya
20 June 2007
CCCP CHEMUTTUTJKJM KILONZOOWOA WAFULA
4,322 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Industrial Court gave textile workers a 7% yearly wage rise but rejected bigger demands because the company proved it could not afford more.

What this practically means

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Executive summary

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This is an award of the Industrial Court at Nairobi in a trade dispute notified under Section 14 of the Trade Disputes Act, Cap. 234, between the Tailors & Textiles Workers Union and African Cotton Industries Ltd concerning twelve issues arising from the renewal of their collective agreement for the period 1st September 2002 to 31st August 2004. The Union sought a general wage increase of 25% per year, enhanced house allowance, leave travelling, night shift, meals and safari allowances, revised basic minimum wages, extended sick leave, higher redundancy severance pay, improved retirement benefits, protective clothing and soap, an incentive and yearly bonus scheme, and medical expenses. The Company pleaded inability to pay, citing declining profits and losses since 2003, escalating raw material costs, competition from cheap imports, and an Economic and Planning Division report confirming losses and a weak financial position. The Court awarded a general wage increase of 7% per year (14% over two years), upheld the Company's house allowance offer of Kshs. 1,900, raised meals and safari allowances by Kshs. 150 across the board, and increased gratuity to 18 and 24 days pay per completed year of service for 5-10 and 11+ years respectively. It awarded two bars of soap monthly to deserving employees but disallowed clothing for all employees absent proof of exposure under Section 53 of the Factories Act. The demands on leave travelling and night shift allowances, basic minimum wage, sick leave, redundancy severance pay and bonus were rejected; the medical expenses claim was dismissed as withdrawn at the hearing. No costs order appears in the award.

Key legal issues

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01

General wage increase

Holding

Modest increase of 7% per year (14% for two years) awarded, below the Union's 25% demand and above the Company's 5% offer, reflecting the 26% rise in cost of living indices and the Company's poor finances

Reasoning

The Court applied the settled principle that wage increases depend on proven cost-of-living increases and the employer's capacity to pay. The EPD report showed rising cost of living but no documentary or other evidence proved the Company could bear a substantial increase. Balancing the compensatory entitlement of 26% for the two-year period against the parties' positions, the Court fixed 7% per year.

p. 4
02

House allowance

Holding

Company's offer of Kshs. 1,900 per month upheld against Union's demand of Kshs. 3,500

Reasoning

The Court noted the statutory duty under Section 9 of the Employment Act to provide housing or sufficient rent, acknowledged scarcity and cost of decent accommodation in urban centres, but compared rates in comparable textile concerns (Kshs. 950 to 1,670) and considered the Company's poor financial status in upholding Kshs. 1,900.

p. 4
03

Meals and safari allowance

Holding

Awarded an across-the-board increase of Kshs. 150, making Kshs. 800 for drivers and Kshs. 500 for turnboys/loaders

Reasoning

Only 5 drivers and 5 turnboys/loaders were entitled to the benefit, a small number. Weighing the high cost of foodstuffs and accommodation against the Company's finances, the Court found a modest across-the-board increase of Kshs. 150 appropriate rather than the Union's demand of Kshs. 2,800 per day.

p. 6
04

Retirement benefits/gratuity

Holding

Existing gratuity provision found slightly low; increased to 18 days pay per completed year for 5-10 years' service and 24 days pay per completed year for 11 or more years' service, for sector uniformity

Reasoning

After reviewing provisions across the sector, the Court found the outgoing clause (15 days for 5-10 years; 20 days for 11+ years) a bit on the lower side and, to maintain uniformity in the sector, awarded enhanced rates while leaving the rest of the clause unchanged. The Union's proposed retirement ages and other amendments were not granted.

p. 8
05

Protective clothing and soap

Holding

Two bars of soap per month awarded to all deserving employees; overalls/dust-coats and uniforms for all employees disallowed

Reasoning

Section 53 of the Factories Act requires protective clothing only for workers exposed to wet or injurious/offensive substances. Absent evidence that all employees were so exposed, the demand for clothing for all was disallowed; soap was awarded to keep soiled clothes clean.

p. 9
06

Incentive and yearly bonus

Holding

Demand rejected for the moment; introduction of an incentive scheme is a management function but once introduced it becomes a condition of service

Reasoning

The Court held that whether to introduce an incentive bonus scheme lies with management, but once introduced the right to claim it becomes a condition of service. Given the Company's hopelessly poor business performance, no justification existed to compel introduction of a scheme at this time.

p. 9

Legal principles established

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  • Wage increases depend on proven increase in the cost of living and on the employer's demonstrated capacity to pay
  • It is the employer's statutory duty to provide reasonable housing accommodation or pay sufficient rent
  • Shift regulation is a management function
  • Once an employer introduces an incentive bonus scheme, the right to claim the bonus becomes a condition of service

Court orders

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  1. 1.General wage increase of 7% each year, or 14% for the two years period
  2. 2.House allowance upheld at Kshs. 1,900 per month as offered by the Company
  3. 3.Leave travelling allowance maintained at Kshs. 2,000; Union's demand rejected
  4. 4.Night shift allowance maintained at Kshs. 50 per night; Union's demand rejected
  5. 5.Meals and safari allowance raised across the board by Kshs. 150, making it Kshs. 800 for drivers and Kshs. 500 for turnboys or loaders
  6. 6.Basic minimum wage demand rejected
  7. 7.Sick leave demand rejected; status quo maintained
  8. 8.Redundancy severance pay maintained at 21 days wages for each completed year of service; demand rejected
  9. 9.Retirement benefits increased: 18 days pay for each completed year of service for 5-10 years of service and 24 days pay for each completed year of service for 11 years or more; rest of the clause unchanged
  10. 10.Two bars of soap per month awarded to all deserving employees; demand for overalls/dust-coats and uniforms for all employees disallowed
  11. 11.Incentive (production) and yearly bonus demand rejected
  12. 12.Medical expenses demand dismissed as withdrawn
Jurisdiction invoked
Trade Disputes Act, Cap 234, Section 14(7) and (9)(e) - Notification of Dispute with statutory certificate of the Labour Commissioner

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Tailors & Textiles Workers Union v African Cotton Industries Ltd (Cause 98 of 2005) [2007] KEIC 4 (KLR)", Case Analysis (2007). Cause 98 of 2005. Source: https://new.kenyalaw.org/akn/ke/judgment/keic/2007/4/eng@2007-06-20

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