KENYA ENGINEERING WORKERS UNION VS ENGINEERING SUPPLIES LIMITED

Background
1.    The Claimant, a duly registered Trade Union, initiated this suit by the Memorandum of Claim dated 23rd August 2021, on behalf of Mr. Kenneth Katana [the grievant], seeking the reliefs outlined below against the Respondent. Therefore: -
I.    Services gratuity (23 days a year) 23/30×14 × (21,500+2,700)    =    Kshs259,747/=
II.     Basic salary and house allowance deducted (3months) (21,500+2,225) - (12,927+1,939) ×    3 = Kshs.20,873/=
III.    House allowance arrears (3 years) (2,700-2,225) × 36    Kshs. 77,400/=
Total amount    =    Kshs.358,020/=
IV.     THAT, the Honourable Court issue an order against the Respondent to pay the awarded amount at prayer 4.2 above, with interest at the court's rate from the time it was due.
V.     THAT, the grievant herein be issued with a certificate of service.
VI.     THAT, the Respondent shall meet the cost of this unit.
2.    The Respondent resisted the Claimant’s claim through a Memorandum of Response dated 30th September 2021. They contended that, contrary to what he avers in his pleadings, the grievant voluntarily resigned from his employment, and his employment was not terminated. He is not entitled to the reliefs sought or any of them.
Claimant’s Case
3.    It was the Claimant’s case that the Grievant was first employed by the Respondent on 1st February 2006 as a subordinate staff member, initially earning a gross salary of Kshs. 5,957.
4.    At the time of retirement from his employment, the Grievant was earning a basic salary of KShs. 21,500 and a house allowance of Kshs. 2,225.
5.    It was stated that upon attaining the retirement age, the Grievant, through his letter dated 21st May 2020. The Respondent accepted the request. However, instead of paying the Grievant his retirement benefits per the Collective Bargaining agreement between them and the Claimant Union, they, while paying the Grievant his salary for June 2020, confusedly caused him to sign documents acknowledging receipt of retirement benefits that were significantly less than those provided by the CBA. 
6.    The Claimant asserted that the house allowance that the Respondent was paying the Grievant at the time of retirement was far less than the one negotiated and agreed upon by the parties under clause 17 of the CBA. Instead of KShs. 2,700, he was being paid KShs. 2,225.
7.    The Grievant’s decision to request retirement was prompted by the Respondent’s action of reducing his salary from April 2020 to June 2020 to KShs. 21,500, along with a house allowance of KShs. 1,930.
8.    On 20th June 2020, the Grievant was paid his salary and earned but unutilised leave days. For this, he has no claim against the Respondent. His claim is confined to the underpayment and service gratuity.
9.    Aggrieved by the action and unable to reach an agreement, the Claimant invoked the provisions of Section 62 of the Labour Relations Act, 2007, and reported the matter to the Ministry of Labour. The Minister accepted the dispute and appointed Mr Njagi as a conciliator.
10.    The Conciliator repeatedly invited the parties to conciliation meetings, but the Respondent refused to attend, leading the Conciliator to recommend in his report that the Claimant could proceed to lodge his claim in court.
11.    Cross-examined by Counsel for the Respondent, the Grievant testified that he joined the Claimant Union in 2018. However, he had no Union membership card or a receipt for payment of Union dues, from which his membership can be ascertained.
12.    He further testified that he informed his employer, the Respondent, on 27th March 2019, that he had joined the membership of the Claimant Union. The Union wrote to them regarding that.
13.    He stated that his decision to retire was influenced by two factors. Firstly, the Respondent’s decision to unilaterally reduce his remuneration. Secondly, he wished to attend to his father’s land. He, however, admitted that he did not mention the issue of the salary reduction in his letter requesting retirement.
14.    He asserted that before the salaries were reduced, the Respondent did not offer them the choice of accepting the reduced salary or being declared redundant.
15.    The Grievant explained that he was summoned to the office of the Head of the Accounts Department, where he was given a document to sign. He simply signed it, believing that it was an acknowledgement of the June salary and payment for earned but untaken leave that he had received.
16.    He stated that he wasn’t aware that in 2019, the Respondent issued a notice to the Claimant Union to terminate the Collective Bargaining agreement.
17.    The Grievant admitted that he filed the claim approximately 14 months after the separation. He is not aware that the doctrine of continued injury and the limitation of causes of action related to it diminish his claim.
18.    In his evidence under re-examination, the Grievant stated that his letter of appointment only provided for basic pay. It did not provide for house allowance.
19.    He further stated that he went to school up to standard three. The Head of the Accounts Department asked him to sign the document, telling him it was to acknowledge the June salary and leave pay.
Respondent’s Case
20.    The Respondent presented one witness to testify on their behalf. It was their case, supported by the evidence of the witness, that they had entered into a Collective Bargaining Agreement (CBA) with the Claimant union on 28th October 2011, which remained in force until its termination in accordance with its terms.
21.    Following the retirement of its last unionisable employee in November 2019, it settled all his dues and issued a notice dated 30th November 2019 to terminate the CBA, which the Claimant acknowledged without objection.
22.    It was further stated that they sought formal revocation of the CBA from the National Labour Board in March 2020 pursuant to section 54(5) of the Labour Relations Act.
23.    According to the Respondent, the outbreak of the COVID-19 pandemic severely impacted its business operations, leading to a meeting with employees where a 40% salary reduction was agreed upon to prevent closure.
24.    They contended that all employees, including the Grievant, were given the option of accepting the reduced salary or voluntary disengagement, and that the Grievant voluntarily accepted the salary reduction by signing the revised terms.
25.    The Respondent disputed the Grievant’s union membership, stating that a check-off form submitted by the Claimant was backdated and disputed by several employees, including the Grievant, who denied having knowledge of or consent to union membership.
26.    It was further averred that, in line with government and tripartite guidelines during the pandemic, employees were temporarily sent on paid leave as business conditions worsened.
27.    The Respondent stated that the Grievant voluntarily resigned on 21st May 2020, with effect from 22nd June 2020, and that the resignation was duly accepted.
28.    They maintained that on 20th June 2020, the Grievant was paid all his terminal dues, acknowledged receipt, and signed a full and final settlement discharging the Respondent from any further claims.
29.    Cross -examined by the Claimant’s representative, the Respondent’s witness testified that the Grievant’s level of education was not disclosed at the time of employment.
30.    The CBA between the Claimant and the Respondent that was executed on 28th November 2011, provided that it covered all unionisable employees.
31.    The letter that the Respondent wrote to the Claimant on 30th November 2019 stated that James Kuria was the last Unionised employee. In the same letter, the Respondent informed the Claimant that it was thereby terminating all agreements between the parties
32.    The witness further stated that the Grievant was paid for the 20 days worked in June 2020, house allowance, salary for May 2020, and compensation for 25 leave days. 
33.    He admitted that the Respondent had not produced any minutes from which it could be discerned that a meeting took place between the Respondent and its employees regarding the pay cuts, and that they had agreed to the cuts.
Claimant’s submissions
34.    The Claimant argued that the grievant was a unionisable employee and therefore entitled to enjoy and benefit from the terms and conditions of the Collective Bargaining Agreement (CBA), which had been duly negotiated and registered between the parties.
35.    The Claimant argued that the CBA remained valid and binding notwithstanding the Respondent’s attempt to terminate the Recognition Agreement, relying on section 59(3) of the Labour Relations Act, 2007, and the decision in Kenya Engineering Workers Union v Engineering Suppliers Limited, ELRC Cause No. E006 of 2024.
36.    Regarding payment of dues, the Claimant submitted that the Grievant was not paid the benefits claimed, and that the alleged discharge voucher only covered salary for days worked and leave, which were not in dispute.
37.    The Claimant further argued that the Grievant was entitled to a service gratuity under clause 22 of the CBA, as well as a proper house allowance under clause 17, and that any payments below the agreed CBA rates constituted unlawful underpayment.
38.    It was submitted that the Respondent’s unilateral reduction of salary during the COVID-19 period was unlawful due to a lack of consultation and non-compliance with the relevant tripartite guidelines on altering employment terms.
39.    The Claimant relied on section 25 of the Employment Act, 2007, to argue that the Respondent was obligated to pay all rightful remuneration, including any amounts unlawfully withheld.
40.    Further reliance was placed on ELRC Cause No. E654 of 2020 at Nairobi between the Kenya Engineering Workers Union and M/s Insteel Limited.
41.    The Claimant urged the Court to find the claim meritorious, grant all the prayers sought, and award costs, including throw-away costs under Rule 70 of the Employment and Labour Relations Court (Procedure) Rules, 2024.
The Respondent’s submissions
42.    The Respondent argued that the Claimant’s claim lacks merit, maintaining that the Grievant’s terminal dues were fully settled upon his voluntary resignation and that no additional sums are due.
43.    It was argued that although the parties had entered into a Collective Bargaining Agreement (CBA), the same was effectively terminated in accordance with its terms following the retirement of the last unionisable employee in November 2019, and notice of termination was duly issued.
44.    The Respondent further submitted that the alleged CBA was not registered and therefore lacked legal enforceability under section 59(5) of the Labour Relations Act, relying on University Academic Staff Union (UASU) v Kisii University; Ministry of Labour and Social Protection & another (Interested Parties) (Miscellaneous Case E085 of 2023) [2023] KEELRC 2904 (KLR).
45.    Regarding locus standi, the Respondent argued that the Claimant Union was not authorized to initiate the suit, given that the Collective Bargaining Agreement (CBA) had been terminated, and no evidence was presented to substantiate the Grievant’s union membership.
46.    The Respondent argued that the Grievant received all his terminal dues, which he acknowledged by signing a full and final settlement, and that this discharge prevents any further claims.
47.    On the claim for service gratuity, it was submitted that the Grievant was not entitled to the same as he was a member of the National Social Security Fund (NSSF) and was paid in accordance with the law.
48.    Regarding the claim for refund of the 40% salary reduction, the Respondent argued that the reduction was necessitated by the COVID-19 pandemic, was mutually agreed upon by employees, and was voluntarily accepted by the grievant, thereby creating a new contractual arrangement which estops him from claiming a refund.
49.    Regarding the arrears of house allowance, the Respondent asserted that the claim was barred by time as a continuing injury pursuant to Section 90 of the Employment Act, citing Kengo Bakari Mwandogo v Kaluworks Limited [2020] eKLR. Additionally, the Respondent maintained that the house allowance had been properly paid as part of the Grievant’s salary.
50.    The Respondent urged the Court to find that the Grievant was fully settled, dismiss the claim in its entirety, and award costs to the Respondent.
Analysis and determination
51.    I have carefully considered the respective pleadings and evidence by the parties, and their Counsel’s respective submissions, and the following issues emerge for determination;
I.    Whether it was proved that the Grievant was an employee who could benefit from the terms of the CBA between the Claimant and the Respondent.
II.    Whether the Grievant is entitled to the reliefs sought.
52.    To benefit from the terms of a Collective Bargaining Agreement [CBA], it is important to clearly understand who is entitled to those benefits and under what legal basis. The two main categories are:
I.    Trade Union members, those who have formally joined a registered trade union, signed a membership or check -off form authorising deduction of union dues, are fully entitled to all benefits negotiated under the CBA, such as salary increments, allowances, leave entitlements and grievance procedures.
II.    Unionisable Employees, those employees who are eligible to join a Union based on the nature of their job, but may not actually be unionised. As such, “Unionisable” refers to a category of employees, not membership. This category typically excludes management or confidential staff. In many legal systems, including ours, a CBA may still apply to Unionisable employees even if they are not union members, depending on whether the law allows the CBA to be extended to non-members.
However, non-members would be required to pay an agency fee [a fee equivalent to union dues] if they benefit from the CBA, and some benefits, like union representation in disputes, may be limited for non- members.
53.    In light of the foregoing, it becomes absolutely necessary for any litigant pursuing an alleged benefit[s] under a CBA, to unambiguously plead as a material fact, and tender sufficient evidence, under which category of the two, he is approaching the Court for remedy. Where the pleadings and evidence are ambiguous, the Court can seldom avail itself of the remedy, as Courts in an adversarial system like ours cannot allow themselves to venture into the realm of speculation.
54.    I am compelled to conclude that the Claimant was not explicit regarding the category under which the Grievant sought relief before the Court. Whether intentionally or unintentionally, and to the prejudice of their case, the Respondent failed to state in the Memorandum of Claim whether the Grievant was a member or a unionizable employee.  Even in its letter dated 9th June 2021, to the Ministry, the Claimant was very silent on this.
55.    However, when one considers the submissions by Counsel for the Respondent and the evidence of the Grievant, two contradictory positions emerge. Whilst the submissions indicate that the Grievant was a Unionisable employee, the Grievant testified that he was a member of the union, having joined the same on or about 27th March 2019. Sight is not lost of the Grievant’s evidence under cross-examination that he had no receipt to demonstrate that he had paid any union dues, or an executed membership document or check-off form.
56.    The Respondent’s witness stated at paragraph 13 of his witness statement that on or about 4th May 2020, a representative of the Claimant served upon the Respondent a letter dated 22nd April 2020, attaching to it a backdated check off list purporting to seek the deduction of union dues for seven of the Respondent’s employees, alleged to be its members, including the Grievant. Subsequently, the named employees denounced the check-off form and the signatures thereon attributed to them. In my view, the Claimant did not challenge this vital evidence.
57.    It is my considered view that the Claimant failed to prove that the Grievant was either its member or a Unionisable employee. As such, I have no basis to hold that he was an employee entitled to the benefits and terms under the Collective Bargaining Agreement.
58.    Section 10(5) of the Employment Act requires that any change to employment terms must be made in consultation with the employee.
59.    Any reduction of salary, under whatever circumstance, must comply with Section 10(5) of the Employment Act. It must be preceded by consultations between the employer and the employee[s] and by the employee[s]' consent. A unilateral salary reduction amounts to an unlawful variation of the contract.
60.    In the case of Ibrahim Kamasi Amoni v Kenital Solar Limited [2018] KEELRC 1093 (KLR), the court held that, “I agree with the claimant that the reduction of his salary was unilateral.  For a reduction of salary to be valid, an employer ought to obtain the approval of an employee by communicating the reduction to the employee in a letter and causing the letter to be accepted by the employee.  This is because salary is a fundamental term of employment whose reduction has a negative impact on an employee’s livelihood and should not be done arbitrarily or unilaterally by an employer.”
61.    The COVID-19 pandemic posed extraordinary economic difficulties for employers worldwide. In the present case, the Respondent contended that, in the circumstances of COVID-19, and following consultations with its employees and their concurrence, it was agreed that the employees would take a pay cut to avoid redundancies.
62.    I have carefully read the Grievant’s letter dated 21st May 2020, under which he applied to be allowed to retire. He did not at all mention the matter of reduction of remuneration or that he was dissatisfied with any action by the Respondent in relation thereto. To me, the only reasonable conclusion is that the Claim for a unilateral salary reduction and the alleged underpayment are an afterthought. I am not persuaded that the reduction was unilateral.  The claim for salary underpayment for the period from April to June 2020, therefore, fails.
63.    This Court observes that the reliefs sought—service gratuity, salary underpayment, and house allowance—were all based on the assertion that the Grievant was an employee entitled to benefits under the Collective Bargaining Agreement. Having determined, as I have hereinabove, that he was not such an employee as a member of the Claimant or a Unionisable employee, the reliefs cannot be available to him.
64.    Section 51 of the Employment Act mandatorily requires an employer to provide a certificate of service upon termination. Therefore, the Grievant is entitled to a certificate of service.
65.    In the upshot, the Claimant’s claim lacks merit. It is hereby dismissed.

Read Signed and Delivered this 23rd Day of March 2026.