Issue in dispute – refusal by the respondent to negotiate and conclude CBA 3 clauses on general wage increase, house allowance, and redundancy benefits.
The claimant is a registered trade union. The respondent is a limited liability company based in Mazers in Kilifi County.
The parties have a Recognition Agreement dated 7 December 2021.
Under section 54 of the Labour Relations Act (LRA), having signed the Recognition Agreement, the claimant forwarded the CBA proposal to the respondent on 22 February 2022. The respondent has refused to negotiate the CBA. Under section 62 of the LRA the claimant reported a dispute to the Minister but the respondent refused to attend or attend at the reconciliation.
Later the respondent made a counterproposal. Parties embarked on negotiation but have not agreed on 3 issues;
- General wage increase,
- House allowance,
- Redundancy benefits.
The claimant is seeking that, due to disagreement, its proposal regarding the three issues be adopted as the court''s judgment. The proposal is that;
An order adopting the claimant’s CBA proposal of 20% in 2022 and 20% in 2023 on general wage increase, house allowance of Ksh.10, 000 or 35% of the basic salary whichever is higher and for redundancy, severance pay at 25 days for each completed year of service by directing the parties to sign the same within 14 days from the date of judgment date inclusive of all negotiated and agreed upon clauses.
In evidence, the claimant called Francis Ngaira Jirongo, the claimant’s secretary, from the Coast region. He testified that the respondent has refused to negotiate the CBA despite reporting profits for the years of the CBA negotiations, 2022 to 2023.
Upon cross-examination, the witness testified that he does not have the current number of its members employed by the respondent. At the time of signing the Recognition Agreement, the claimant had achieved the threshold of majority under section 54 of the LRA.
The claimant is aware that the respondent has lodged a petition with the National Labour Board to revoke the Recognition Agreement; however, there is no decision on this matter. Parties have engaged in negotiation over the CBA, and 3 clauses are not resolved, hence the claim for:
- An increase in the general wage of 20% for 2022 and 2023.
- House allowance Ksh. 10,000 of 35% of the basic salary, whichever is higher.
- Redundancy pay at 25 days for each year served.
In response, the respondent admitted the Recognition Agreement between the parties dated 7 December 2021. Based on the Agreement, the parties commenced CBA negotiations.
Currently, the respondent has a total of 148 employees, of whom 47 are members of the claimant. The remaining employees are not unionisable or have subscribed to another union.
The respondent has engaged the claimant in CBA negotiations in good faith and reached consensus in majority of clauses on both monetary and non-monetary clauses. The issues of general wages, house allowances and redundancy have not been resolved as they are financially unsustainable given the economic status of the respondent.
The respondent is relatively new and commenced operations in 2021. It is still in the phase of capital recovery and operational stability. It has consistently posted losses from 2021 to 2023. The proposal for a general wage increase of 20% for 2022 and 2023, a house allowance increase of Ksh. A 10,000 or 35% salary increase and a 25-day redundancy for each year is unsustainable due to the respondent''s financial status.
The respondent has continued to implement salary increases for all cadres of employees. In July 2023 and August 2024, a wage increase was implemented. A 10% average increase was applied to all employees who had served for one year or were due for harmonization.
The claimant''s proposals are not sustainable in the current financial standing of the respondent. The claim has since lost its recognition status due to reduced membership, which now stands at 38% of the workforce. The claim should be dismissed, and the court should order parties to maintain the prevailing wage and house allowance for the 2022-2023 CBA cycle, and the benefits for redundancy to remain as under the Employment Act.
In evidence, the respondent called Samuel Ruwa, the accountant, who testified that the respondent was established in 2018 and commenced operations in July 2021. The Recognition Agreement was signed on 7 December 2021, and CBA negotiations commenced.
Ruwa testified that currently, the respondent has 148 employees of who the claimant has 48 below the recognition threshold. The proposals under the CBA are not sustainable. The respondent reported a dispute to the National Labour Board for clarification of the claimant’s status after going below the majority threshold.
The claimant has relied on other CBAs with third parties to claim an increase in general wage, a house allowance, and a reduction. However, the different companies have been in existence for longer than the respondent, which started operations in 2021 as evidenced by the Recognition Agreement of 7 December 2021. The proposal to increase the general wage by 20% for 2022 and 2023 is not sustainable. The proposal to increase the housing allowance by Ksh. 10,000 or 35% whichever is higher, is not sustainable. The redundancy rate should remain as stipulated under the Employment Act.
The respondent has since increased wages by 10% to cover all employees. If the wage is increased as proposed by the claimant, this will require an additional KSh. 22 million on the total wage bill, which the respondent cannot afford.
At the conclusion of the hearing, both parties submitted written statements.
Determination
It is not in dispute that parties herein have a Recognition Agreement dated 7 December 2021.
Upon attaining recognition status, the next step for the parties is to negotiate a collective agreement under Section 54 of the LRA. The claimant''s proposal for a collective agreement is lawful and valid, as required under sections 54 and 57 of the LRA, as held in Teachers Service Commission v Kenya National Union of Teachers & 3 Others, Civil Appeal No. 196 of 2015.
The respondent contests that the claimant has since gone below the recognition threshold, and the matter was reported to the National Labour Board. However, until a decision is made, the claimant is justified in seeking negotiations for a CBA upon attaining the threshold of recognition, which dates back to 7 December 2021.
In this regard, the claimant has proposed a CBA and the only items not agreed are general wage, house allowance and redundancy rate. The proposal is:
- An increase in the general wage of 20% for 2022 and 2023.
- House allowance Ksh. 10,000 of 35% of the basic salary, whichever is higher.
- Redundancy pay at 25 days for each year served.
The respondent maintains that it is relatively new, having started operations in 2021, and has not yet made any profits. Therefore, it should not be compared to other third parties that have been settled and have enjoyed many years of operations.
The respondent called the chief accountant, who testified that in 2022 and 2023, the respondent made financial losses and cannot sustain any wage increases for the proposed CBA with the claimant. His case was that the claimant has since lost the simple majority, and the matter is pending before the National Labour Board.
However, when Ruwa was cross-examined, he confirmed that there was a general wage increase for management staff, with an average of 24%. He also confirmed that there was a general wage increase for all employees at 10%. His case was that;
For machine attendants, the average gross wage before June 2023 was KSh . 18,000. From June 2023, their wages increased to between Ksh. 21,000 to Ksh . 35,000, and by August 2024, the range rose further to Ksh. 23,100 to Ksh. 35,500.
For plant operators, the pre-June 2023 gross wages ranged between KSh. 25,000 and KSh . 35,000. From June 2023, these were increased to Ksh . 28,000 to Ksh . 39,000, and by August 2024, further adjusted to Ksh. 31,900 to Ksh.42,000.
The essence of the evidence by Ruwa for the respondent should be the basis of a CBA with the claimant. The proposed increments from 2022 to 2024 comprise the basic increments which can be actualised under the CBA registrable with the court.
Taking the view that the claimant has since lost the recognition threshold, and hence the matter is before the National Labour Board, thus, no CBA can be negotiated and concluded, as it is an unlawful and invalid view. This position is contrary to sections 54 and 57 of the LRA.
Parties shall resume CBA negotiations in good faith and take into account the 10% wage increases from 2022 to 2023. Conduct reviews of wage increases after June 2023, considering the period from 2023 to 2025, which should be reviewed alongside a CBA covering the same timeframe.
The offered 10% general wage increase shall be reviewed and assessed in relation to the current wages paid and applied accordingly.
For the house allowance, parties shall take into account the current rate of 15% of the basic wage paid and apply it accordingly.
The redundancy rate allowed under section 40 of the Employment Act, which is 15 days for every year worked, shall apply until the parties agree on a higher rate.
To ensure a court-monitored process, parties shall make reports on the progress within 30 days.
Accordingly, the following orders are hereby issued;
- Upon the Recognition Agreement dated 7 December 2021, the claimant is justified in seeking a CBA with the respondent.
- Parties shall conclude CBA negotiations for the unresolved items of general wage increase for 2022 and 2023 based on the 10% offered by the respondent;
- House allowance shall be applied at 15% of the basic wage based on the current wages paid;
- The redundancy rate shall be applied at 15 days for every year worked in accordance with section 40 of the Employment Act;
- Parties shall resume negotiations on this basis and report to the court within 30 days on 3 December 2025;
- To maintain industrial peace, each party is to meet its costs.
Delivered in open court at Mombasa, this 23rd day of October 2025.
M. MBARŨ
JUDGE
In the presence of:
Court Assistant: Japhet
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