Employment Disputes in Kenya: A Guide to the ELRC and Labour Court

Employment disputes in Kenya are heard by the Employment and Labour Relations Court (ELRC), established under the Employment and Labour Relations Court Act, No. 20 of 2011. Under section 12(1), the Court has exclusive original and appellate jurisdiction over disputes referred to it in accordance with Article 162(2) of the Constitution, including disputes between an employer and an employee, between an employer and a trade union, and between trade unions. How a dispute gets to the ELRC, and what happens once it is there, are more nuanced than a quick summary suggests.

Employment Disputes in Kenya: Filing a Claim and Conciliation

The Labour Relations Act, 2007 provides a conciliation mechanism for “trade disputes”, which it defines to include disputes concerning the dismissal, suspension or redundancy of employees, not only collective bargaining disagreements. A trade dispute may be reported to the Cabinet Secretary under section 62, by or on behalf of a trade union, employer or employers’ organisation that is a party to the dispute, and the Cabinet Secretary appoints a conciliator under the Act. Under section 69, a dispute is deemed unresolved after conciliation if the conciliator issues a certificate that it has not been resolved, or if thirty days from the conciliator’s appointment, or any longer period the parties agree, expire.

On the Court’s side, section 15(1) of the ELRC Act allows it to adopt conciliation, mediation and other dispute resolution mechanisms on its own motion or at the parties’ request. Under section 15(4), if it becomes apparent at any stage that the dispute ought to have been referred for conciliation or mediation, the Court may stay the proceedings and refer it. That is a discretionary power, and sections 15(2) and (3), which dealt with a stricter position, were deleted by Act No. 18 of 2014. Conciliation before filing is therefore strongly advisable where the matter qualifies as a trade dispute, since it avoids giving the Court a basis to stay the claim, but it is not clearly an absolute jurisdictional bar. Where the situation is urgent, take advice on whether the full conciliation process must run first.

Unfair Dismissal: Substantive and Procedural Fairness

Section 45(2) of the Employment Act, 2007 provides that a termination is unfair if the employer fails to prove that the reason is valid, that it is a fair reason related to the employee’s conduct, capacity or compatibility or based on the employer’s operational requirements, and that it was done in accordance with fair procedure. An employee continuously employed for not less than thirteen months before termination may complain of unfair termination (section 45(3)). Substance and procedure are assessed independently, so a dismissal with a good reason can still be unfair if the section 41 process was not followed: the employer must explain the reason to the employee in a language they understand and hear the employee’s representations before terminating for misconduct, poor performance or physical incapacity.

Under section 49(1)(c), the remedy of compensation can be the equivalent of a number of months’ wages or salary not exceeding twelve months, based on the employee’s gross monthly wage at the time of dismissal, and payments are subject to statutory deductions (section 49(2)). Section 50 requires the Court, in determining a complaint, to be guided by section 49. Section 49(4) lists factors in the assessment, including the employee’s wishes, any contribution to the termination, length of service, mitigation of loss and any severance payable. Terminal benefits and outstanding leave pay remain owed however the dismissal is characterised.

Redundancy: The Procedural Requirements

Section 40(1) of the Employment Act says an employer shall not terminate on account of redundancy unless it complies with each of the following conditions:

• where the employee belongs to a trade union, notify the union and the labour officer of the reasons for and extent of the intended redundancy not less than a month before the termination date; where the employee is not a union member, notify the employee personally in writing and the labour officer;
• have due regard to seniority in time and to the skill, ability and reliability of each employee in the affected class when selecting who is to be made redundant;
• pay the redundant employee not less than one month’s notice or one month’s wages in lieu; and
• pay severance pay at the rate of not less than fifteen days’ pay for each completed year of service.

Section 40(1) also deals with the position where a collective agreement exists. Section 40(2) provides that subsection (1) does not apply where services are terminated on account of insolvency, which is governed by Part VIII of the Act. Failure to meet any of the conditions, not just the notice period, exposes the employer to a finding of unfair termination.

Time Limits

Section 89 of the Employment Act provides that, notwithstanding section 4(1) of the Limitation of Actions Act, no civil action or proceedings based on or arising out of the Act or a contract of service shall be instituted unless commenced within three years after the act, neglect or default complained of, or, in the case of continuing injury or damage, within twelve months after its cessation. Delay within the period can still prejudice a claim in practice, as evidence is harder to find and witnesses forget, so do not wait until the deadline.

Remedies

Section 12(3) of the ELRC Act empowers the Court to make interim preservation orders including injunctions in cases of urgency, a prohibitory order, an order for specific performance, a declaratory order, an award of compensation or damages in any circumstances contemplated by the Act or any written law, an order for reinstatement of an employee within three years of dismissal, subject to conditions, and any other appropriate relief. Tailor the prayers to the facts: reinstatement is rarely appropriate where the relationship has broken down irretrievably, and the Court is then more likely to award compensation.

Frequently asked questions

This article is general information on Kenyan law as at its publication date, not legal advice. Reading it does not create an advocate and client relationship.