Fuels And Lubricants Limited v Kenya Petroleum Oil Workers Union [2018] KEELRC 1316 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR

RELATIONS COURT AT MOMBASA

CAUSE NUMBER 829 OF 2017

BETWEEN

FUELS AND LUBRICANTS LIMITED.................................CLAIMANT

VERSUS

KENYA PETROLEUM OIL WORKERS UNION...........RESPONDENT

Rika J

Court Assistant: Benjamin Kombe

Ms. Beatrice Opolo Advocate, instructed by Federation of Kenya Employers for the Claimant

Ms. Judith Owi for the Respondent

JUDGMENT

1. The Claimant is a Limited Liability Company, which has a Recognition Agreement with the Respondent Union. The Respondent represents Unionisable Employees of the Claimant. Parties have negotiated, and concluded various Collective Bargaining Agreements in the past.

2. Their last CBA expired on 31st May 2017. Parties negotiated a succeeding CBA, and agreed on all subjects, except, on redundancy. The previous CBAs provided for payment of severance pay to affected Employees, in event there is a redundancy situation, pegged on 45 days’ salary for every complete year of service. The Claimant seeks to reduce severance pay, by adopting the statutory minimum of 15 days’ salary, rather than 45 days’ salary for every complete year of service. The Respondent is against such reduction. This is the nub of the dispute herein.

3. In the Statement of Claim filed on 31st October 2017, the Claimant justifies its position on the grounds that: it is not in a position to continue paying severance at the rate of 45 days’ salary for every complete year of service because it has incurred, and continues to incur, financial losses; and change in policy on fuel distribution, allowing anybody to buy and distribute fuel, has affected Claimant’s profitability and the ability to sustain severance pay currently available to Employees in event of redundancy. In the year 2012, the Claimant made an all-time high net profit of Kshs. 5,635,135 against a sales return of Kshs. 1 billion. In 2014 and 2015, the Claimant made net losses of Kshs. 6,158,103 and Kshs. 20,419,247 respectively. Sales volumes have dwindled. In 2016 the Claimant made sales of Kshs. 520,135,442. The net profit is indicated at Kshs. 3,394,432.

4. The Claimant submits that a CBA is a negotiated document and is not cast in bronze. Parties are free to negotiate fresh terms once the old CBA has lapsed. The Respondent does not stand to suffer prejudice if Parties adopt 15 days’ salary for every complete year of service, as severance pay. The Claimant prays the Court to grant Judgment in its favour.

5. The Respondent filed its Statement of Response on 24th November 2017. Its position is that the dispute has already been referred to the Ministry of Labour, and Conciliation instigated.  The Claim is therefore premature as Conciliation has not concluded. The Respondent exhibits its letter to the Ministry dated 20th September 2017, reporting the dispute, and a letter from the Chief Industrial Relations Officer in the Ministry to the Parties, advising the Parties on appointment of Conciliator. Secondly the Respondent submits that the Parties have negotiated CBAs for the periods 2011/2013, 2013/2015, and 2015/2017. In all these CBAs, redundancy clause included payment of severance pay based on 45 days’ salary for every complete year of service. There is no evidence of poor financial position brought before the Court by the Claimant.

6. Parties consented to have the Claim considered on the strength of their Pleadings, Documents and Submissions. Their Representatives highlighted the Submissions briefly in Court, on 5th June 2018.

The Court Finds:-

7. The dispute was referred to the Ministry of Labour by the Respondent Union, on 20th September 2017. Clause 3 [d] [ii] of the Recognition Agreement provides that in event of failure by the Parties to reach settlement at the Committee level, either Party may refer the dispute to the Ministry of Labour. The Respondent made referral after Parties failed to reach settlement on redundancy clause. The Conciliator was appointed on 16th October 2017, before the Claimant filed the Claim on 31st October 2017. The Ministry informed Parties about the referral of the dispute; the issue in dispute; and the appointment of the Conciliator.

8. The Claimant ought to have filed a Replying Statement at the Ministry, under Section 63 [1] of the Labour Relations Act 2007, instead of filing the Statement of Claim herein. Failure to file a Replying Statement and to submit to the process of Conciliation, however, did not affect the validity of referral. The Claimant does not say it was aggrieved by the decision by the Minister to appoint a Conciliator to justify filing of the Claim when Conciliation had been set in motion.

9. The Claimant wrote to the Ministry on 6th November 2017 advising that the Claimant had filed the Claim herein in Court, and that the Ministry was barred from going on with Conciliation, unless otherwise advised by the Court.

10. There was nothing in law which barred the Ministry from proceeding with a statutory process. There was nothing requiring that the Conciliator stays his proceedings, until given the green light by the Court to continue conciliating. Filing of a Claim in Court while the same dispute is pending before the Conciliator, does not serve as an order for stay of conciliation proceedings.

11. The Claimant ought to have submitted to Conciliation, and file the Claim only if the dispute was unresolved, in terms of Section 69 [a] and [b] of the Labour Relations Act. The Claimant could also come before the Court if it was aggrieved by the appointment of the Conciliator. None of these events happened, warranting the invocation of the judicial process.

12. The Court is contented that the Claim is premature. There is a statutory process initiated by the Respondent at the Ministry of Labour, which has not been exhausted. This Court cannot in the circumstances, assume jurisdiction. The Claim offends Part VIII of the Labour Relations Act, Rule 5 of the Employment and Labour Relations Court [Procedure] Rules 2016, and the Parties’ Recognition Agreement. IT IS ORDERED: -

a) The Claim is hereby struck out with no order on the costs.

b) Parties are free to revert to the Court upon exhaustion of the Conciliation Process.

Dated and delivered at Mombasa this 27th day of July 2018.

James Rika

Judge