Equal pay for equal work done
By James WaNjeri, Advocate
Today we highlight a case that can only be compared to a David vs Goliath contest. 29 employees sued their employer, one of Kenya’s oldest and biggest banks, and won.
In ELRC Cause E618 of 2021, Omondi Justus & 28 others vs Kenya Commercial Bank (KCB) Limited, the petitioners brought an interesting case to the Court. They said that between 2013-2016 they had been employed by the bank as clerks. At the time, their employment was based on fixed-term contracts. Within the same organization, there were other clerks who were permanent employees.
Both sets of employees were issued with a similar job description and they undertook the same tasks. When it came to their performance management, they were issued and evaluated with a similar scorecard.
The employees had two issues that set them apart. The first one was the term, permanent, and contract. The second one was that the permanent employees belonged to a union and they had a Collective Bargaining Agreement (CBA) with the employer. The contract employees claimed that they were victims of discrimination by the employer as follows:
The contract clerks earned Kshs. 32, 481 while the permanent team earned Kshs. 67,157. Their salaries were not increased over a six-year period while the permanent team had salaries increasing. When it came to overtime, the contract team was each paid an hourly rate of Kshs. 274 or a double rate of 366 and it was not subject to increment. The permanent team on the other hand, had an hourly rate of Kshs. 614 per hour or a double date of Kshs. 820. On leave days, permanent employees had 28 days with a leave allowance of Kshs. 10,500. Their contract counterparts on the other hand had 24 leaves days and did not qualify for leave allowance. While both sets of employees received medical insurance, permanent employees received benefits at almost double what the contract employees received. Contract employees did not qualify for pension, a benefit that the permanent employees enjoyed.
The claimants also stated that the employer treated them in a discriminatory manner. For instance, they claimed that during the pandemic, permanent employees were asked to receive their vaccine within the CBD while the contract employees were told to go to travel to a neighboring county of Kiambu. The 2nd vaccine for permanent employees was administered at the Bank’s KCB Clinic but the contract employees were ignored. Additionally, permanent employees qualified to receive bonuses while contract employees did not, despite handling similar tasks.
Contract employees were also denied better working conditions that were available to mitigate the effects of the covid19 pandemic. The claimants complained that the permanent employees were allowed to work from home in line with the best practice at the time, but contract employees were required to go to the office with no option to work from home.
The Bank in its response stated that the contract employees had agreed to the terms of service laid down in their contracts and legally, parties are bound by the terms of their contracts. They also stated that the benefits under the CBA are enjoyed by unionisable employees and those who remit union dues.
Wage disparities also known as pay gaps, affect many employees allover the world. According to the UN, worldwide, women only make 77 cents for every dollar earned by men. It has been found that wage injustice affects people based on factors like race, age, pregnancy, and factors that have no bearing on the work done.
In this present scenario, there was a clear wage gap between two sets of employees who did the same job. The reason for that gap was that one group had signed a CBA with the employer and was on permanent terms. The other group was on renewable annual contracts, they did not belong to the union and therefore they could not access those benefits.
In its decision, the court began by dealing with the question of the CBA. Is it proper to use the CBA to treat the same set of employees differently? The Court held that the terms and conditions of employment that are negotiated under a CBA are enforceable and applicable to all unionisable employees protected under the law. This means that employers must directly apply the terms and conditions of employment of a CBA when issuing an employment contract. To deal with wage disparities and wage injustice, the court has held that the employee must be informed of the terms of the CBA directly affecting the terms and conditions of employment.
The court has established that in Kenya, the terms and conditions under the CBA ought to be the minimum conditions of employment and to issue any terms below that is unlawful. Therefore, if you have a CBA with your employees, those are the basic terms for any incoming employee at that level. The bank was found to have breached the rights of the contract employees by failing to disclose the CBA terms to them when offering them employment. Under section 14 of the Employment Act, the legal duty to disclose an existing CBA rests on the employer. Where the employer fails to inform the prospective employee of the favorable CBA terms and the employee accepts the lower terms, the court has stated that the consent of the employee is nullified since it was obtained through fraud. failure to disclose such material facts amounts to unfair labor practice.
On the question of discrimination, the Kenyan constitution at article 27 prohibits any discrimination on any ground, including race, sex, pregnancy, marital status, health status, ethnic or social origin, colour, age, disability, religion, conscience, belief, culture, dress, language or birth. The term including is imperative as it suggests that the list is not exhaustive.
So what does discrimination look like in the work place? The Supreme Court in Petition 4 of 2019, LSK vs Attorney General and COTU held that discrimination entails the unjust or prejudicial treatment of different categories of people in the same circumstances. By being paid less for doing the same job with similar job descriptions, the claimants claimed that they had been discriminated against and their constitutional rights violated.
The court agreed with them and held that the failure to treat all clerks equally was direct discrimination. This was because there was no reasonable distinction to be found between them save that they were on casual and temporary terms. Each clerk was awarded Kshs. 2,000,000 for discrimination. Clearly, the price of discrimination is high and employers should ensure that there exist real and justifiable reasons to distinguish between two employees and why they should be paid differently. The temporary nature of employment contracts is not a distinguishing feature and employers should update their HR policies.
The Court pointed out that the recognition of fixed-term contracts in law is not a justification to pay low wages and create a disparity that is not justified. The basic minimum wage is based on the negotiated CBA. Employers must now strive to ensure that they review their existing CBAs and contracts to ensure that they align with this decision of the Court.
The Kenya Commercial Bank (KCB) the Respondent herein, recently announced profits of Kshs. 30 billion at the end of Q3. In this court decision, each clerk was awarded Kshs. 1,247,256 as underpayment for 3 years. For being discriminated against, they each received Kshs. 2,000,000. They also received their leave days owed, overtime, leave allowance, housing allowance, and pension benefits. Conservative estimates place the Bank’s exposure at over 100 million shillings.
At JN Advocates, we have built expertise in employment and labor matters. We are trusted by our corporate and private clients to help them navigate the employment landmine as they pursue their commercial interests. We do this by educating clients on the latest developments in the law and empowering them with critical tools to ensure that they reduce their liability. To consult us on this and other matters, email us at legal@jnadvocates.com.
The contents of this newsletter do not constitute legal advice and are provided for general information purposes only.