Conflicting Laws and Unclear Employment Relationships Complicate Implementation of Collective Bargaining Agreements

Conflicting Laws and Unclear Employment Relationships Complicate Implementation of Collective Bargaining Agreements

Under Kenyan law, the definition of a Collective Bargaining Agreement, known specifically as “Collective Agreement”, is provided for in two pieces of legislation. Section 2 of the Labour Relations Act 2007 defines collective agreement as “…a written agreement concerning any terms and conditions of employment made between a trade union and an employer, group of employers or organization of employers while Section 2 of the Employment Act 2007 defines collective agreement as “…a registered agreement concerning any terms and conditions of employment made in writing between a trade union and an employer, group of employers or employers’ organization”.

From these definitions, it is clear that collective agreements cover issues beyond wages and salaries to include various aspects of an employment relationship, such as working days, working hours, retirement age, payment of gratuity and redundancy. As such, a collective agreement, once registered, will define the terms and conditions that govern the employer-employee relationship of the employers and employees covered in the respective agreement.

A collective agreement binds the parties to the agreement, and is enforceable through registration in accordance with the process stipulated under the law. The bargaining process is conducted through negotiation between trade unions and employer(s) or employers’ organization and it begins with initiation, negotiation, signing, registration and finally implementation of the collective agreement.

Collective agreements apply to all workers in a defined category, whether they are members of a trade union or not, which is party to the agreement. As such, some workers may not know the existence of an agreement or its terms. Collective agreements also contain procedural terms which may not be amenable to individual enforcement or intended to create individual rights, and this can hinder the ability of the collective agreement to be enforced.

Several challenges confront collective agreements including the following:

Differences in definition of collective agreement in the text of law. From a cursory reading of the two statutory provisions defining a “collective agreement”, there are apparent differences in the wording of the two definitions. These differences have already been subjects of several court cases. The ambiguity in definition creates loopholes, uncertainty and ultimately room for evasion of the law.

Confusion in interpreting the point at which a collective agreement comes into force to bind the parties. The Employment Act 2007 specifies that a collective agreement is one which is registered. Rule 35 (5) of the Industrial Court Rules provides that a collective agreement shall not take effect until it has been registered by the Industrial Court. However, Section 59 (5) of the Labour Relations Act states that “a collective agreement becomes enforceable and shall be implemented upon registration by the Industrial Court and shall be effective from the date agreed by the parties”. The conflicts in the statutes create uncertainty and could hinder enforcement of collective agreements where parties follow an incorrect interpretation or procedure. Furthermore, arguments may be raised to create loopholes and quash a collective agreement due to these procedural technicalities.

Unclear process to follow in registering a collective agreement. As per Section 60(2) of the Labour Relations Act, the employer is required to submit the collective agreement to the Industrial Court for its registration within 14 days of its conclusion. If the employer fails to submit the collective agreement to the Industrial Court for registration, the trade union is permitted to submit it to the Industrial Court for registration. However, under the Industrial Court (Procedure) Rules, the employer is required to submit a copy of the collective agreement within 14 days of its execution after which the Minister has the responsibility of presenting the collective agreement to the Industrial Court. This has added further confusion in the registration process of collective agreements. Such contradictions may result in conflicting judicial interpretation of the law. Lawyers, judges and laymen alike would therefore be at risk of adopting conflicting interpretations and following an incorrect procedure, which may compromise the validity of a collective agreement. This was seen in the two cases of Said Ndege vs Steel Makers Ltd [2014] eKLR and Kenafric Industries Limited vs Bakery Confectionary Food Manufacturing and Allied Workers Union [2014] eKLR where two judges held contradictory judgments on when a collective agreement comes into force.

Disharmony between the constitutional and statutory mandate and roles of the independent commissions established under Article 248 of the Constitution and the Salaries and Remuneration Commission in determination of wages for public officers. Primarily the disharmony manifests itself in the following ways: whether the mandate to determine, set, review, revise and advise on the remuneration of public officers belongs exclusively to the Salaries and Remuneration Commission as per Article 230 (4) of the Constitution; whether independent commissions established under Article 248 of the Constitution, such as the Teachers Service Commission, are bound by the advice of the Salaries and Remuneration Commission; and the exact role played by the Salaries and Remuneration Commission in the negotiations and conclusion of collective agreements which deal with remuneration, wages, allowances and benefits of employees in the public service. This disharmony was for example, the subject of contention in Kenya National Union of Nurses vs Moi Teaching and Referral Hospital Board & 2 others [2015] eKLR and also in Teachers Service Commission vs Kenya National Union of Teachers (KNUT) & 3 others [2015] eKLR (Civil Appeal No. 196 of 2015). It is worth pointing out that the Court of Appeal in Teachers Service Commission vs Kenya National Union of Teachers (KNUT) & 3 others clarified the blurred roles of various constitutional bodies as follows:

“TSC as employer for the decision and preparation of the budget; SRC for advice on fiscal sustainability of the claim; National Treasury for preparation of National Budget, National Parliament for approval of the budget and Appropriation and Controller of Budget for implementation of the budget by authorizing withdrawals from public funds. The decisions of those constitutional bodies are subject to, inter alia, principles of public finance articulated in Article 201 and principles of financial control of public funds in Article 225 and Article 10 National Values and Principles of Governance…. Disputes relating to revenue allocation and public wage setting are complex, intricate and of technical nature and are best handled by the institutions with institutional competence. The Constitution conferred that jurisdiction to the five institutions to which I have referred.”

Conflict between relevant statutory Acts establishing independent commissions (such as the Salaries and Remuneration Commission Act and Teachers Service Commission Act) and the Constitution. For example, Section 37(3) of the Teachers Service Commission Act, provides that “the registered teachers recruited by the Commission under Article 237 (2) (b) of the Constitution shall serve under such terms and conditions as the Committee established under Section 13 (5) of this Act in consultation with the Salaries and Remuneration Commission may determine.” The phrase “in consultation” does not correspond to the terminology used in Article 230 (4) (a) of the Constitution, which provides that one of the powers and functions of the Salaries and Remuneration Commission is to “set and regularly review the remuneration and benefits of all State officers”. Section 37 (3) of the Teachers Service Commission Act also contradicts Article 259 (11) of the Constitution, which makes the advice of the Salaries and Remuneration Commission exclusive, binding and mandatory. Section 11 of the Salaries and Remuneration Commission Act also provides that the Salaries and Remuneration Commission shall “make recommendations on matters relating to the salary and remuneration of a particular State or public officer”. Therefore, all collective agreements regarding unionizable public officers in relation to settling, determination and reviewing of their salaries are subject to the advice and recommendations of the Salaries and Remuneration Commission which are binding. Further, seeking the advice of the Salaries and Remuneration Commission is a mandatory pre-condition to the commencement of any collective bargaining process regarding remuneration of public officers.

Unsustainable wage setting mechanisms prior to the establishment of the Salaries and Remuneration Commission. The potency of the collective agreement in the public sector may have been undermined by the inherited weaknesses in the wage-setting mechanisms where, prior to the creation of the Salaries and Remuneration Commission, wage awards were made arbitrarily without factoring in or appreciating the principles of accountable public finance and fiscal sustainability, the process of informed budgetary allocations/appropriations and the multifaceted approach needed to determine the salary  structure for public officers who have different job grading structures across various public institutions and sectors in Kenya. The Salaries and Remuneration Commission has now been tasked with streamlining the wage bill and salary structure in the public sector. However, this may be discordant with previous wage setting mechanisms, which are yet to be updated.

The adversarial nature of the negotiation process which is characteristic of collective bargaining where employers (especially those in the public sector or are government agencies) are naturally in a place of power (and possess the capacity for technical, human and financial resources). Employers can easily delay implementation of collective agreements by failing, refusing or neglecting to register the collective agreement (as was seen in the case of Said Ndege vs Steel Makers Ltd [2014] eKLR) where employers are unable to show what steps or measures they have taken to ensure they have complied with the law to ensure the collective agreement is registered. Employers may also derail the process of collective bargaining negotiations, registration and implementation through insolence or inertia. This can be drawn from the recent strikes of teachers who through their unions Kenya Union of Teachers (KNUT) and Kenya Union of Post Primary Education Teachers (KUPPET) have respectively been negotiating terms to lay the framework for collective agreements from 2012 and 2013 and there was no existing collective agreement specifying the salary and allowances to be allocated to teachers (Teachers Service Commission vs Kenya National Union of Teachers (KNUT) & 3 others [2015] eKLR (Civil Appeal No. 196 of 2015)).

Lack of adequate mechanisms to deal with disputes in essential services, particularly in the health sector, without disrupting the delivery of vital services. This warrants an exceptional examination of collective agreements in the health sector and an assessment of why they are increasingly problematic. Public hospitals are worn down by extreme shortages in personnel, which fall below the recommended threshold by international standards. For this reason, health workers feel that their services warrant a wage increase as they are understaffed and consequently overworked. From frequent trends, it appears that pay, allowances and benefits (and not other terms or working conditions) are viewed as critical factors to recruit and retain staff in Kenya’s health sector. The devolution of health services has, however, compounded these issues and created uncertainty as to who is authorized to determine and set the salaries of public health workers. There is a lack of a comprehensive framework to regulate strikes by personnel who are engaged in essential services (such as the health sector and other key sectors), which would prevent complete disruption of service delivery or complete withdrawal of labour.

Devolution of health services. The 2010 Constitution of Kenya brought about devolution through which some sectors of the economy were devolved, including health services. The problems associated with devolution have been compounded by a longstanding lack of a legislative framework underpinning the transfer of the health component to the counties. According to Article 235 of the Constitution, counties are enabled to establish and abolish offices as well as to “appoint persons to hold or act in those offices” and to remove or exercise disciplinary measures over them, with the exception of persons employed by the Teachers Service Commission. Such offices created, and persons appointed relate to the services listed in Part 2 of the Fourth Schedule (entitled “Distribution of Services between the National Government and the County Government”). As a result, personnel working in the county health departments are technically employees of the County Governments. However, several health officers working in the counties have employment contracts with the Ministry of Health, which is created under the auspices of the National Government and whose contracts are signed by the Director of Medical Services. This is creating uncertainty and ambiguity as to who the proper employer is in the health sector and to whom health workers report. That is, whether their employer is the Ministry of Health, or the respective County Governments in which they are posted and therefore who is authorized to sign collective agreements as the employer party impacting them, as well as who the authorized representatives/signatories to collective agreements in respect of health workers are. This has important legal consequences; in particular, who will practically perform the contractual obligations and carry out and enforce the terms and conditions of the collective agreement. Further, the creation of the Salaries and Remuneration Commission in addition to the Ministry of Health and the devolved County Governments has created uncertainty as to who is authorized to determine and set the salaries of health workers across the various counties.

Unavailability and inaccessibility of information and data relied upon by the Salaries and Remuneration Commission to trade unions. Traditionally, the Industrial Relations Charter has recognized a tripartite concertation system where employers, the employees (unions) and the government interacted and negotiated in good faith through social dialogue. The process of social dialogue therefore involved the three traditional parties, but in the post-2010 public-service legislative landscape, the Salaries and Remuneration Commission was introduced to determine the remuneration of public officers. The Salaries and Remuneration Commission has published regulations entitled “Salaries and Remuneration (Review of Salaries and Remuneration, Submission of Proposals and Pay Determination and Advice) Regulations, 2012” and the Salaries and Remuneration Commission (Remuneration and Benefits of State and Public Officers) Regulations, 2013. Regulation 18(1) thereof provides: “the Commission shall not negotiate with a trade union”. This expressly prohibits the Salaries and Remuneration Commission from directly engaging with trade unions. The trade unions therefore do not have access to the information, factors and considerations the Commission uses in rendering advice to the public body employers and do not have the information relating to fiscal sustainability and other economic indicators or factors the Salaries and Remuneration Commission rely on. The lack of dialogue may undermine the collective bargaining process, heighten conflict and propagate an unwillingness by trade unions to negotiate or reach an agreement.

Lack of adequate knowledge and training on the process and strategies of collective bargaining best practices. This may have precipitated the stalemates and standoffs between trade unions and the government, creation of collective agreements, which are unenforceable due to fiscal unsustainability and continuous, persistent strikes. There is also lack of compliance with mandatory timelines in registration of collective agreements, political undertones that deliberately extend the period of the strike and undermine the collective bargaining process, and lack of robust or effective penal consequences for contempt of court orders. In the wake of devolution and creation of multiple public/governmental agencies and institutions, service of legal documents and court orders is more illusory as it is difficult to pinpoint and ascertain the proper persons and officers who are meant to be served with court documents and legal documents who are in many cases unknown, unidentifiable or elusive. For this reason, it is generally harder to effect service of, and enforce court orders against the government or government agencies.

That said, collective bargaining has made commendable contributions, and several actions should be taken to improve the process in Kenya.

Collective bargaining has contributed towards the improvement of employment conditions and rights of employees in Kenya. The law on employment in Kenya is, for the most part, comprehensive with robust and modern provisions upholding the rights of employees and regulating employment relations. Employees have, by and large, benefited from the employment laws and the industrial court has been seen to firmly protect, uphold and enforce the rights of employees under the various laws. Collective agreements concluded between trade unions and private sector employers or their organizations may be easier to enforce as the employer is easier to identify and to serve with any legal documents and court orders.

It has also encouraged social dialogue between parties involved. For example, the recent (2017) doctor’s strike saw significant support and involvement of other organizations such as the Law Society of Kenya, the Council of Governors, the Kenya National Commission on Human Rights and even religious leaders in mediating the negotiations and drafting the recognition agreement and return-to-work formula. This undoubtedly introduced fresh perspectives and approaches to the dispute at hand.

But, as a priority, provisions of the Labour Relations Act and the Employment Act on collective agreements should be harmonized to prevent ambiguity, which propagates disputes on validity of collective agreements and undermines their enforceability. The definition of “collective agreement” and the process of registration of collective agreements under the statutes should be clarified for consistency. It is also important to provide a legal mechanism, process and framework under the Labour Relations Act to regulate negotiation and renegotiation of collective agreements already concluded although not registered. There is a lacuna between the time of conclusion of a collective agreement and the 14 days within which concluded collective agreements should be registered. This was the subject of contention in the case of Kenafric Industries Limited vs Bakery Confectionary Food Manufacturing and Allied Workers Union [2014] eKLR.

Streamlining laws and legislations that establish public bodies/institutions and regulating their functions and powers is important for coherency, uniformity and certainty. This will bolster the ability of affected parties to enforce collective agreements in the public sector. Further, there is an urgent need to clearly delineate and clarify the functions and responsibilities of the National Government vis-à-vis those of the County Governments, which are currently blurred.

To improve enforcement of collective agreements in the health sector in Kenya, it is important also to align the Labour Relations Act with the Constitution. While Sections 78(1) (f) and 81 (3) of the Labour Relations Act No. 14 of 2007 prohibit strikes for those engaged in essential services, including hospital and fire services, the same is termed unconstitutional and contrary to Article 41 (2) (d) of the Constitution which grants every worker the right to go on strike, which was the ruling of the Court in the case of Okiya Omtatah Okoiti vs Attorney General & 5 others [2015] eKLR. As such, prohibition of strikes by workers in the health sector (and other sectors listed as providing “essential services”) cannot stand in Kenya. There are differences in practices across countries where for example in 2004, Cyprus abolished the limitation prohibiting strikes in essential services (including strikes in hospital services). In South Africa, though, the Labour Relations Act prohibits strikes in police and health services.

Separate mechanisms and processes can be explored for health workers and other personnel in “essential services” going on strike. This may include providing a peace obligation to prohibit industrial action during the subsistence of the collective agreement while it remains in force, striving for peaceful settlement of disputes before embarking on industrial action, providing minimum services during a strike in certain sectors, or holding of ballots among workers to decide whether they should go on strike and application of conciliation procedures. In European countries such as France, Germany, Belgium, Greece and Italy, strikes in the health care sector are subject to restrictive legislative measures that require hospitals to maintain a minimum emergency or “vital” operative level of service even during a strike.

For Kenya, it is also important that the Health Act 2017 is implemented as soon as possible, considering the devolution system and providing a mechanism to deal with previous legal, regulatory and institutional regimes to ensure a comprehensive and coherent legal framework in the health sector. A parting shot would be to encourage doctors and nurses unions to use their influence and mandates to negotiate for improvement of other working terms and conditions, which may ultimately work to transform the health sector to improve the quality of health care in Kenya. This would include negotiating to improve working hours for doctors. There is need to ensure that the skills, training and competences of medical personnel are updated on a regular basis to ensure they are continuously informed on and conversant with current developments and trends in medical technology, procedures and patient care, which may be achieved by negotiating through the forums created in the collective bargaining process. In The Netherlands, parties have previously negotiated for medical personnel to have access to life-long vocational and learning avenues and relevant professional training.

Further, affected trade unions should consider entering into a preliminary/interlocutory/interim agreement pending conclusion of a collective agreement to provide an effective framework for the terms and conditions of the collective bargaining process, such as expedient dispute resolution where the employer delays conclusion of a collective agreement and timelines for conclusion of the agreement. For instance, the return-to-work agreement, which was signed by the Kenya Medical Practitioners and Dentists Union provides that the parties shall conclude and register the collective agreement within 60 days.

More importantly, an assessment of the financial and fiscal implications is necessary prior to commencement of the collective bargaining process to ensure that any agreement concluded is fiscally sustainable and enforceable. This has been provided for in Regulation 18 (2) and (3) of the Salaries and Remuneration (Review of Salaries and Remuneration, Submission of Proposals and Pay Determination and Advice) Regulations, 2012 and the Salaries and Remuneration Commission (Remuneration and Benefits of State and Public Officers) Regulations, 2013. Employers and trade unions should observe these regulations and follow the process that has been prescribed for collective bargaining to avoid disputes and litigation.

 

Author: Beverly Muthoki Musili, Governance Division 

Photo: Kenya Broadcasting Corporation (KBC)

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