Kenya’s apex court has pronounced itself on the issue of variation of employment terms by employers without consulting employees.
In the recent decision of Gatuma vs Kenya Breweries Ltd & 3 others (Petition E023 of 2023) [2024] KESC 52 (KLR) (30 August 2024), the Supreme Court held that unilateral variation of employment terms by employers will be considered a breach of the employment contract, for which employees may claim for constructive dismissal.
The Appellant in the matter argued that the reduction of his salary constituted an unfair labour practice, for which he sought to have the Respondents held severally and jointly liable in compensating him for the unearned salary over the duration of his employment after the change was effected.
In considering the issue, the Supreme Court made reference to section 10 (5) as read with section 13 of the Employment Act (Chapter 226, Laws of Kenya), which provides for the basic elements of an employment contract, as well as how changes may be made to them:
“From the provisions of section 10 (5) and section 13 of the Employment Act it is clear that any unilateral variation of the terms of an employment contract may be deemed as a repudiation of the contract and in case the same would lead to termination of employment the same may be deemed as constructive dismissal. The provisions of section 13 equally apply to remuneration. Any unilateral changes in remuneration and terms of employment without informing the employee will be tantamount to an unfair labour practice.”
Employers therefore ought to make sure that they adequately consult their employees when it comes to decisions that may have the resultant effect of negatively varying the employees’ employment contracts. The Supreme Court laid down the steps an employer should take when varying an employment contract as follows:
1. Issuing prior notice to the employee of the intention to vary the contract;
2. Engaging the employee in consultations on the substance of the variations;
3. After consultations, revise the contract to reflect the variation and again notify the employee of the said changes in writing; and
4. The employee must consent to the variation through inference or in writing.
This alert serves the purpose of general guidance and is not intended to constitute specific legal advice. For legal advice concerning this alert, please contact our Partner at Grace.Kinyanjui@CMS-DI.com.
*Contributors
• Brian Macharia, Associate
