Dispute Resolution

The primary legislative provision governing dispute resolution under the Employment Act is Section 87 which provides as follows:

• Subject to the provisions of this Act whenever:

1. an employer or employee neglects or refuses to fulfill a contract of service; or
2. any question, difference or dispute arises as to the rights or liabilities of either party; or
3. touching any misconduct, neglect or ill-treatment of either party or any injury to the person or property of either party, under any contract of service,

the aggrieved party may complain to the labour officer or lodge a complaint or suit in the Industrial Court.

• No court other than the Industrial Court shall determine any complaint or suit referred to in subsection (1).
• This section shall not apply in a suit where the dispute over a contract of service or any other matter referred to in subsection (1) is similar or secondary to the main issue in dispute.

The Industrial Court was reconstituted to the Employment and Labour Relations Court(ELRC). The ELRC, established under Employment and Labour Relations Court Act No. 20 of 2011 pursuant to Article 162(2) of the Constitution, has exclusive original and appellate jurisdiction to hear and determine all disputes referred to it in accordance with Article 162(2) of the Constitution and the provisions of the ELRC Act or any other written law which extends jurisdiction to the Court relating to employment and labour relations including:

• disputes relating to or arising out of employment between an employer and an employee;
• disputes between an employer and a trade union;
• disputes between an employers’ organisation and a trade union’s organisation;
• disputes between trade unions;
• disputes between employer organisations;
• disputes between an employers’ organisation and a trade union;
• disputes between a trade union and a member thereof;
• disputes between an employer’s organisation or a federation and a member thereof;
• disputes concerning the registration and election of trade union officials; and
• disputes relating to the registration and enforcement of collective agreements.

Rule 28 of the Employment (General) Rules, however, provides as follows:

 “An employee who is aggrieved by the actions of his employer may, if the grievance is not settled amicably by the employer, file a complaint in the Industrial Court”.

This Rule along with Article 159 of the Constitution which encourages the settlement of disputes through alternative modes such as reconciliation, mediation, arbitration and traditional dispute resolution mechanisms, encourages the use of alternative modes of dispute resolution so long as the same is not repugnant to justice and morality or inconsistent with any given laws.

Employers and employees are, due to the nature of their relationship and the desire in many instances to continue with the relationship, encouraged to resolve their disputes in the least acrimonious way possible. This may involve the use of internal processes that may be codified in a Human Resource Manual or external processes which involve third parties. In either case, the principles of fair hearing, natural justice and fair administrative action shall apply.

A sample dispute resolution clause that may be included in an employment contract is included below:

Should any dispute arise between the Parties hereto with regard to the interpretation, rights, obligations and/or implementation of any one or more of the provisions of this Employment Contract, the same shall be resolved in the manner set out in the Human Resource Manual.

OR

1. Should any dispute arise between the Parties hereto with regard to the interpretation, rights, obligations and/or implementation of any one or more of the provisions of this Employment Contract, the Parties to such dispute shall in the first instance attempt to resolve such dispute by amicable negotiation and in good faith in an attempt to reach a just and equitable solution satisfactory to both parties.
2. Should such negotiations fail, the parties may within Fifteen (15) days refer the case to mediation and appoint a single mediator as may be mutually agreed between the Parties. The mediation shall be conducted by a single mediator of not less than seven (7) years standing.
3. Should such negotiations fail to achieve a resolution within Thirty (30) days, either Party may declare a dispute by written notification to the other, whereupon such dispute shall be referred to arbitration under the following terms:

• such arbitration shall be resolved under provisions of the Kenyan Arbitration Act 1995 (as amended from time to time);
• the tribunal shall consist of one arbitrator to be agreed upon between the Parties failing which such arbitrator shall be appointed by the Chairman for the time being of the Chartered Institute of Arbitrators upon the application of any Party;
• the place and seat of arbitration shall be Nairobi and the language of arbitration shall be English;
• the award of the arbitration tribunal shall be final and binding upon the Parties to the extent permitted by law and any Party may apply to a court of competent jurisdiction for enforcement of such award. The award of the arbitration tribunal may take the form of an order to pay an amount or to perform or to prohibit certain activities.

1. Notwithstanding the above provisions of this clause, a Party is entitled to seek preliminary injunctive relief or interim or conservatory measures from any court of competent jurisdiction pending the final decision or award of the arbitrator.

When it comes to the use of internal processes, employers are encouraged to develop a human resource policy which should detail the manner to be followed in resolving disputes between employees as well as disputes between employers and employees.  The policy ought to lay out the process to be followed, the officers involved in the resolution process, classification of offences especially in disciplinary processes as well as a right to appeal or alternative recourse in case the employee is unhappy with the findings of the internal body/ office. Such a policy must be clear and understood by the employees for effective implementation of the same and to avoid any challenges that may arise from implementation of the process. The application of the policy should also be mentioned in the specific employment contracts to ensure that both parties are bound to observe the provisions of the policy.

When it comes to external processes, the most popular mode of alternative dispute resolution is arbitration. The age-old question has however been whether an arbitration clause in an Employment Agreement can oust the jurisdiction of the labour court. Some courts have held that the dispute resolution process laid out in the labour laws must be followed to protect the employees from any adverse provisions that may be contained in the employment contract. The court in Stephen Nyamweya & Another V Riley Services Limited[1] the judge observed the following:

• The law does however provide for an elaborate conciliation process in employment matters. In this case, the Respondent opted to include its own unique mechanism for dispute resolution. Unfortunately, by some strange coincidence the dispute resolution clause as drawn is incapable of implementation owing to certain absurdities contained therein.
• Counsel for the Respondent cited a host of authorities on interpretation of commercial contracts to give effect to the intention of the parties and asked the Court to adopt the principles contained in these authorities. I however take the view that employment contracts are distinct as against commercial contracts.
• First, employment contracts are drawn by the employer in a standard format to be applied to all employees, with minimal adjustments on job description and remuneration. Second, the employee has no opportunity to negotiate on standard clauses. That being the case, the employer owes the employee a duty of care to ensure that every clause is capable of implementation without too much trouble.
• One of the unique features of the Industrial Court is that parties can access justice expeditiously, at a minimal cost and without too may legal hurdles. While employers are encouraged to adopt ADR at the work place, they are expected to do it in a way that facilitates the quick resolution of disputes rather than cause delay.
• At any rate, if an employer attempts to halt or delay the jurisdiction of the Court, they must do so in a way that manifestly aids the cause of justice. To my mind, the Respondent had the capacity to eliminate the absurdities contained in the ADR clause in the Claimants’ contracts of employment which it now seeks to rely on to bar the Claimants from accessing justice before this Court.
• I therefore find the preliminary objection by the Respondent not well taken and hereby overrule it. I also strike out the said Clause 11.2 [arbitration clause] from the Claimants contracts of employment and direct that this case will proceed as if the said clause did not exist.

The court in James Heather – Hayes v African Medical and Research Foundation (AMREF)[2] however disagreed with the ruling in Stephen Nyamweya & Another V Riley Services Limited in upholding the arbitration clause in the employment contract. The judge noted that:

“Arbitration is a choice of the parties in so far as alternative dispute resolution is concerned.  One of is undisputed advantages is its granting of party autonomy whereby parties to an arbitration agreement are awarded the autonomy of choosing their own judge(s) and other facilities in dispute resolution.  This was so in the instant case and the parties contract and must be honoured…it is not the duty of this court to redraw agreements by parties.  The court can only come in to facilitate an interpretation and implementation of these contracts and no more.  I agree with the applicant/respondent that there is a subsisting contract that issues in dispute shall be referred to arbitration and I find as such”.

The judge went on to observe that the ruling in the Riley Services Case was only so because of the absurdity in the arbitration clause and that an employer and employee are free to contract and choose an alternative form of dispute resolution. However, seeing the rationale of the court in the Riley Services Case, it is important that when drawing a dispute resolution clause, the employer should ensure that the clause is clear, unambiguous and if necessary, explained to the employee at the time of executing the contract; and is devised to ease the process of dispute resolution as opposed to delaying the course of justice.

[1] [2013] eKLR

[2] [2014] eKLR