Abyssinia Iron and Steel Limited v Kenya Engineering Workers Union (Civil Appeal E051 of 2021) [2025] KECA 2210 (KLR) (28 November 2025) (Judgment)

Abyssinia Iron and Steel Limited v Kenya Engineering Workers Union (Civil Appeal E051 of 2021) [2025] KECA 2210 (KLR) (28 November 2025) (Judgment) Neutral citation: [2025] KECA 2210 (KLR) Republic of Kenya In the Court of Appeal at Kisumu Civil Appeal E051 of 2021 MS Asike-Makhandia, HA Omondi & AO Muchelule, JJA November 28, 2025 Between Abyssinia Iron and Steel Limited Appellant and Kenya Engineering Workers Union Respondent (Being an appeal from the judgment and decree of the Employment and Labour Relations Court at Kisumu (Radido J.) dated 3rd February, 2021 in ELRC CASE No.31 of 2019) Judgment 1.This dispute revolved around the employer's refusal to negotiate a Collective Bargaining Agreement between the Kenya Engineering Workers Union (the respondent) and Abyssinia Iron & Steel Ltd (the appellant) covering the period between 1st January, 2017 and 31st December, 2018. 2.When the parties' effort to negotiate and fully reach a conclusion was futile, the matter was referred to conciliation under section 62 of the [Labour Relations Act](/akn/ke/act/2007/14) “the LRA”. The respondent submitted its memorandum but the appellant only submitted its submissions after prodding by the Conciliator. 3.After conciliation, only 2 items remained unresolved: general wage increase and entitlement to sick leave. The respondent had proposed a 42% general wage increase, while the appellant did not give any proposals or make submissions before the Conciliator. 4.The Conciliator considered the submissions made and recommended a 12% general wage increase spread over 2 years indicating that he had considered the current cost of living (then) of 15% of the consumer price index, reduced bargaining power of employees, current productivity (then) of the employees and the fact that the appellant was a regional leader in the industry. 5.On entitlement to sick leave, the respondent had proposed 92 days of sick leave on full pay during a period of 12 months and thereafter half pay for 62 days. The appellant, on its part, proposed 7 days sick leave on full pay within 12 months, followed with half pay for 14 days before retirement on medical grounds. 6.In his report, the Conciliator recommended 30 days sick leave on full pay within a calendar year, followed by another 30 days on half pay. The Conciliator then prepared a draft collective bargaining agreement, however, the appellant declined to execute it prompting the respondent to move the court. 7.The court directed the Central Planning and Monitoring Unit “CPMU” to prepare and file an economic report within 30 days, which was filed on 11th March 2020 together with a response to the Memorandum of claim. 8.In his determination, the learned judge noted that the respondent had proposed a general wage increase of 42% per year over a 2-year period but the appellant did not give any proposals but desired that the wage remain static over the period in contention (1st January 2017- 31st December 2018). Further, the Economic Investigation Report analysed the appellant’s financial position and wage bill from 2014 to 2018 and indicated that the gross profit in 2014 was Kshs.195,303,365/= and in 2018 it was Kshs.177,286,237/=. The profit after tax for the 2 years was Kshs.37,574,616/= and 2,186,131/= respectively. In the same report, it was noted that the consumer price index had risen by 13.78% (from August 2016 to May 2018). 9.In consideration of the reduced annual purchasing power of 6.9% over the period in contention, the Court adopted the recommendation by the Conciliator. It awarded a 12% general wage increase for the period from January 2017 to December 31, 2018, spread over the two years at 6% yearly. 10.Regarding sick leave, the court held that after two consecutive months of service with the appellant, an employee shall be entitled to sick leave with full pay up to a maximum of forty five (45) days and thereafter to sick leave with half pay up to a maximum of forty five (45) days in each period of twelve months service provided that:i.An employee shall not be entitled to such payment unless he/she produces to the employer a certificate of incapacity covering the period of sick leave claimed, signed by a duly qualified medical practitioner in charge of a dispensary or medical aid centre, or by a person acting on such practitioner’s behalf.ii.An employee shall not be eligible for sick leave under this clause in respect of any incapacity due to gross negligence on his part. 11.Dissatisfied, the appellant filed the present appeal faulting the learned judge for entertaining issues of wage increment and sick leave whereas the respondent’s suit was brought under sections 74 and 57 of the LRA; failing to consider the expert opinion filed by the Central Planning & Monitoring Unit; finding that he lacked jurisdiction to entertain the claim as the same had been dealt with by the conciliator; ordering salary increment at 6% in total disregard of the appellant’s financial status; and in ordering sick leave with full pay for a maximum of 45 days in each period of 12 months service which is more than what was provided for by the conciliator. 12.In support of the appeal, the appellant through written submissions filed by the firm of Omondi, Abande and Company, contended that the Employment and Labour Relations Court (ELRC) lacked jurisdiction since the parties had agreed on all CBA issues except sick leave and wage increment; and no certificate of unresolved dispute had been issued as required under Section 69 of the LRA. It was further contended that, under Sections 12 of the ELRC Act and 57(5) of the LRA, disputes over disclosure of information must first be subjected to conciliation before being brought to court. 13.The appellant maintained that the conciliation process was incomplete, as only a non-binding report existed; and the ongoing request for information showed that negotiations were still underway, making the court’s intervention premature. It was also submitted that Section 74 of the LRA did not apply since a recognition agreement was already in place, and that the Court granted reliefs not pleaded, amounting to judicial overreach. 14.Regarding the CPMU Report, the appellant argued that it was based on audited accounts and interviews, clearly demonstrating that its financial status could not sustain any salary increment. It disagreed with the court’s finding that the report lacked productivity analysis, noting that it contained a detailed financial review from 2014 to 2018. The appellant further emphasized that its financial downturn was aggravated by the 2017–2018 electoral violence. 15.Citing Section 37(1) of the [Employment and Labour Relations Court Act](/akn/ke/act/2011/20), the appellant asserted that the CPMU is the competent and independent body to issue economic reports, not the conciliator, and that the claim sought adoption of the respondent’s proposals, not the conciliator’s recommendations. It was further submitted that the court could only disregard the CPMU’s findings upon presentation of a contradictory expert report, which was not provided. 16.In support, the respondent cited the case of Janet Mwacha Mwaboli vs. Modern Soap Factory Ltd (2019) eKLR in which the court held that;“Section 69 of the [Labour Relations Act](/akn/ke/act/2007/14) requires the Conciliator to issue a certificate if the dispute is unresolved. Rule 5 of the Employment and Labour Relations Court (Procedure) Rules, 2016 states that where the dispute has been the subject of conciliation, the statement of claim shall be accompanied by a report of the Conciliator on the conciliation process supported by minutes of the conciliation meeting. It is mandatory also to have the certificate of conciliation under Section 69, accompanying the statement of claim. 17.It is further submitted that under Rule 5 of the ELRC Rules, where no certificate of conciliation is issued, a claimant must file an affidavit explaining the omission. Similarly, if conciliation has not occurred, an affidavit must state the reasons. 18.That in the instant appeal, the respondent’s verifying affidavit alleged that the dispute arose from the appellant’s refusal to produce documents, while the conciliation report indicated the dispute concerned the appellant’s refusal to negotiate the CBA. 19.Further, the report reflected input from both parties, who agreed on thirty-three clauses and disagreed on two. As the matter was under conciliation, the Conciliator was obligated to issue minutes of the proceedings and a certificate of unresolved dispute. Additionally, upon filing the claim, the respondent was required to file an affidavit explaining the absence of such a certificate. 20.Regarding the 6% salary increment the appellant asserts that its financial position, as detailed in the CPMU report, remained unchallenged by any contrary evidence as such the court’s decision to award a salary increment contrary to the report and evidence on record amounted to a miscarriage of justice. 21.Lastly, as regards sick leave, the appellant maintains that there was no legal or factual basis for awarding 45 days sick leave on half pay, exceeding the conciliator’s recommendation, and the court gave no justification for such an order.In opposing the appeal, the respondent through written submissions filed by JNN Advocates LLP contends that the appellant erroneously argued that the learned Judge erred in addressing the issues of wage increment and sick leave, asserting that the suit, brought under Sections 57 and 74 of the LRA, merely sought information for CBA negotiations. That in any event, following the withdrawal of a related application, the ELRC properly assumed jurisdiction and determined the unresolved matters upon conclusion of the conciliation process. 22.It is argued that the parties signed a Recognition Agreement on June 24, 2016;nevertheless, the appellant refused to negotiate or disclose its audited accounts as required under Section 57, leading the Cabinet Secretary for Labour to appoint a conciliator; that, progress was hindered by the appellant’s non-cooperation; and upon review, the conciliator recommended a 6% annual wage increase and 30 days of sick leave with full pay plus 30 days of half pay, noting that only these two issues remained unresolved, which it included in the draft CBA. 23.The respondent then filed a memorandum of claim to have the unresolved issues to be determined by the court, and contends that the ELRC was within its jurisdiction to determine the dispute as the conciliator had exhausted the report and given recommendations. 24.It is further contended that, pursuant to Rule 37(1) of the ELRC Procedure Rules, the Court properly referred the dispute to the CPMU for an expert report based on Treasury wage guidelines. The CPMU Report was duly filed, parties made submissions thereon, and the Court duly considered the pleadings, the conciliator’s report, the CPMU findings, and the submissions before rendering its award. Reliance was laid on the case of Dhulay vs. Republic (1995–1998) EA 29, where it was stated that the court was entitled to evaluate and adopt the expert opinion alongside other relevant factors. 25.It is further submitted that the 12% wage increase was appropriately awarded, reflecting a 6.9% reduction in workers’ purchasing power and comparable industry CBAs. The ELRC had jurisdiction under Section 69 of the [Labour Relations Act](/akn/ke/act/2007/14), upon issuance of a Certificate of Unresolved Dispute following failed conciliation. As the conciliator’s role is non- determinative, escalation to the court was proper. Accordingly, the grounds of appeal alleging non-consideration of the CPMU report, want of jurisdiction, or disregard of financial status are without merit and ought to be dismissed. 26.Lastly, on sick leave, the respondent argues that the ELRC properly exercised its discretion by grounding its decision on industry-wide practice and the need for uniformity within the sector. Referring to paragraph 33 of the judgment, it is submitted that the Court aligned its award with comparable CBAs across the industry. The trial court was therefore justified in granting the enhanced sick leave entitlement, having provided cogent and well-reasoned justification. 27.This is a first appeal. The Court’s mandate as the first appellate court is to re-evaluate the evidence, assess it and reach a conclusion. We draw from Rule 31(1) of the Court of Appeal Rules 2022 which provides that:1.On an appeal from a decision of a superior court acting in the exercise of its original jurisdiction, the Court shall have power:a.to re-appraise the evidence and to draw Inferences of fact.See also this Court’s decision in Gitobu Imanyara & 2 Others vs. Attorney General [2016] eKLR. 28.Having carefully considered the record, the rival submissions by parties, the authorities cited and the law, the main issues for determination are;i.Whether the learned judge had jurisdiction to entertain the issues of wage increment and sick leave under sections 57 and 74 of the [Labour Relations Act](/akn/ke/act/2007/14), and in light of the conciliator’s prior determination.ii.Whether the orders on salary increment and sick leave were justified in the circumstances, considering the appellant’s financial status and the conciliator’s recommendations. 29.Regarding the first issue on jurisdiction, Article 162(2)(a) of [the Constitution](/akn/ke/act/2010/constitution) establishes the ELRC to determine disputes relating to employment and labour relations. The ELRC Act establishes the ELRC and defines its jurisdiction. The court’s jurisdiction is also outlined in various statutes related to employment and labour issues. Relevant to this case is the LRA, which not only recognizes CBAs but also specifies the procedures for their negotiation and registration. The Act also details an extensive process for resolving trade disputes arising under it, outlined in Parts VIII and IX. A trade dispute under Section 2 of the LRA is described as follows:“trade dispute means a dispute or difference, or an apprehended dispute or difference, between employers and employees, between employers and trade unions, or between an employers’ organization and employees or trade unions, concerning any employment matter, and includes disputes regarding the dismissal, suspension or redundancy of employees, allocation of work or the recognition of a trade union; …” 30.Section 57 thereof outlines the recognition and collective bargaining processes, while Section 74 of the [Labour Relations Act](/akn/ke/act/2007/14) (LRA) authorizes the ELRC to resolve trade disputes referred to it after failed conciliation or when the conciliator’s report is not acted on. It follows, therefore, that the ELRC at this stage is responsible for determining the trade dispute between the parties, including disagreements regarding the terms of the CBA or what the parties call the economic dispute between them. Before addressing an economic dispute, the compulsory jurisdictional dispute resolution process outlined in Part VIII of the LRA first involves conciliation, and if the dispute is not resolved there, it can be referred to the ELRC. 31.The bottom line is that the ELRC can only take jurisdiction to hear an economic dispute after the mandatory dispute resolution process under Part VIII of the LRA has been completed. In Teachers Service Commission (TSC) vs. Kenya Union of Teachers (KNUT) & 3 Others [2015] eKLR Odek, J.A., stated that:“Subject to statutory exceptions, the correct jurisdictional procedure is as followed in Tailors and Textile Workers Union vs. Ashton Apparels (EPZ) Ltd. Mombasa Industrial Cause No. 340 of 2014 where the parties did not resolve the dispute at their own level and the claimant reported the existence of the dispute to the Labour Minister; the parties were not able to agree upon conciliation and the Conciliator issued a Certificate of Disagreement paving way for referral of the dispute to the Employment and Labour Relations Court.” 32.It is clear to us that once a conciliator issues recommendation that are not binding, unless adopted by both parties, either party may approach the court for a determination. Therefore, the learned judge properly assumed jurisdiction. 33.Regarding the findings on salary increment and sick leave, we take note that the power to do so by the ELRC ought to be exercised judiciously, and on a case-by-case basis where parties are unable to agree on the terms of a CBA. The court should ensure it does not substitute its preference for that of the parties’ freedom to agree on the terms of employment. The court ought to be guided by the Wage Guidelines issued by the government. 34.A court faced with a question of wage increment ought to take into account productivity, cost of living and the ability to pay by the employer. In this case the learned Judge directed the CPMU to file an economic report, which was indeed filed on 11th March 2020. The learned judge referred to the report in his analysis, noting the appellant’s declining profitability and the inflation rate of 13.78%. The learned judge considered the report but did not adopt it in its entirety; the trial judge noted that the report did not give an analysis of productivity during the period but merely stated that the respondent’s financial position had deteriorated. Our considered view is that courts are not bound by expert opinions; they are persuasive, not conclusive nor binding. 35.On wage increment, the conciliator recommended 12% increment over two years (6% annually). The learned judge adopted this recommendation after evaluating the appellant’s declining profit margins, the inflation rate (13.78%), and purchasing power erosion (6.9%); and also drew from the provisions under section 15(4) of the Employment and [Labour Relations Act](/akn/ke/act/2007/14) to make any appropriate order in the interests of justice, including adopting or adjusting a conciliator’s recommendations. In David Musyimi Ndetei t/a Oasis Mineral Water Company & another vs. Safepak Ltd [2005] KECA 165 (KLR) this Court held:“…Of course, where the expert who is properly qualified in his field gives an opinion and gives reasons upon which his opinion is based and there is no other evidence in conflict with such opinion, we cannot see any basis upon which such opinion could ever be rejected. But if the court is satisfied on good and cogent ground(s) that the opinion though it be that of an expert, is not solidly based, then a court is not only entitled but would be under a duty to reject it.” 36.As regards the complaint that the court erred in addressing the issue of the pay, yet the issue was merely seeking information for purposes on negotiations, we take note that the learned judge pointed out that the issue regarding information was compromised by an application which was dealt with. In the instant appeal, the trial judge partly relied on the conciliator's report as such the award of salary increase was justified. We detect no error in fact, law or on application of legal principles; and the upshot is that the appeal lacks merit and is dismissed with costs to the respondent. **DATED AND DELIVERED AT KISUMU THIS 28****TH** **DAY OF NOVEMBER, 2025.****ASIKE-MAKHANDIA****......................................****JUDGE OF APPEAL****H. A. OMONDI****.......................................****JUDGE OF APPEAL****A. O. MUCHELULE****.......................................****JUDGE OF APPEAL** I certify that this is a true copy of the original.Signed**DEPUTY REGISTRAR**