Industrial Court of Kenya, 6 December 2004, Case No. 79/2002
Constitution of Kenya (2010)
(5) The general rules of international law shall form part of the law of Kenya.
(6) Any treaty or convention ratified by Kenya shall form part of the law of Kenya under this Constitution.
Protection of wages
Use of international law as a guide for interpreting domestic law , Establishment of a jurisprudential principle based on international law
Business placed under administration/ Unpaid wage claims/ Gaps in labour legislation and contradictions between commercial law and labour law on the protection of wage claims/ Use of international law as a guide for interpreting domestic law/ Establishment of a jurisprudential principle based on international law
A business in financial difficulty had been placed in administration, and the appointed administrator dismissed a very large number of employees. Those employees appealed to the courts for payment of salaries, various other unpaid claims and compensation for dismissal provided for by the company’s collective agreement.
The appointed administrator stated his obligation to honour the company’s other debts in order to explain non-payment of the amounts mentioned above. In order to justify the primacy of the other debts over those of the employees, the defendant based his defense on the provisions of the law on commercial businesses, limiting the privilege of wage claims to a maximum of 4000 Kenyan shillings or four months of salary, the lower amount of the two to serve as reference.
After recalling that the law on commercial businesses had not been updated for a long time, the Court emphasized that at the time of the trial 4000 Kenyan shillings were the equivalent of less than one month’s minimum salary. The Court then pointed out that the labour legislation adopted more recently remained silent concerning several aspects of the protection of wage claims. However, those gaps did not prevent the existence of contradictions between the labour legislation and the law concerning commercial businesses.5 Even though the contradictory provisions identified by the Court were not directly applicable to this case, they expressed, nonetheless, a much more favourable general approach to the protection of wage claims and were clearly incompatible with the Article of commercial law mentioned above.
In order to right those contradictions, to interpret the silence in the labour legislation and finally to be able to determine to what extent the workers’ claims should be protected, the Court decided to examine the position of international labour law on this issue. In justification of its approach, the Court referred to various courts decisions from common law countries that referred to international law in the event of gaps in legislation.6 The Court then examined ILO Conventions Nos. 95 (Protection of Wages) and 173 (Protection of Workers’ Claims (Employer’s Insolvency)) even though they had not been ratified by Kenya. The Court emphasized Article 7 of ILO Convention No. 173. That Article stipulates that if domestic legislation limits the privileged protection applicable to wage claims to a certain amount, that ceiling should be socially acceptable and revised periodically.
In strengthening its analysis of international labour law, the Court then turned to the work of the ILO Committee of Experts on the Application of Conventions and Recommendations, specifically its General Survey concerning the two Conventions mentioned above.7 With reference to the Committee of Experts, the Court mentioned the following:
“The ILO also has an Expert Group Committee made up of internationally renowned experts on labour law from amongst the member countries who analyse the annual reports of members and pursuant to surveys and other reports, make further recommendations on the proper implementation of the specific Conventions. These recommendations are then widely used by courts around the world and form a part of the evolving jurisprudence around the ILO Conventions in particular and international human rights law in general.”
From the General Survey of the Committee of Experts, the Court pointed out that the need to provide special protection for workers’ claims was a very widely accepted principle at the international level, taking into account the central importance of wages for the maintenance of the workers. The Court also stressed the paragraph of the study linking the protection of wages and the right to decent remuneration, as recognized by Article 23 of the Universal Declaration of Human Rights.
After having taken note of the orientations of international labour law on this issue, the Court considered that it should interpret the silence and contradictions of the legislation in a way that would assure socially acceptable protection to employees of insolvent businesses. The Court declared:
“Must we assume that if the law is silent, then it has refused to grant privilege, as the Respondent has argued before us? If so, (…) the employees (…) must now be allowed to go under without a remedy in law? We cannot contemplate such a situation in the light of our Constitutional order, the laws made thereunder and interpretation and application thereof in the context of international law.”
Basing its reasoning on ILO Conventions Nos. 95 and 173 and on the Committee of Experts’ views regarding these instruments, the Industrial Court of Kenya decided that the salaries and other benefits corresponding to the period immediately prior to the dismissal had to be guaranteed up to a limit of four months. All other claims owed under the law, the business’s collective agreement and employment contracts, were to be guaranteed up to a limit not exceeding the equivalent of twelve months of salary.