KCB freezes Sh115m payout to former contract workers


KCB Group CEO Paul Russo during the bank's 2022 full-year financial results investor briefing on March 16, 2023. PHOTO | DENNIS ONSONGO | NMG

KCB Bank Kenya has had a court decision requiring it to compensate former contract workers more than Sh115 million for alleged discrimination suspended.

The lender convinced the Court of Appeal to suspend the decision issued in November last year by the Employment Court, arguing that the 29 former workers might not be able to refund the money in case it is successful in its quest to overturn the judgment.

Justice Monica Mbaru had in a precedent-setting decision ruled that it amounted to unfair labour practice to keep employees on contract for more than three years.

“We take judicial notice that the applicant is a reputable bank and that the respondents’ fears of it going under are totally unfounded. What this means is that in the event the appeal fails, the applicant is in a sound financial position to pay the decretal amounts,” Justices Daniel Musinga, Imaana Laibuta and Grace Ngenye said.

The judges noted that among the issues raised and emphasised by the KCB was whether applying different salary and benefits rates to employees employed under different terms was discriminatory.

The court further said the issue as to whether the former employees were entitled to pension benefits although they had not joined the retirement scheme was a major issue to be addressed during the hearing.

“In the circumstances of the present case, we are persuaded that the respondents (former employees) will not be in a position to refund the money if they are paid and the intended appeal succeeds,” the judges added.

The lender has questioned the decision that despite not being unionisable members the court was of the view that the terms of a Collective Bargaining Agreement (CBA) could be incorporated in their employment contracts.

In the appeal, KCB says it will argue that the former contract workers were not union members as they were not paying any agency fees, and as such, the CBA terms could not apply to them.

On discrimination, the lender says the 29 contract workers were engaged on fixed-term contracts, and that it was, therefore, wrong for the trial court to equate their terms of employment with those of workers employed under permanent and pensionable terms.

According to KCB, the court was wrong by ordering that each of the former employees be paid Sh241,657 for retirement yet they had not attempted to join the retirement benefit scheme.

The former workers had asked the court to compel the lender to deposit the money in an interest-earning account but the application was rejected.

The contract workers moved to court in 2021 accusing the lender of unfair work practices. They successfully argued that the bank violated the principle of equal pay for equal work as both sets of clerks were issued with similar job descriptions, but while the permanent clerks were paid a minimum starting salary of Sh67,157 per month, those on contract were paid a gross wage of Sh32,481.

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