It is discriminatory for employers to offer permanent employees better terms than those on contract, the Employment and Labour Relations Court has found.
Justice Monicah Mbaru said it is unfair to have the same demands for the two sets of employees while paying them differently.
At the same time, she said, that it is the responsibility of an employer to reveal or disclose to a new employee any existing Collective Bargaining Agreement (CBA) negotiated by other employees.
According to her, it amounts to obtaining labour through fraud if an employer offers an employee a fixed contract job while holding back an agreement with others.
“Where the employer then proceeds to issue a fixed term contract and blindsides the employee on the terms and conditions negotiated under a CBA for the cadre of the employee and despite any consent given by the employee placed under such circumstances, such is direct fraud.
“It is misrepresentation of facts of the existence of the CBA regulating employment and this being contrary to the law regulating basic terms and conditions of employment is illegal,” said justice Mbaru.
At the centre of the case is Kenya Commercial Bank (KCB). The lender hired 29 employees between 2013 and 2016 as clerks to work in its customer experience department, which later became a division in 2018. The employees, who include Justus Omondi were employed on a fixed-term basis.
However, the bank had also a second group of clerks who it had hired on permanent basis.
The court heard that those who were on fixed-term contracts were paid Sh32,418 gross salaries while their colleagues who were on a permanent basis and performed the same duties were taking Sh67,157 as starting salary.
During the hearing, it emerged there was an existing CBA between KCB and its permanent clerks that dictated a Sh3,356 pay increase for each year they worked.
On the other hand, the starting salary for those on a fixed contract was never raised or reviewed.
At the same time, the permanent clerks were offered 28 annual leave days while their colleagues got 24. They were also entitled to Sh10,500 annual leave allowance while contract clerks did not qualify for the allowance.
Housing allowances and medical insurance cover were also different for the two groups. On one hand, permanent clerks were entitled to Sh11, 700 as house allowance while contract clerks were denied.
Meanwhile, contract employees were entitled to Sh300,000 and Sh50,000 inpatient and outpatient insurance limits while their colleagues on permanent employment had Sh650,000 inpatient cover and Sh130,000 outpatient cover.
Justice Mbaru heard that between 2014 and 2016 KCB did not offer its contract staff a medical cover while it offered their colleagues on permanent terms the same.
The bank was also accused of offering pensions to its permanent clerks while denying those on contract. Some of the contract clerks, the court heard, have worked for the bank for over eight years.
KCB opposed the case.
It argued that contract clerks were employed based on their distinct job application process which has different terms and conditions.
According to the lender, those on contract mutually agreed to sign the contracts and were bound to the benefits that they accepted during negotiations. It asserted that those who join employment on a fixed contract basis do so willfully.
The bank also denied that it has discriminated against its employees on contract adding that there was no evidence to support the same.
After hearing the arguments, justice Mbaru found that fixed-term contracts are legal.
The judge ordered KCB to pay Sh58 million for discrimination, Sh1.2 million for underpayment, Sh30,995, for pending leave days.
It will also pay each employee Sh31,500 for leave allowance, Sh424,800 as house allowance, Sh241, 657 and Sh7,200 meals allowance.