Arbitration of Employment Disputes

Arbitration agreements in employment contracts have long been a matter of contention in Kenya and the other commonwealth states, with both sides advocating either their support or opposition.

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Arbitration agreements in employment contracts have long been a matter of contention in Kenya and the other commonwealth states, with both sides advocating either their support or opposition. Also, there are differing court rulings on the matter, as well as vagueness in applicable laws. Due to the facts, it can be said that it is safe to deduce that the issue of arbitration clauses in employment contracts is frequently disputed. It is important to remember, however, that when it comes to labor conflicts, employers will have a clear advantage. A narrower definition of employment arbitration applies solely to resolving workplace conflicts through arbitration. A well-intentioned provision of the Kenyan Constitution mandates that the courts and tribunals use alternative conflict resolution, such as arbitration, when making decisions. If there is no arbitration clause in place, the employer is not required to enter into arbitration with an employee to address issues that occur during or after the employment contract has been terminated. A vast proportion of conflicts end up in the Employment and Labour Relations Court.

Due to the preference of courts, courts are now struggling to deal with an increase in caseloads, which has lead to a re-examination of the usefulness of alternate routes to dispute resolution, such as employment arbitration. The Employment Act and the Labour Relations Act has not made the clear point of where employment disputes should be settled and instead has privileged conciliation over arbitration. The legislation enacted in 2007 resulted in the erosion of the employment at-will theory and the rise of a legal principle known as fair labor practices. 1 It has been difficult for commercial arbitration-based ideas that control party autonomy to gain importance and foothold in the field of employment law since the advent of the new jurisprudence.

Advantage of Employment Dispute Arbitration

One of the most common uses of the court is when the dispute revolves around termination and the consequent terminal benefits. It is exceedingly rare for parties to an employment contract to submit to arbitration during the course of the employment contract and retain a cordial work relationship. In general, arbitration is used less in nations where there is a specific tribunal system for employment issues. Certain governments do not allow employment disputes to be arbitrated. Where there is no special court structure for employment claims, attorneys are more than used to arbitrating workplace conflicts.

Arbitration has advantages for both employers and employees. the parties have greater freedom in rule-making since the procedures are flexible It is also less formal. The arbitration panel consists of one or more private individuals who make the final decision (albeit usually with a legal background). employees may believe that a civilian will sympathize with them more.

When handled through an arbitration procedure, arbitration decisions may be made more quickly than those made in the civil arena. An arbitration proceeding has finality since there are few grounds for contesting the panel’s judgment. On the other hand, the degree to which a party is confident in their case relies greatly on that person’s confidence in their position. Costs can potentially be lower in the courtroom, though this is less likely to be the case in practice.

In civil action, the only important distinction is privacy. There are no public filings during the arbitration process, and the arbitrator’s judgment is kept secret by both parties. Disputes around employment are frequently taboo, which is why the parties may prefer to keep them private. This strategic advantage is lost, however, when employees can observe a trial taking place in open court since employers want to avoid press attention even when they are certain of winning.

Disputes can be willingly arbitrated once they have occurred. Although litigiousness isn’t normally a prime consideration at the commencement of a new job, employers may include in their employment contracts a need to resolve disagreements through arbitration. Here, the provision must be worded carefully so that it’s effective. Even if an arbitration clause exists, it is likely to be problematic because of the very fact of its presence. Still, arbitration can be a strong alternative in the event of workplace conflict. Arbitration provisions in employment contracts should be drafted with legal counsel, as well as the details of their implementation.

Despite the fact that arbitration has several advantages, it will not pass a fairness test unless both parties are able to willingly, knowingly, and without pressure or coercion, opt to arbitrate rather than fight their claims.4 Usually, in employment contracts, employees have limited or no option in deciding whether to accept unwanted terms in the contract. As a result, most believe that if they refuse to sign the contract and press for additional discussion, their prospective employer would simply refuse to hire them.

The Kenyan Context

Although arbitration is firmly rooted in the Constitution and widely acknowledged as a means of resolving workplace disputes, the Kenyan Labor Laws place stringent restrictions on the ability of individual employee claims to be arbitrated. Workers’ ability to bring issues to a tribunal is a public policy matter and need to be preserved as part of the statutory terms and conditions of employment. Workers’ rights to seek employment and labour relations arbitration has drastically weakened due to certain clauses in the Employment Act and the Employment and Labour Relations Act. An issue of public policy would be created if a party claims that Parliament intended that only courts, mediation, or conciliation may be used for labor disputes.

The Employment Act Part III outlines in detail what details must be contained in a written contract of employment. From the above information, it does not appear that a dispute resolution clause is required by law to be included in an employment contract. Part V and VI comprise the terms of the contract of service that are at least as comprehensive as those of the contract of service as a whole. However, if such other regulations are included in a collective bargaining agreement, a contract between the parties, or an enactment by any other written law, a court order, or a ruling issued, such terms and conditions shall apply if they are more favorable for an employee than those set forth in Parts V and VI. Yet, others question if an unanticipated dispute settlement clause is a “favourable term of employment.”

An inherent legislative procedure is provided in the Employment Act for handling any complaint on the issue of unjust termination or summary dismissal. The option for employees to bring a complaint to a conciliation officer or the ELR Court is provided.5 Dispute settlement processes are discussed in Part XII and it provides that “… whenever an employer or employee neglects or refuses to fulfil a contract of service; or any question, difference or dispute arises as to the rights and liabilities of either party; or touching any misconduct, neglect or ill treatment of either party or any injury to the person or property of either party, an aggrieved party may complain to the labour officer or lodge a complaint or claim to the ELR court”. That said, it additionally states that no court other than the ELR court shall handle any grievance or litigation in which the aforementioned topics are at issue. 6 These remedies can only be given by the labour officer or ELR court.

Taking a look at the provisions of the Employment and Labour Relations Court Act, the ELR Court is granted exclusive original and appellate legislative authority on all disputes relating to employment and labour relations, including those that arise during or as the result of employment between an employer and an individual who is not a union member.8 The scope of this jurisdiction is wide and is defended zealously. Despite being given the ability to create law granting Magistrates Courts jurisdiction over work and labour relations issues, Parliament has only provided jurisdiction for specific restricted situations. Only topics defined in Section 29 of the Employment and Labour Relations Courts Act can be heard in Magistrate Courts.9 The aforementioned clause specifies that Magistrate Courts may only hear disputes involving employment-related offenses or any other dispute identified in the Gazette notice by the Chief Justice on the recommendation of the Employment and Labour Relations Court’s Principal Judge. Magistrates in the level of Senior Resident Magistrate and higher are now permitted to decide cases when an employee’s gross monthly remuneration does not exceed Kshs. 80,000.

Section 15(4) states that: “If at any stage of the proceedings it becomes apparent that the dispute ought to have been referred for conciliation or mediation, the Court may stay the proceedings and refer the dispute for conciliation, mediation or arbitration.” In the entire Employment and Labour Relations Court Act, the word ‘arbitration’ is only mentioned in this section and the ambiguity of it is that a court may not proceed to make an order referring an issue to conciliation or mediation even though its satisfied that it should be so. It therefore appears that mediation and conciliation are most preferred modes of ADR than abitration.

In light of the Constitution and Labour Laws, it appears ADR will play a major role in resolving workplace conflicts. It may be seen that in all the aforementioned legislation, the ADR process is optional and arbitration is not specified. Some claim that there was no mandated pre-dispute arbitration anticipated in the Kenyan Labour Laws, and hence that the types of ADR include conciliation and mediation.

Sections 35(2)(b) and 37(1)(b), Kenya Arbitration Act addresses arbitrability, it provides e that the High Court may set aside or refuse to recognize/enforce an arbitration award only if the subject-matter of the dispute is not arbitrable under Kenyan law; or the arbitral award conflicts with or would be contrary to Kenyan public policy. The Kenyan Arbitration Act addresses arbitrability in Sections 35(2)(b) and 37(1)(b), which provide that the High Court may set aside or refuse to recognize/enforce an arbitration award only if the subject-matter of the dispute is not arbitrable under Kenyan law; or the arbitral award conflicts with or would be contrary to Kenyan public policy. The bone of contention is thus whether arbitration may resolve employment disputes or it is against Kenya’s public policy. However, the Kenyan Arbitration Act, does not clearly or exclusively exempt employment issues from arbitration.


While the Arbitration Act does not expressly prohibit the arbitration of individual employment issues in Kenya, there are several considerations that actively work against their arbitrability. These include an imbalance of negotiating power on the part of employees, expenses involved, the disadvantages of recurrent player biases, and the absence of the benefit of judicial review in ensuring employee statutory rights are protected. Nonetheless, arbitration remains a viable alternative for workplace problems. Employers considering including arbitration clauses in employment contracts would be well to get legal advice on the appropriateness of the provision as well as the specifics of its construction.

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