In a landmark decision, the Court of Appeal in Nairobi has upheld a lower court’s ruling requiring ABSA Bank — previously Barclays Bank — to extend benefits from a backdated collective bargaining agreement (CBA) to employees who had exited the bank under a voluntary retirement scheme.
- The decision concludes a long-standing legal dispute between ABSA Bank and the Banking Insurance and Finance Union—representing workers in the finance sector.
- The case revolved around a voluntary early retirement scheme introduced by ABSA Bank in March 2013 when it planned to restructure its operations.
Last Friday, the Court of Appeal tossed out the lender’s appeal to a lower court’s ruling that set a precedent on how backdated CBAs are applied in practice.
During the restructuring phase, some employees were invited to apply for a voluntary exit — lured by a special package — and several accepted, officially leaving the bank on March 31, 2013. In August 2013, a new CBA covering the period from March 1, 2013, to February 28, 2015, was signed between the Kenya Bankers Association—of which ABSA is a member — and the union.
The conflict emerged when the union argued that employees who left under the retirement scheme were entitled to the benefits of the CBA, given that its effective date predated their departure. ABSA contended that the CBA was signed after the employees had exited and should not apply to them.
The Employment and Labour Relations Court initially ruled in favor of the union, but ABSA challenged the decision. In its appeal, the lender argued that the voluntary retirement was a separate contract and that the employees had been fully compensated under the existing terms at the time of their exit. The bank also insisted that the CBA, although backdated, could not apply retroactively to those no longer in employment.
However, the Court of Appeal rejected ABSA’s arguments noting that the CBA explicitly applied to employees on the payroll as of March 1, 2013, which included those who exited on March 31. The court held that backdated agreements are valid if agreed upon by the parties and emphasized that employees should not be excluded from benefits simply due to administrative delays in signing crucial agreements.
The court upheld the lower court’s ruling and ordered ABSA to extend the CBA benefits to the affected employees and awarded costs to the union. The ruling sets a precedent for how backdated CBAs are applied.
