The Constitution of Kenya 2010, under Article 162(2), gives Parliament the mandate to establish courts with the status of the High Court to hear and determine disputes relating to employment matters and land matters. In view of this provision, the Employment and Labour Relations Court [ELRC] was enacted by Parliament through the Employment and Labour Relations Court Act of 2011 [ELRC Act].
The jurisdiction of the ELRC relates to employment and labour matters and any other disputes relating to the employer-employee relationship, according to section 12 of the ELRC Act. A question then arises:
DO PENSION SCHEMES DISPUTES FALL WITHIN THE AMBIT OF THE ELRC ACT AND HENCE THE JURISDICTION OF THE ELRC?
The Supreme Court of Kenya in Albert Chaurembo Mumba & 7Others v Maurice Munyao & 148Others [2019] eKLR dealt with is question conclusively. The Petition came before the Supreme Court as of right under Article 163(4) of the Constitution, being an appeal from the Judgement of the Court of Appeal in Malindi which affirmed the decision given by the ELRC.
The dispute.
The Respondents, who were all former employees of the Kenya Ports Authority and beneficiaries of the Pension Scheme in question, sued the Appellants [who were trustees of the Scheme] in the High Court Civil division at Mombasa, seeking a declaration that the Appellants had made an illegal and fraudulent amendment to the Trust Deed that created the Scheme. They claimed that the amendment reduced their accrued benefits.
Before the matter was determined, the parties entered a consent to transfer the matter to the ELRC for want of jurisdiction since the dispute, in their view, involved and employment matter.
In the ELRC the Appellants submitted that the court had no jurisdiction over the matter. They argued that the Chief Executive Officer [CEO] of the Retirement Benefits Authority, and the Appeals Tribunal under the Retirement Benefits Authority Act had the mandate to listen and determine disputes relating to Pension schemes. The ELRC ruled on all matters in issue except the question of jurisdiction.
The Court of Appeal, while affirming the decision of the ELRC, stated that the CEO can only determine the matter where there is no conflict of interest, and the Authority did not actively participate in the decision in dispute. The court therefore held that the CEO was disqualified, by the principles of natural justice, from reviewing this particular matter since the Authority played an active part in amendment of the Scheme and approving the Remedial Plan implementation by the Appellants.
The Appellants, aggrieved by this holding, applied to the Supreme Court to determine whether the High Court or the ELRC has jurisdiction to entertain disputes relating to Pension schemes.
Supreme Court decision.
The Court took notice that parties (trustees and beneficiaries/members of pension schemes) have previously chosen the forum to adjudicate their grievances, including: the CEO of the RBA, the Retirement Benefits Appeals Tribunal, the ELRC and the High Court. The court stated that this was in itself an injustice and an abuse of the judiciary and jurisdictional competence set by the Constitution. The court therefore looked at the jurisdiction of all these forums in determining this issue.
The court stated that pension disputes are not included in the definition of a trade dispute, hence the ELRC did not have jurisdiction to entertain the matter.
That although the core of a pension scheme is an employer-employee relationship, once a member of a pension scheme leaves the employment, there is no longer an employer-employee relationship between the pensioner and the creator of the scheme. The relationship between these parties becomes that of trustees and beneficiaries, governed by the RBA Act and the law of trusts.
Therefore, the relationship between the Appellants and Respondents did not fall under the ambit of the ELRC Act, and hence the ELRC cannot assert jurisdiction on such disputes.
The court further stated that the Constitution under Article 165(5)(b) restricts the High Court from exercising jurisdiction on matters dealt with under a specialized mechanism. Since the matter fell under the RBA Act, the High Court did not have jurisdiction to determine the dispute.
WHICH FORUM THEN HAS JURISDICTION IN PENSION MATTERS?
The court stated that section 46 of the RBA Act requires that a member/beneficiary of a retirement benefits scheme dissatisfied with a decision of a trustee of the scheme, to write to the CEO for review of the decision. That the CEO has a quasi-judicial mandate to adjudicate disputes arising under the RBA Act in the first instance.
The court stated that issues of conflict of interest, which cannot be implied by the parties when choosing forum, do not negate the jurisdiction of the CEO to determine disputes as under Section 46 of the RBA Act.
The court relied on the case of Samuel Kamau Macharia & Another v Kenya Commercial Bank Ltd & 2Others (2012) eKLR to hold that jurisdiction cannot be optional unless such parallel avenues are provided with certain limitations by any written law. Therefore, the decision of the Court of Appeal that the High Court or ELRC can usurp optional jurisdiction in case the CEO has conflict of interest was wrong.
The court further stated that the jurisdiction of the Retirement Benefits Appeals Tribunal, under section 47 and 48 of the RBA Act, arises only after the matter has been determined by the CEO in the first instance. The Tribunal then exercises appellate jurisdiction.
The court additionally stated that the Respondents needed to exhaust the review and appellate mechanisms under section 46 and 48 of the RBA Act first, before moving to the superior courts for any other recourse.
