EMPLOYMENT DISPUTES IN KENYA: THE EFFECTIVENESS OF ALTERNATIVE DISPUTE RESOLUTION

At a Glance
- What Alternative Justice Systems (AJS) mean in the context of employment disputes.
- Where AJS works well.
- Where AJS may be ineffective or inappropriate.
- The likelihood of success.
- The biggest risks associated with AJS.

Introduction
Pursuant to a Gazette Notice issued under the Judicial Service Act, 2011, the then Chief Justice of Kenya, Hon. Justice Willy Mutunga, appointed a multi-stakeholder taskforce on traditional, informal and other mechanisms used to access justice in Kenya, collectively referred to as Alternative Justice Systems (AJS). The appointment was informed by Article 159 of the Constitution of Kenya, 2010, which recognises and promotes alternative forms of dispute resolution, including traditional dispute resolution mechanisms.

Alternative Justice Systems encompass methods of resolving disputes outside conventional courtroom litigation, including negotiation, mediation, conciliation, arbitration and traditional community-based processes involving elders. The taskforce was mandated to develop an appropriate judicial policy on AJS, assess the viability of integrating these mechanisms into the justice system, and recommend practical measures for their implementation.

This process culminated in the Judiciary’s adoption of the National Alternative Justice Systems Policy in August 2020, which provides a framework for promoting AJS in accordance with Article 159(2)(c) of the Constitution.

Employment Disputes
In the context of employment disputes, AJS offers three principal avenues for resolving disagreements without necessarily proceeding to a full trial. These include:
1.) Conciliation through the Ministry of Labour: A labour officer or appointed conciliator assists the employer and employee, or their respective representatives, in reaching a mutually acceptable agreement.
2.) Court-annexed mediation: Where a dispute has already been filed before the Employment and Labour Relations Court (ELRC), the matter may be referred to a trained mediator. Any settlement reached may subsequently be recorded as a court order.
3.) Private mediation or arbitration: The parties select their own mediator or arbitrator, often pursuant to an agreement between them or a dispute resolution clause in the employment contract.

It is important to distinguish between mediation and arbitration. A mediator does not determine who is right or wrong but facilitates discussions to help the parties reach a mutually acceptable settlement. An arbitrator, on the other hand, considers the dispute and makes a determination that binds the parties in accordance with the applicable arbitration agreement and law.

Where AJS Works Well in Employment Disputes
AJS can be particularly effective in employment disputes where the issues are clearly defined, the parties are willing to negotiate in good faith, and the desired outcome can be achieved through an agreement.
The following disputes are generally suitable for resolution through AJS:
1.) Unpaid dues: Disputes involving salary arrears, overtime, leave pay, notice pay, service pay and gratuity. Such disputes often involve quantifiable amounts, making them relatively straightforward to resolve through negotiation or mediation.
2.) Termination terms: Where both parties accept that the employment relationship has ended, mediation can facilitate agreement on compensation, a neutral reference and the issuance of a certificate of service.
3.) Redundancy packages: Parties may negotiate severance pay, notice pay and other applicable benefits, ideally with a trade union or employee representative involved where appropriate.
4.) Wrongful dismissal claims involving monetary compensation: Where the principal issue concerns compensation rather than reinstatement or a determination of a contested legal right, mediation may provide a practical route to settlement.
5.) Workplace conflicts before they escalate into formal claims: Disagreements involving managers, transfers, disciplinary warnings and remuneration can often be addressed through early intervention. Such discussions may preserve the employment relationship or, at the very least, help the parties maintain a professional relationship and avoid unnecessary disputes over references.
6.) Collective employment disputes: Conciliation plays an important role in resolving collective disputes under the Labour Relations Act, 2007. It is a statutory step in the resolution of many such disputes, including those preceding a lawful strike or referral to court, subject to the applicable legal requirements.

The advantages of resolving employment disputes through mediation are largely practical. It is generally faster, less expensive and more private than litigation. Most importantly, it allows the parties to retain greater control over the outcome instead of leaving the final determination entirely to a judge.  

Where AJS Cannot or Should Not Be Used
Although AJS offers significant benefits, it is not suitable for every employment dispute. Certain matters require formal investigation, authoritative legal determination or urgent intervention to protect the rights and safety of the affected person.
The following categories require particular caution:
1.) Sexual harassment cases: Section 6 of the Employment Act places specific obligations on employers, including the requirement for an employer with 20 or more employees to issue a policy statement on sexual harassment. In Ooko & another v SRM & 3 others [2022] KECA 44, the Court of Appeal emphasised the employer’s positive duty to act on a sexual harassment complaint. Sexual harassment may also constitute a criminal offence under the Sexual Offences Act. A private settlement cannot extinguish an employer’s statutory obligations or prevent the enforcement of applicable criminal law. Community-based processes are also generally discouraged where gender-based violence is involved, particularly where they may compromise the victim’s safety or access to justice.
2.) Discrimination, victimisation and rights-based claims: These disputes may raise constitutional and statutory questions requiring an authoritative determination. Where there is a significant imbalance of power between the parties, the affected employee may also be disadvantaged in negotiations, making a fair and voluntary settlement difficult to achieve.
3.) Cases requiring a declaration, reinstatement or precedent: Where the employee seeks a formal declaration of rights, reinstatement or a judicial precedent, mediation alone may not provide an adequate remedy. Court proceedings may therefore be necessary.
4.) Urgent matters: Where employment, health or safety is at immediate risk, or delay could cause irreversible harm, the parties should seek appropriate urgent intervention rather than allow the dispute resolution process to delay necessary protection.

The guiding principle is straightforward: where a dispute primarily concerns money, contractual terms or an agreed exit from employment, AJS may be effective. However, where the dispute involves abuse, discrimination, urgent protection or rights that cannot lawfully be waived through private agreement, the matter should be referred to the appropriate authority or court.

Chances of Success
The effectiveness of AJS in employment disputes should be assessed realistically. Approximately half of the employment cases referred to mediation are said to result in settlement, often within weeks rather than the months or years that contested litigation may take.
However, the settlement rate should not be interpreted as a guarantee of success in every case. Outcomes depend on the nature of the dispute, the willingness of the parties to negotiate, the quality of the available evidence and the balance of bargaining power between them.
Employees may accept less compensation than they might potentially obtain at trial in exchange for speed, certainty and the avoidance of prolonged litigation. This can be a legitimate and practical decision, provided that the employee understands their legal rights, the available remedies and the implications of the proposed settlement. 

Practical Guidance for Employees
Employees can take the following steps to protect their interests when resolving employment disputes:
- Preserve evidence: Keep employment contracts, payslips, termination letters, relevant correspondence and other records that may support the claim.
- Observe limitation periods: Record the date of termination and diarise the applicable limitation period. Under section 90 of the Employment Act, claims arising out of a contract of service are generally subject to a three-year limitation period, with a separate twelve-month period for continuing injuries or damage.
- Identify your priorities: Determine whether your primary concern is compensation, a professional reference, a certificate of service, reinstatement or an opportunity to be heard.
- Seek legal advice before signing: Understand the consequences of any document described as a “full and final settlement” before executing it.
- Use the appropriate reporting channels: Sexual harassment and discrimination should be reported through the relevant internal, regulatory or legal channels where appropriate, rather than being addressed exclusively through a private settlement.

Practical Guidance for Employers
Employers can also take proactive steps to reduce the likelihood and cost of employment disputes:
- Observe fair procedure: Ensure that dismissals are supported by valid reasons and that the applicable procedural requirements are followed and documented.
- Implement a sexual harassment policy: Employers with 20 or more employees should comply with section 6 of the Employment Act by issuing the required policy statement.
- Encourage early and genuine mediation: Where appropriate, offer mediation before a dispute escalates into a defended claim, thereby reducing legal costs and workplace disruption.
- Document settlements properly: Record the agreed terms, payment amounts, timelines and any other obligations clearly. Where proceedings are pending before a court, consider having the settlement adopted as a court order to facilitate enforcement.

Conclusion
Alternative Justice Systems offer employers and employees in Kenya a faster, less expensive and potentially less adversarial means of resolving workplace disputes. Kenya’s constitutional and judicial framework recognises and promotes alternative dispute resolution, while labour legislation provides specific mechanisms, including conciliation, for addressing employment-related disagreements.
AJS is particularly useful in disputes involving monetary claims, termination terms and negotiated settlements. However, its effectiveness should not be overstated: the likelihood of settlement depends on the circumstances of each case, and reported settlement rates are not a guarantee of success.
More importantly, AJS must not become a means of concealing sexual harassment, circumvent anti-discrimination protections or compromising rights that the law protects regardless of private agreement.

Ultimately, the most effective use of AJS is an informed one. Employees and employers must understand their rights and obligations, observe applicable deadlines, choose an appropriate dispute resolution mechanism and ensure that any settlement is fair, voluntary, lawful and properly documented.