Friday, September 5, 2014

Why SMEs need Labour Law Due Dilligence



One of the vexing issues for any employer in the Kenyan economy is employee management. By this I mean managing the process of hiring and retaining employees who make a positive contribution towards realizing the goals of the company. Large corporations are largely affected by issues like strikes and go slows and the government has also been vexed by strikes in the education and health sectors.
Inevitably a large part of employee management is tackled through labour laws. The law provides on how an employee is hired, the employment contract, terms and benefits and cessation of employment. A brief highlight of the key laws is important.

The employment Act has provisions that regulate the relationship between employer and employee including the minimum terms and conditions of employment such as the terms of an employment contract, appointment, benefits including leave, termination and others. The Employment Act also has provisions on resolution of disputes between parties to an employment contract. The Labour Relations Act on the other hand has provisions governing the registration and regulation of trade unions. The Act allows collective bargaining and therein provides for the manner of negotiating Collective Bargaining Agreements. It also has provisions on dispute resolution between trade unions and employers.
The Occupational Health and Safety Act and the Work injury Benefits Act have provisions aimed at protecting employees while at work. They provide for measures geared towards making the work environment safer and has provisions on adequate compensation in the event of work injuries. The Industrial Court Act on the other hand establishes the Industrial Court, pursuant to the Constitution. The Court has jurisdiction to resolve labour disputes between employers and employees. 

There are a host of other legislations that affect employer-employee relations such as the National Social Security Fund Act. Subsidiary legislations such as the annual minimum wage will also influence this relationship. Policy measures by the government in various spheres such as immigration will impact the relationship. Lastly as County Governments enact more legislation, some laws are expected to impact the employment relationship.

On the above analysis, it is important to have Small and Medium Enterprises invest in labour law due diligence and this is why. SMEs normally start operations with a minimum work force who are easily managed. In most cases a human resource department is not considered necessary, it’s an increased cost. As SMEs grow and thrive, employee-relations dynamics also evolve in a larger magnitude. Employees will feel entitled to a larger piece of the pie if profits are growing. At the same time an employer cum entrepreneur is also thinking of how to grow the company and reinvest earning into the business so that the company has a firm foundation for continued growth.

Due diligence is taking necessary steps to comply with the law. Labour law due diligence is therefore important since SMEs need to understand the laws that affect them in the present and those that

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