A Kenyan appeals court on Friday set aside a labor court ruling that gave teachers a pay rise of 50 to 60 percent in a victory for the government, which maintained its budget deficit meant it could not afford the salary increase.
In a two-page ruling, the court found that the labor court lacked jurisdiction in the case.
Teacher unions, which have more than 280,000 members, said they would appeal the ruling to the Supreme Court.
Members of the Kenya National Union of Teachers and the Kenya Union of Post Primary Education Teachers went on strike for several weeks earlier this year after the government refused to increase salaries.
National Treasury Cabinet Secretary Henry Rotich told Reuters in August the teachers' demand was unsustainable.
"The impact of that award is not helpful to the country and even to the teachers because the economic consequences are far reaching and will affect everyone," he said.
Kenya faces a deficit of 8.7 percent for the year starting July 1, compared with a deficit of 7.8 percent in the previous year. The deficit — along with other factors, such as a globally strong dollar — have hit the Kenyan shilling hard.