Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
AI-generated case brief
Case Brief · caselaw.co.ke
Court of AppealDismissedCivil Appeal No. 207 of 2012· [2013] KECA 36 (KLR)

Telkom Kenya Limited v John O. Ochanda [2013] KECA 36 (KLR)

Court of Appeal
25 October 2013
5,765 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~23 min to read original · ~4 min brief

The bottom line

#

Kenya's Court of Appeal ruled that Telkom Kenya discriminated against 996 retrenched employees by paying different severance and golden handshake amounts without lawful justification.

What this practically means

#

Executive summary

#
Telkom Kenya Limited appealed against a High Court judgment (Mwera J, 28 September 2011, in consolidated suits HCCC Nos. 216, 219 and 255 of 2007) ordering payment of severance pay at 2½ months' salary per completed year of service and a golden handshake on the phase 2 scale (Kshs.150,000) to 996 former employees retrenched under the appellant's 2006 staff rationalization scheme. The appellant, represented by Mr. Oraro, argued that age-based categorisation in retrenchment is lawful, that the CBAs governed exit packages, that golden handshake was ex gratia without legal or contractual basis, and that the trial judge had improperly rewritten the parties' agreement. The respondents, through Mr. Nowrojee and Mr. Oluoch, contended that the differential treatment lacked justification, that the CBA was unregistered, and that the appellant bore the burden of justifying differential treatment. The Court of Appeal (Kihara Kariuki PCA, M'Inoti and Mohammed JJA) framed two issues: whether differential severance pay between the two phases, and non-payment of golden handshake to phase 1 employees, amounted to discrimination. It held that severance pay is statutory and must relate to years already served, not years remaining before retirement, and that the appellant's age-based formula, ungrounded in law or agreement, was blatant discrimination. It further held that once golden handshake was payable, it had to be paid across the board, and the appellant's failure to give any reason for excluding phase 1 employees was discriminatory. The Court found no merit in the complaint that the judge rewrote the contract, affirmed the High Court decision, dismissed the appeal, and made no order as to costs.

Key legal issues

#
01

Whether differential severance payments based on age-based phases amounted to discrimination

Holding

The deliberate use of a formula resulting in preferential treatment of one phase of employees amounted to blatant discrimination; the High Court's finding was upheld

Reasoning

The Court held that severance pay is statutory and must be calculated per year already served, not on years remaining before retirement. The employer's justification, that older employees would access pensions immediately, had no legal basis and appeared arbitrarily imposed. Because the appellant deliberately adopted a formula giving preferential treatment, the differential payment was discriminatory and the trial judge's finding could not be faulted.

p. 9
02

Whether denial of golden handshake to phase 1 retrenchees constituted discrimination

Holding

Once the appellant decided to pay golden handshake, it had to be paid across the board; giving no reason for excluding phase 1 was discriminatory

Reasoning

The Court noted golden handshake had become an item to be demanded, appearing in circulars, guidelines and the CBA, and thus payable and not dispensable at whim. The appellant paid phase 2 but gave no reason for denying phase 1 employees. The Court inferred the appellant had no reason, detected no misdirection in the judge's treatment, and upheld the award on the phase 2 scale.

p. 10
03

Whether the trial judge rewrote the parties' contract by imposing severance and golden handshake terms

Holding

The trial judge did not rewrite the contract; there was no substance in that complaint

Reasoning

The appellant argued the CBA, though with outstanding issues, bound the parties and the court could not substitute its own terms. The Court rejected this, holding that after careful consideration of the evidence, issues and submissions, the judge did not rewrite any contract. The severance formula was statutory and the golden handshake had become payable through government policy and negotiation.

p. 10

Legal principles established

#
  • Severance pay on retrenchment must be computed on the years the employee has already served, at the statutory rate, and cannot be tied to pension or future years of service
  • Where an employer elects to pay a benefit such as golden handshake to one group of retrenchees, it must be paid across the board and cannot be dispensed with arbitrarily

Court orders

#
  1. 1.Appeal dismissed
  2. 2.No order as to costs

Authorities

#

Legislation

  • Companies ActCap 486
  • Employment ActCap 226 (repealed), section 16A
  • Wages & Conditions of Employment ActCap 229
  • Kenya Communications Act1998
  • Trade Disputes Actsection 11(1)
  • Constitution of KenyaArticle 159(2)(d)
  • Civil Service RegulationsGovernment policy on rationalization

Cases cited (4)

  • National Bank of Kenya vs Pipeplastics Samkolit (K) Ltd & Anor
    Civil Appeal No. 95 of 1999
  • Johnstone Muthama vs Minister for Justice and Constitutional Affairs & Another
    (2012) eKLR
  • Federation of Women Lawyers Kenya (FIDA-K) & 5 Others vs Attorney General & Another
    (2011) eKLR
  • Community Advocacy and Awareness Trust and Others vs The Attorney General and Others
    (2012) eKLR
On appeal from
High Court of Kenya at Nairobi
HCCC No. 216 of 2007 (Consolidated with 219 & 255 of 2007)
Jurisdiction invoked
First appeal to the Court of Appeal under the applicable appellate framework (the judgment does not cite a specific provision)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Later judgments citing this (3)

#

Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

#

Cite this brief

Caselaw, "Telkom Kenya Limited v John O. Ochanda [2013] KECA 36 (KLR)", Case Analysis (2013). Civil Appeal No. 207 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2013/36/eng@2013-10-25

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.