Barclays Bank of Kenya v Agnes Wachu Wamae & 104 others [2020] KECA 220 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that employers paying above the legal minimum severance can cap enhanced redundancy packages without breaching the Employment Act.
What this practically means
#Executive summary
#Key legal issues
#Construction of Section 40(1)(g) of the Employment Act on severance pay for redundancy
Section 40(1)(g) prescribes a minimum of 15 days' pay for each completed year of service. It does not oblige an employer who pays a more generous package to apply that enhanced rate to every year of service; capping the enhanced rate at 16 years was a lawful business decision where each employee received more than the statutory minimum.
The Court held that the law only required the bank to pay 15 days' salary for each year of service. Having chosen to pay 1½ months' salary per year capped at 16 years, the practical effect was that every respondent received more than the Act required. Employees who served fewer than 16 years gained at the enhanced rate, and longer-serving employees still received more than the statutory minimum. The respondents therefore suffered no loss and had no basis for claiming a balance.
Alleged discrimination contrary to Section 5(3) of the Employment Act
The capping of the exit package at 16 years did not amount to discrimination; the trial Judge erred in so finding.
The Court found that the restructure exercise treated all affected employees on the same terms, and since each received more than the statutory minimum, there was no disadvantage and hence no discrimination. Section 5 of the Act was not flouted in any way. The trial Judge's finding that capping deprived longer-serving employees of their lawful entitlement was wrong because their only entitlement was the 15 days' minimum, which was exceeded.
The Release executed by each respondent
The respondents, having accepted the packages and signed Releases confirming satisfaction, could not turn around and sue the bank; the trial Judge erred in not making a finding on this issue.
Counsel for the appellant faulted the trial Judge for failing to make a finding on the Release. The Court observed that the respondents received generous packages and executed documents confirming receipt of the money and that they were satisfied, did not return the money, and yet sued. While the Court allowed the appeal on the substantive construction of Section 40(1)(g), it noted the Releases as reinforcing the absence of any claim.
Proof of individual claims and interest
The trial Judge erred in allowing the pleaded claims without evidence of the period served by each respondent, and in awarding interest at court rates when the whole claim already included interest at 20%.
The Court noted that each of the 105 claims differed in period served and quantum, yet only one witness testified and no evidence was led to show the period served by each respondent. Further, the pleaded claim of Kshs.301,855,477 included interest at 20%, which the Judge allowed, and then additionally awarded interest at court rates from 31st January 2011 — a double award of interest that was wrong.
Legal principles established
#- The statutory minimum under Section 40(1)(g) of the Employment Act is severance pay of 15 days' pay for each completed year of service; an employer who pays more than that minimum may structure the enhanced package, including capping the enhanced rate, without breaching the Act or discriminating against employees
- Where the whole claim includes interest at a specified rate and the court also awards interest at court rates, that double award of interest is an error
Court orders
#- 1.Appeal allowed
- 2.Judgment of the ELRC dated 12th October 2018 set aside
- 3.Costs of the appeal and of the suit below awarded to the bank
- On appeal from
- Employment and Labour Relations Court of Kenya at Nairobi
- ELRC No. 806 of 2011
- Jurisdiction invoked
- First appellate jurisdiction over appeals from the Employment and Labour Relations Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Barclays Bank of Kenya v Agnes Wachu Wamae & 104 others [2020] KECA 220 (KLR)", Case Analysis (2020). Civil Appeal No. 440 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2020/220/eng@2020-11-06
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.