Peter Munyiri Maina v Family Bank Limited
The bottom line
#Kenya's Court of Appeal held that a former Family Bank CEO's gratuity must use the bank's Tier 2 industry rate of 18% and each year's actual salary.
What this practically means
#Executive summary
#Key legal issues
#Applicable gratuity rate under clause 8 for years 2-5
The rate is 18%, being the Tier 2 bank average in the PWC October 2016 survey specific to Tier 2 banks, not the 31% paid by two parastatal-linked banks
Clause 8 set 10% for year one and aligned later years with banking industry rates. The April 2016 PWC report was cross-sector and multi-tier; the October 2016 survey sampled 14 of 16 Tier 2 banks and found an average of 18%, noting parastatals offer 31%. The two banks paying 31% (HFCK and National Bank) were Government-linked, so their rates reflected parastatal practice. The 18% rate therefore best aligned with the relevant industry rates.
Computation of the gratuity award
Gratuity for each year must be computed on that year's actual monthly salary: Kshs. 3,100,000 for years 2-4 and Kshs. 3,642,500 for year 5
The evidence showed the salary review to Kshs. 3,642,500 took effect from 1st August 2015, i.e. only the 5th year. Neither party's global approach was correct: the ELRC erred in using the lower salary for all four years, and the appellant erred in seeking the higher salary for all four. The PWC reports confirmed gratuity is based on the monthly salary at the material time.
Entitlement to interest
No interest was warranted because the rate was unascertained and the respondent did not wrongfully withhold the money; pre-suit interest also fails under rule 29(3)
Interest and costs are discretionary and interference requires error in principle. The parties had not agreed a rate for years 2-5; the appellant's claimed rates were not those contemplated by the contract, a view upheld on appeal. Since the claim did not succeed as specified and the rate had to be judicially ascertained, the respondent was not in wrongful denial. Treasury-bond rates were unsupported by the rules.
Denial of costs
The order that each party bear its own costs was reasonable given the failed claim, the effluxion of the contract and the unspecified rate
Costs are discretionary under section 12(4) of the ELRC Act, exercised subject to the rules as the court considers just. The appellant did not succeed in the pleaded claim; the employment ended by effluxion of time rather than breach; and the contract left the rate for years 2-5 unspecified. In those circumstances the denial of costs was justified and not arbitrary.
The Manpower Services report not considered by the ELRC
No fault could be attributed to the ELRC because the report was not among the listed documents and its introduction into evidence was unclear
The ELRC had directed that the claim be heard on pleadings, listed documentary evidence and submissions. The Manpower Services report was not listed in the statement of claim or list of documents and first appeared in written submissions. The Court could not establish how it entered the evidence, so the ELRC committed no error in not adverting to it.
Legal principles established
#- Where a contract aligns gratuity with banking industry rates, the applicable rate is that of the tier in which the employer bank is classified, not the industry-wide average
- Once gratuity is reduced into a term of the contract, it crystallises into a contractual right enforceable strictly per the contract's terms
- An appellate court will not interfere with a discretionary decision on interest or costs unless the discretion was exercised on wrong principles or the decision is plainly wrong
- Gratuity upon expiry of a fixed-term contract is computed on the salary actually earned in the year to which it relates, not a global final-year salary
Court orders
#- 1.Appeal succeeds only as regards computation of the gratuity for the 5th year of employment; all other grounds dismissed
- 2.Final gratuity award: Year 1 Kshs. 2,700,000; Year 2 Kshs. 6,696,000; Year 3 Kshs. 6,696,000; Year 4 Kshs. 6,696,000; Year 5 Kshs. 7,867,800; total Kshs. 30,655,800
- 3.Each party to bear its own costs of the appeal
- On appeal from
- Employment & Labour Relations Court
- Not stated in the judgment
- Jurisdiction invoked
- First appeal to the Court of Appeal from the Employment & Labour Relations Court (specific provision not stated in the judgment)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Peter Munyiri Maina v Family Bank Limited", Case Analysis (2025). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2025/2043/eng@2025-11-28
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.