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ELRCPartially AllowedCause No. 774 of 2011· [2013] KEELRC 81 (KLR)

Kudheiha Workers v BOG Gatugi Girls’ Sec. School [2013] KEELRC 81 (KLR)

Industrial Court of Kenya
7 November 2013
MOMaureen Onyango
859 words in judgment
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The bottom line

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A Kenyan court awarded a retired school worker Kshs.136,947 in gratuity under a collective agreement, ruling the 2007 Employment Act cannot apply to pre-2008 retirements.

What this practically means

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Executive summary

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The Claimant union, KUDHEIHA WORKERS, filed a claim on behalf of its member Samuel Muchora Theuri, a former employee of the Respondent school, alleging wrongful retirement and non-payment of service gratuity for approximately 25 years of service. The Claimant relied on a Memorandum of Agreement between the union and the Ministry of Education whose Clause 31 provided for service gratuity, and alleged discrimination because gratuity had been paid to another retiring employee, Charles Githaiga Kabachia. The Respondent, appearing through the Attorney General, denied the claim on grounds of locus standi, asserted the claim was frivolous, and contended that NSSF contributions discharged any gratuity obligation and that the agreement did not apply. The case was heard by Justice Charles P. Chemuttut, who retired before delivering judgment; the file was allocated to Lady Justice Maureen Onyango, who prepared the award. The court framed two issues: whether the Memorandum of Agreement applied to the Grievant and whether he was entitled to gratuity and compensation. Holding that the Employment Act 2007 was not retrospective and did not apply to a retirement occurring before its commencement, the court found the agreement applicable. The Grievant was awarded Kshs.136,947.60 as service gratuity computed at one twelfth of each completed month of service on his final salary, exceeding the amount claimed. Compensation for unlawful termination was refused as the retirement was lawful. Costs were awarded on actual disbursable expenses only, the union having acted without an advocate.

Key legal issues

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01

Applicability of the Memorandum of Agreement to the Grievant

Holding

The Memorandum of Agreement between the Claimant and the Ministry of Education applied to the Grievant; the Respondent did not deny its authenticity and had paid gratuity under it to another employee, Kabachia.

Reasoning

The Respondent's only objection was that Section 35(6) of the Employment Act excluded the Grievant from gratuity entitlement. However, the Employment Act 2007 took effect on 2nd June 2008, after the Grievant's retirement in 2004/2005, so that provision could not apply retrospectively. The Respondent's failure to deny the agreement's authenticity, and its payment of gratuity to Kabachia under the same agreement, confirmed its applicability.

p. 2
02

Entitlement to service gratuity and computation

Holding

The Grievant was entitled to service gratuity at one twelfth of each completed month of service on his last salary of Shs.3,490, totaling Kshs.136,947.60 for 327 months of service, not one month per year as claimed.

Reasoning

Clause 31(a)(i) and (ii) of the Memorandum of Agreement governed gratuity. The court applied the agreement's formula (one twelfth per completed month of service) rather than the union's claimed formula of one month's salary per year, computing entitlement over 327 months of service from January 1978 to March 2005 on the final salary of Shs.3,490.

p. 2
03

Compensation for wrongful termination

Holding

No compensation was awarded because the Grievant was lawfully retired, not terminated.

Reasoning

The Grievant was issued a retirement letter on 20th February 2004 with three months' notice and retired on 31st December 2004. Since the exit was a lawful retirement rather than a termination, the statutory compensation for wrongful termination sought by the Claimant was unavailable.

p. 2

Legal principles established

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  • Section 35 of the Employment Act, 2007, which came into effect on 2nd June 2008, does not apply to an employment relationship terminated before that date.
  • Where a collective agreement applies to the employment, service gratuity is payable as provided in the agreement notwithstanding NSSF contributions, and a respondent who paid gratuity to another employee under the agreement cannot deny its applicability.

Court orders

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  1. 1.Award of service gratuity of Kshs.136,947.60 to the Grievant at the rate of one twelfth of each completed month of service based on last salary of Shs.3,490
  2. 2.Refusal of compensation of 12 months' salary as the Grievant was lawfully retired, not terminated
  3. 3.Costs of the claim awarded to the Claimant based on actual disbursable expenses only

Authorities

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Legislation

  • Employment ActSection 35(6)
  • Advocates Remuneration Order
Jurisdiction invoked
Jurisdiction of the Industrial Court of Kenya over labour disputes reported to the Minister for Labour

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Kudheiha Workers v BOG Gatugi Girls’ Sec. School [2013] KEELRC 81 (KLR)", Case Analysis (2013). Cause No. 774 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/81/eng@2013-11-07

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