Samuel Cheruiyot v Kericho Municipal Council & another [2013] KEELRC 859 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Whether the claimants were public servants covered by the Head of Public Service circular raising retirement age to 60
Yes. Employees of water companies established under the Water Act, 2002 remained public servants and employees of the parent local authorities, so the circular of 20th March 2009 applied to them.
Relying on Republic v Eldoret Water & Sanitation Co Ltd, the Kenya Local Government Workers v WASPA decision and David Mwangi Gioko, the court held that water companies though registered as separate commercial entities are wholly owned by their parent councils in a principal-agent, parent-subsidiary relationship, so the distinction is only in name and legal regime. The claimants therefore fell within the Muthaura circular enhancing retirement age from 55 to 60 years.
Whether the transfer and agency agreement varied the claimants' terms and conditions of service
No. The transfer was temporary under an agency agreement and the claimants remained on their original terms and conditions of service.
The 2nd respondent is a private company limited by shares, but it acted as agent and subsidiary of the 1st respondent for water supply. Section 178(i) of the Local Government Act vests water supply in municipal councils, and such duties could not be delegated to a private company without the authority and consent of the Minister for Local Government. The letter of transfer intended the terms of service to remain intact.
Whether the claimants were entitled to the reliefs sought
Partly. Retirement at 55 was unlawful given the enhanced retirement age of 60, but compensation was limited to a golden handshake and one year's salary rather than the full five years of unserved service.
The retirement at 55 on 31st December 2009 deprived the claimants of five years of service through the 2nd respondent's negligence and callousness. However, applying the fair go all round principle from Maria Kagai Ligaga v Coca Cola, compensation must redress economic injury proportionately and cannot be based on the entire remainder of years of service where no labour was contributed. Conflicting evidence also showed some claimants had accessed pensions or opted for early retirement.
Whether judgment in default should issue against the 1st respondent
No. Judgment in default was declined because the issue was raised too late and would unjustly truncate the determination of the issues between the intertwined respondents.
The 1st respondent filed no pleadings, but the request for default judgment was raised only in submissions after the close of proceedings, without giving the respondents an opportunity to address it. Entering such judgment would benefit the claimants on a technicality and would oust the 2nd respondent's defence, since the court found the respondents intertwined and the same in law.
Legal principles established
#- Employees transferred from local authorities to water companies under agency arrangements remain public servants and employees of the parent councils.
- An agency agreement transferring staff does not vary the transferred employees' terms and conditions of service.
- Compensation for unfair termination must be proportionate and based on the principle of a fair go all round, not on the full remainder of years of service.
Court orders
#- 1.Award to Willy Kipsang Ng'eno of a golden handshake of Kshs.125,000.00 plus one year gross salary out of the five years unserved period (Kshs.24,935.00 x 12 = Kshs.299,220.00), totalling Kshs.424,220.00
- 2.Award to Philip Bii of a golden handshake of Kshs.125,000.00 plus one year gross salary out of the five years unserved period (Kshs.16,853.00 x 12 = Kshs.202,236.00), totalling Kshs.327,236.00
- 3.Award to Samuel Cheruiyot of a golden handshake of Kshs.125,000.00 plus one year gross salary out of the five years unserved period (Kshs.34,990.00 x 12 = Kshs.419,880.00), totalling Kshs.544,880.00
- 4.Costs of the claim to be borne by the respondent
- 5.Decline to enter judgment in default of appearance and defence against the 1st respondent
- Jurisdiction invoked
- Original jurisdiction of the Industrial Court of Kenya under its establishing legislation over employment and labour relations disputes
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Samuel Cheruiyot v Kericho Municipal Council & another [2013] KEELRC 859 (KLR)", Case Analysis (2013). Industrial Court Cause No. 1113 of 2010. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2013/859/eng@2013-05-15
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.