Paul Ngotwa v Telkom Kenya Limited [2014] KEELRC 798 (KLR)
The bottom line
#A former Telkom Kenya employee won enhanced redundancy pay of Kshs. 3.56 million after proving company practice exceeded the statutory minimum, but got no tax exemption or interest.
What this practically means
#Executive summary
#Key legal issues
#Terminal benefits payable under redundancy law
Claimant entitled to severance pay at one month's salary per year of service (based on established company practice), one month's salary in lieu of notice, and payment for 23 accrued leave days.
Section 40(1)(e)(f) and (g) of the Employment Act sets the minimum: cash for accrued leave, one month's notice or wages in lieu, and severance of not less than fifteen days' pay per completed year. Section 26(2) requires more favourable terms to prevail. The release letters for Mbaka and Biwott, properly attached to the Claimant's further affidavit, showed a company practice of one month's salary per year of service. The Respondent produced no evidence that these were individually negotiated terms exclusive of the Claimant, so the practice applied to him. The Respondent, having no leave records, could not counter the claim for 23 accrued leave days.
Whether redundancy benefits are subject to tax
The redundancy benefits are subject to tax; the Gazette Notice No. 73 tax exemption applied only to the specified retrenched Telkom Kenya employees and could not be extended to the Claimant.
Article 210 of the Constitution provides that no tax may be waived or varied except as provided by legislation, and employers have a statutory duty to deduct and remit tax on employee dues. Legal Notice No. 73 of 14th May 2010 exempted lump sum retirement benefits of some 1,038 Telkom Kenya employees retrenched between 31st December 2008 and 28th February 2010. The exemption was specific to those employees. Further, the Claimant's redundancy took effect from the Court of Appeal judgment of 19th July 2013 and cannot be backdated into the exemption window.
Entitlement to interest on redundancy payments
Claim for interest refused as neither the trial Award nor the Court of Appeal judgment made any order for interest.
The Court examined both the Award by the trial court (Kosgey J, 14th January 2011) and the Court of Appeal judgment of 19th July 2013 and found no order for interest in either. In the absence of such an order, there was no basis upon which interest could be awarded on the redundancy amount.
Admissibility of documents attached to written submissions at final submissions stage
The release letters and pay slips were properly before the Court because the release letters were also attached to the Claimant's further affidavit.
The Respondent objected that attaching pay slips and release letters of Mbaka and Biwott to submissions amounted to sneaking in additional evidence, incurable even under Section 10(1) of the Industrial Court Act. The Court held the objection untenable as to the release letters, since they had also been attached to the Claimant's further affidavit sworn on 14th October 2013 and were therefore properly on record as evidence.
Legal principles established
#- Where redundancy terms more favourable than the statutory minimum under Section 40 of the Employment Act existed as between the parties, those more favourable terms apply by virtue of Section 26 of the Act.
- A party asserting individually negotiated redundancy terms bears the evidential burden of proving them; absent contrary evidence, terms applied to other employees are general terms applicable to all similarly placed employees.
- A statutory tax exemption applies only to the persons and period specified in the exempting legislation and cannot be extended to others; employers have a statutory duty to deduct and remit tax on employee dues.
Court orders
#- 1.Severance pay at one month's salary for every year of service (180,000 x 18) = Kshs. 3,240,000
- 2.One month's salary in lieu of notice = Kshs. 180,000
- 3.Pay for 23 accrued leave days = Kshs. 138,000
- 4.Total redundancy payment of Kshs. 3,558,000, subject to tax
- 5.Each party to bear their own costs
- On appeal from
- Court of Appeal
- Not stated
- Jurisdiction invoked
- Direction of the Court of Appeal in its judgment dated 19th July 2013 that the Industrial Court take evidence on the terms of redundancy payable and determine it
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Evans Ogutu Ouma v Migori County Assembly Service Board & another[2026] KEELRC 2598 (KLR)28 Sept 2026
- Raphael Njoroge Mwaura & 12 others v Kenya Power & Lighting Company Limited [2020] KEELRC 210 (KLR)[2020] KEELRC 210 (KLR)11 Nov 2020
Cite this brief
#Cite this brief
Caselaw, "Paul Ngotwa v Telkom Kenya Limited [2014] KEELRC 798 (KLR)", Case Analysis (2014). Not stated in judgment (pursuant to Judgment of the Court of Appeal dated 19th July 2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/798/eng@2014-02-17
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.