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ELRCPartially AllowedIndustrial Cause (Memorandum of Claim dated 29th September 2009, filed 5th October 2009)· [2014] KEELRC 1046 (KLR)

Francis Mwangi Maina & another v Town Clerk City Council of Nairobi & 3 others [2014] KEELRC 1046 (KLR)

Industrial Court of Kenya (Industrial Court Act, 2011)
5 May 2014
4,649 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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Nairobi's county government must pay retired council workers interest on late pension contributions plus uniform and long-service allowances, though most other claims failed.

What this practically means

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Executive summary

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The Claimants, Chairman and Treasurer of the Nairobi City Council Retirees Welfare Association, sued the City Council of Nairobi, its Town Clerk and City Treasurer, and LAPTRUST for Kshs. 197,983,807.43, contending the Respondents defaulted in remitting gratuity and terminal benefits and relying principally on Sections 16A and 19A of the Pensions Act as amended by Act No. 6 of 2003 and a CBA of 24th November 2005. They sought declarations, restraint against withholding of monthly salaries, payment of the lump sum jointly and severally, costs and interest at commercial rates. The Respondents maintained all terminal benefits had been paid, LAPTRUST members received their pensions, and that dispute-resolution mechanisms under the Local Authorities Provident Fund Act and the Local Authorities Pensions Trust Rules 2007 excluded the court's jurisdiction. The court, per Maureen Onyango J, held the claim was properly before the Industrial Court: there was no decision capable of appeal to the Minister, the Arbitration Act did not apply to the Industrial Court, and the jurisdictional objection was not raised as a preliminary issue. On the applicable law, the court held the Claimants fell under the Local Authorities Provident Fund Act (LAPFUND) and the Local Authorities Pensions Trust Rules 2007 (LAPTRUST), not the Pensions Act, so Sections 16A and 19A were inapplicable. The 1st Respondent was found in default for late remittance of contributions. The court allowed uniform/bar soap allowances and medallion long service, awarded 2.5% annual compound interest on LAPFUND account balances, and dismissed claims for salary arrears, house allowance, leave allowance, overtime and 15% interest, and dismissed the claim against LAPTRUST. Liability fell on the City Council's successor, the County Government of Nairobi. The claim was allowed with costs to that extent, with interest at court rates, and the advocates were directed to file computation reports within 30 days.

Key legal issues

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01

Whether the claim was properly before the Industrial Court given arbitration and ministerial appeal mechanisms

Holding

The case was properly filed in the court.

Reasoning

There was no decision by the 1st Respondent capable of appeal to the Minister under the Local Authorities Provident Fund Act. At the time the Local Authorities Pensions Trust Rules 2007 were passed, the Trade Disputes Act excluded the Arbitration Act from cases in the Industrial Court, and the Respondents had not invoked the arbitration mechanism. The court also held it had power to review administrative decisions of the Minister, and faulted the Respondents for not raising jurisdiction as a preliminary issue before hearing.

p. 4
02

The legislation applicable to the Claimants' retirement

Holding

The Claimants were covered by the Local Authorities Provident Fund Act (Cap 272) creating LAPFUND and the Local Authorities Pensions Trust Rules 2007 creating LAPTRUST, not the Pensions Act.

Reasoning

The court examined the schemes and held the Pensions Act applies only to civil servants paid from the Consolidated Fund, while the Claimants' benefits derive from contributions by the members and the 1st Respondent under Sections 8 and 9 of Cap 272 and Rules 57 and 58 of the 2007 Rules. Consequently Sections 16A and 19A of the Pensions Act, on which most heads of claim rested, were inapplicable.

p. 6
03

Whether the Respondents were in default of the relevant legislation

Holding

The 1st Respondent was in default by failing to remit contributions as and when due.

Reasoning

Section 8 of Cap 272 and Rules 57 and 58 of the 2007 Rules required monthly remittance of contributions. Both the Claimants and the 4th Respondent established that remittances were made long after due dates, and the 1st Respondent did not deny this; contributions for the Claimants were remitted in November 2009 and April 2010 while the claim was pending.

04

Entitlement to the specific heads of payment claimed

Holding

Uniform/bar soap allowance and medallion long service allowed; salary arrears, house allowance, leave allowance, overtime/special duty and 15% interest dismissed; 2.5% interest on LAPFUND contributions awarded.

Reasoning

The uniform and bar soap claims rested on memos and minutes the 1st Respondent did not dispute. Medallion long service was payable under established practice; a report recommending its discontinuance was never adopted by full council as required by standing order 4 of the Second Schedule to the Local Government Act, and payment to other retirees continued as late as 5th March 2010, so withholding it would be discriminatory. LAPTRUST members' defined benefits were unaffected by late remittance; LAPFUND members got 2.5% annual compound interest.

p. 9

Legal principles established

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  • The Pensions Act (Cap 189) applies to civil servants whose pension is drawn from the Consolidated Fund and not to local authority employees covered by contributory schemes.
  • Sections 16A and 19A of the Pensions Act (as amended by Act No. 6 of 2003) are not applicable to local authority retirees under LAPFUND and LAPTRUST.
  • LAPTRUST is a defined benefit scheme unaffected by late remittance of contributions.
  • LAPFUND members whose contributions were remitted late are entitled to statutory minimum interest of 2.5% per annum compounded annually.
  • Liability for an employer's defaults in remitting retirement contributions attaches to the local authority and passes to its successor county government.
  • A claimant is properly before the Industrial Court notwithstanding statutory arbitration or administrative appeal mechanisms where no decision exists to appeal, the Arbitration Act did not apply to the Industrial Court, and the jurisdictional objection was not raised as a preliminary issue.

Court orders

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  1. 1.Members of the LAPTRUST who are in receipt of pension are not entitled to any payment as claimed under the head of salary arrears and their claim under that head is dismissed.
  2. 2.Members of LAPFUND who were paid under the Provident Fund are entitled to interest at 2.5% on the balance standing on each of their accounts as at 30th June every year from the date of joining the scheme to the date of payment in full, the balance being the amount which was supposed to have been deposited based on Section 12 (a) or (b) of the Local Authorities Provident Fund Act.
  3. 3.The Claimants are entitled to payments for uniforms and bar soap up to the date each was retired (or up to the end of the month in which deceased employees died), to be paid by the 1st Respondent.
  4. 4.The prayer for house allowance from 30th September 2009 is dismissed.
  5. 5.The prayer for leave allowance is dismissed.
  6. 6.The 1st Respondent is ordered to pay medallion long service to Claimants who qualified for it as was the practice of the 1st Respondent.
  7. 7.No further orders under provident fund and provident fund arrears, payment having been admitted, save for the order for calculation of interest already made.
  8. 8.The claim for overtime, leave, off duty, special duty allowance is dismissed.
  9. 9.The claim for interest at 15% is dismissed save for interest on provident fund contributions as already ordered.
  10. 10.The claim against the 4th Respondent (LAPTRUST) is dismissed with no order as to costs.
  11. 11.Liability for payment of the claims falls on the 1st Respondent, accruing to the office of the Government of the County of Nairobi as successor of the City Council of Nairobi.
  12. 12.The claim is allowed with costs to the extent stated in the judgment with interest at court rates from the date of judgment.
  13. 13.Advocates for the claimants and the 1st, 2nd and 3rd Respondents directed to calculate the actual amounts due to each claimant and file a report within 30 days; case to be mentioned on 15th June 2014 for adoption of report and final judgment or further directions.

Authorities

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Legislation

  • Constitution of Kenya (repealed)Section 112(4) and (5); Section 2
  • Pensions Act (Cap 189)Sections 16A and 19A, as amended by Pensions (Amendment) Act No. 6 of 2003, Section 2
  • Service Commissions Act (Cap 185)Public Service Commission (Local Authority Officers) Regulations
  • Local Government Act (Cap 265) (repealed)Second Schedule, standing order 4
  • Arbitration Act-
  • Local Authorities Provident Fund Act (Cap 272)Sections 8, 9, 10(c), 12(a) and (b), 23
  • Provident Fund Act (Cap 191)-
  • Employment Act-
  • Labour Institutions Act-
  • Societies Act-
  • Retirement Benefits Act, 1997-
  • Local Government (Local Authorities Pensions Trust) Rules, 2007Rules 57, 58, 89, 130
  • Kenya (Local Government) (Pensions) Regulations 1963 / Kenya Local Government Officers' Superannuation Fund Rules 1963-
  • Trade Disputes Act-
  • Collective Bargaining Agreement dated 24th November 2005 (Local Government Workers Union / National Joint Negotiating Council)clause 25

Cases cited (4)

  • VOI JUA KALI ASSOCIATION V SANGE & OTHERS
    [2002] 2 KLR 474
  • SIMU VENDORS ASSOCIATION V THE TOWN CLERK, CITY COUNCIL OF NAIROBI & ANOTHER
    [2005] eKLR
  • LAW SOCIETY OF KENYA V COMMISSIONER OF LAND & 2 OTHERS
    [2005] eKLR
  • SONKO & OTHERS V HALUNA & ANOTHER
    [1971] EA 443
Jurisdiction invoked
Jurisdiction of the Industrial Court under the Trade Disputes Act / Industrial Court Act over employment and retirement benefits disputes; the court held the claim was properly filed before it notwithstanding the dispute-resolution mechanisms in the Local Authorities Provident Fund Act and the Local Authorities Pensions Trust Rules 2007.

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (1)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Francis Mwangi Maina & another v Town Clerk City Council of Nairobi & 3 others [2014] KEELRC 1046 (KLR)", Case Analysis (2014). Industrial Cause (Memorandum of Claim dated 29th September 2009, filed 5th October 2009). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/1046/eng@2014-05-05

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