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ELRCPartially AllowedCause No 28 of 2012· [2014] KEELRC 1208 (KLR)

John Mwangi Kuria & 165 Others v Attorney General & Another [2014] KEELRC 1208 (KLR)

Industrial Court of Kenya
30 July 2014
2,283 words in judgment
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The bottom line

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Kenya's Industrial Court ruled that retrenching 166 National Irrigation Board workers without proper notice was unlawful, awarding them compensation and severance pay with interest.

What this practically means

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Executive summary

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The Claimants, 166 former employees of the National Irrigation Board retrenched in 2002, sued for severance pay at 2½ months per year of service and damages for breach of fundamental rights. The claim, originally filed in the High Court by Originating Summons in 2005, was transferred to the Industrial Court where the prayers were narrowed. The court framed three issues: compliance of the retrenchment with the law, the pensionable status of the Claimants, and entitlement to the reliefs sought. The court found the retrenchment irregular: notices of no more than three days were given, and no notice was issued to the minister for labour or the Union as required by Section 16A of the repealed Employment Act (Cap 226) and Clause 16(b) of the 1997-1999 CBA; financial hardship afforded no licence to disregard the law. On pensionability, the court held that membership of the Board's contributory Staff Retirement Benefits Scheme rendered the Claimants pensionable under the Retirement Benefits Act, rejecting the Claimants' distinction between a retirement scheme and a pension as 'a mere splitting of hairs'. The court declined to apply the civil service retrenchment package, holding the statutory body was not bound by it and the supporting document was unsigned. The CBA severance of 25 days per year for unionisable employees was confirmed, while non unionisable employees received the statutory 15 days per year, payable irrespective of pensionability. All Claimants were awarded one month's salary as compensation for the irregular retrenchment, payable within 60 days, with interest and costs to the Claimants. The claims for 2½ months' severance and damages were dismissed.

Key legal issues

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01

Compliance of the retrenchment with the law and CBA

Holding

The retrenchment was irregular: notices were no more than three days, and no notice was given to the minister for labour or the Union as required by Section 16A of the repealed Employment Act and Clause 16(b) of the CBA

Reasoning

Section 16A of the repealed Employment Act (Cap 226) required notification of the union and Labour Officer of the reasons and extent of a redundancy, and the CBA required 60 days' notice to the minister for labour and the union. The 2nd Respondent's own witness admitted the notices were short, and there was no evidence of notice to the minister or Union. Financial hardship was no justification for breaching the law.

p. 3
02

Pensionable status of the Claimants

Holding

All Claimants were pensionable because their contributory Staff Retirement Benefits Scheme was a retirement benefits scheme under Section 2 of the Retirement Benefits Act

Reasoning

The Claimants argued that a contributory scheme was not a pension scheme, but the court held this was a distinction without substance. The statutory definition of a retirement benefits scheme covers arrangements under which persons are entitled to benefits determined by age, length of service or earnings, payable on termination of service. Membership therefore rendered them pensionable.

p. 4
03

Entitlement to severance pay and compensation

Holding

Each Claimant was awarded one month's salary as compensation for the irregular retrenchment; non unionisable Claimants were awarded statutory severance pay of 15 days per completed year; unionisable Claimants' CBA severance of 25 days per year was confirmed

Reasoning

Having found the retrenchment flawed, the court awarded one month's salary as compensation. The civil service retrenchment package was inapplicable to a statutory body. The CBA terms more favourable than statute were protected, so unionisable Claimants kept 25 days per year, while non unionisable Claimants received the statutory minimum of 15 days per year irrespective of pensionability.

p. 5

Legal principles established

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  • An employer may not disregard the statutory and contractual redundancy procedures on the ground of financial hardship
  • Membership of a contributory retirement benefits scheme renders an employee pensionable within the meaning of the Retirement Benefits Act
  • Terms of service more favourable than statute, once conferred by CBA or contract, cannot be altered to the employee's detriment
  • Statutory severance pay under Section 16A(f) of the repealed Employment Act is payable irrespective of pensionability

Court orders

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  1. 1.One month's salary payable to all the Claimants as compensation for an irregular retrenchment exercise to be based on each Claimant's last salary
  2. 2.Severance pay at 15 days' salary for each completed year of service payable to all the non unionisable Claimants
  3. 3.The amounts payable under (a) and (b) shall be tabulated jointly by Counsels for the parties and paid to the Claimants within the next 60 days from the date of the award
  4. 4.The Respondent shall pay the costs of this case
  5. 5.The award amounts shall attract interest at court rates from the date of the award until payment in full

Authorities

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Legislation

  • Employment Act (repealed) (Cap 226)Section 16A
  • Retirement Benefits ActSection 2
  • Employment Act, 2007Section 35(5) and (6)
  • Irrigation Act (Cap 347)
On appeal from
High Court
Originating Summons dated 19th September 2005
Jurisdiction invoked
Transfer of the claim from the High Court to the Industrial Court of Kenya (now Employment and Labour Relations Court) under its employment and labour relations jurisdiction

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, "John Mwangi Kuria & 165 Others v Attorney General & Another [2014] KEELRC 1208 (KLR)", Case Analysis (2014). Cause No 28 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/1208/eng@2014-07-30

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