Eunice Wanjiru Mbau & 12 others v Komothai Coffee Growers Cooperative Society Limited [2016] KEELRC 263 (KLR)
The bottom line
#The Employment Court ordered a Kenyan coffee cooperative to pay 13 retired workers over Kshs. 10.7 million in gratuity, payable in instalments with interest and costs.
What this practically means
#Executive summary
#Key legal issues
#Liability for gratuity on retirement
The respondent, having admitted owing retirement benefits, is liable to pay gratuity at the unregistered but implemented CBA rates of 22% or 25% of basic wage per completed month of service
The claim was admitted by the respondent. The court considered the CPMU report and agreed wholly with its evaluation and recommendations. Although the registered CBA provided rates of 18% or 22%, the unregistered CBA had actually been implemented at 22% or 25%, and the court enforced the implemented rates. Payments were structured in instalments due to the respondent's financial constraints, with minimum amounts and interest from filing.
Severance pay upon old-age retirement
Severance pay is not payable where employees retire on account of advanced age rather than redundancy
The claimants were retired by letters dated 3rd January 2015 upon reaching retirement age and were not declared redundant. The CPMU advised that they were entitled to gratuity but not service pay even though the registered CBA provided for both. The claimants themselves conceded that severance pay is not payable upon retirement, and the court accepted this position.
Salary arrears
The claim for salary arrears was resolved as the arrears were paid during the pendency of the suit
The respondent denied owing salary arrears and stated it had paid all salary arrears. The CPMU established that while the matter was pending in court, the respondent paid the outstanding five months' wages, and the claimants confirmed receipt to CPMU. The court therefore recorded this admission by the claimants.
Legal principles established
#- Severance pay is not payable to employees who retire on account of old age where they were not declared redundant
- An unregistered but implemented CBA may govern payment of gratuity at its implemented rates
Court orders
#- 1.The respondent is liable to pay each of the claimants gratuity in terms of the unregistered but implemented CBAs at the rates of 22% or 25% depending on the number of months served
- 2.Adoption of the computation set out at page 19 of the CPMU report Table 5(a), column reflecting figures based on unregistered but implemented rates at 22% or 25%, totalling Kshs. 10,768,364.00
- 3.Payment in instalments: first and second instalments within November to December 2016 and the last instalment within April to June 2017, subject to minimums of Kshs. 150,000 for the first instalment and Kshs. 100,000 for the second
- 4.Interest at court rates from date of filing suit till payment in full, payable as the last instalment within July to December 2017
- 5.The respondent to pay costs of the suit
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction over employment disputes (retirement benefits and salary arrears claims)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Eunice Wanjiru Mbau & 12 others v Komothai Coffee Growers Cooperative Society Limited [2016] KEELRC 263 (KLR)", Case Analysis (2016). Cause No. 736 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/263/eng@2016-11-25
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.