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ELRCPartially AllowedCause No 1358 of 2012· [2016] KEELRC 595 (KLR)

Paul Mburu Karemeri v Kikuyu Diary Farmers Co-operative Society [2016] KEELRC 595 (KLR)

Employment and Labour Relations Court
30 September 2016
925 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled retirement at the contractual retirement age is lawful, but an employer running an unregistered Provident Fund must pay employees market-rate interest.

What this practically means

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Executive summary

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The claimant, a former employee of the respondent co-operative society, sued through his widow holding letters of administration ad colligenda bona after his death, seeking damages for wrongful dismissal and terminal dues including interest on Provident Fund, one month's salary in lieu of notice, double pay for 111 public holidays and 488 Sundays worked, and salary for seven months from July to November 2007. The respondent admitted employing the claimant but maintained that he retired on 10th July 2007 upon attaining the normal retirement age, that his terminal benefits of Kshs. 124,788 were computed with the union and forwarded through the Kiambu Labour Office, and that he had a rest day each Friday and did not work on public holidays. The court framed two issues: whether the employment was unlawfully terminated and whether the remedies sought were payable. On the first issue, it found the retirement letter dated 3rd May 2007 showed the claimant left on retirement at age 59, above the retirement age of 55 years in Clause 26 of the applicable CBA, so the dismissal claim failed. On remedies, the respondent's witness admitted the Provident Fund was unregistered despite a caution from the Retirement Benefits Authority; the court held the respondent accountable and awarded interest at market rates for eleven years, to be tabulated by counsel within thirty days. The holiday, Sunday and seven-month salary claims failed for want of proof. Costs were awarded to the claimant.

Key legal issues

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01

Whether the termination of the Claimant's employment was unlawful

Holding

The termination was lawful as it was a retirement at the normal retirement age of 55 years under Clause 26 of the CBA, communicated by letter dated 3rd May 2007 with effect from 10th July 2007

Reasoning

The retirement letter showed the Claimant left on account of retirement. The court noted he was 59 years old at the time, above the CBA retirement age of 55. Retirement on due notification therefore did not constitute wrongful or unfair dismissal, defeating the claim for damages for wrongful dismissal.

p. 3
02

Whether the Claimant was entitled to interest on his Provident Fund contributions

Holding

Yes - the Respondent ran an unregistered Provident Fund, contrary to a caution by the Retirement Benefits Authority, and must pay interest at market rates for 11 years

Reasoning

The Respondent's witness admitted the Provident Fund was unregistered and that the Retirement Benefits Authority had cautioned the Respondent. Running an unregistered fund deprived the Claimant of interest on his contributions, so the Respondent was held accountable for the loss.

p. 3
03

Whether the Claimant proved the claims for public holidays, Sundays worked and salary for seven months

Holding

No - these claims failed for want of proof

Reasoning

The court treated these heads as claims in the nature of special damages requiring proof. The evidence did not establish that the Claimant worked on public holidays or Sundays, nor any basis for the claim for salary for the period July to November 2007, and the claims were dismissed.

p. 3

Legal principles established

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  • An employer who runs an unregistered Provident Fund, thereby denying employees interest on their contributions, is accountable and liable to pay interest at market rates
  • Retirement of an employee who has attained the normal retirement age provided in the applicable Collective Bargaining Agreement, on due notification, is a lawful termination

Court orders

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  1. 1.Dismissal of the claim for wrongful dismissal
  2. 2.Award of interest on Provident Fund at market rates for eleven (11) years, to be tabulated and agreed upon by counsel within thirty (30) days from the date of the judgment
  3. 3.Dismissal of the claims for public holidays and Sundays worked
  4. 4.Dismissal of the claim for salary for seven (7) months from July to November 2007
  5. 5.Costs of the case awarded to the Claimant
Jurisdiction invoked
Employment and labour relations jurisdiction of the Employment and Labour Relations Court (claim for wrongful dismissal and terminal dues); no specific constitutional provision cited

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, "Paul Mburu Karemeri v Kikuyu Diary Farmers Co-operative Society [2016] KEELRC 595 (KLR)", Case Analysis (2016). Cause No 1358 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/595/eng@2016-09-30

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