Susan Nzisa Musella v Bank of Baroda (Kenya) Limited [2016] KEELRC 1072 (KLR)

Employment and Labour Relations Court

17 June 2016

ANAbuodha Jorum Nelson

685 words in judgment

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The bottom line

Kenyan employers cannot withhold a retired employee's terminal benefits over a criminal case unless they actually file a civil claim for the disputed money.

What this practically means

Executive summary

The claimant was employed by the respondent bank from 1st August 1977 and retired on 21st November 2014 upon attaining retirement age. In March 2012 she was suspended on half basic salary following her arrest and prosecution for fraud involving an account at her branch. She sued for her terminal dues, which the respondent did not dispute she was entitled to, but which the respondent withheld pending the outcome of the criminal case, citing losses its customers suffered in the fraudulent transaction and clause A5(c) of the Collective Bargaining Agreement permitting half salary during suspension pending a criminal case. The claimant argued there was no basis for withholding the money since no counterclaim had been filed for the amount allegedly lost. The court held that retirement severed the employment relationship and that the criminal prosecution was independent of the claimant's terminal benefits. Fines on conviction are payable to the state, compensation orders are rare and difficult to enforce, and the proper course is a concurrent civil claim, which the respondent never filed. However, the CBA provision justified withholding salary while the claimant remained an employee, but only to the extent of the disputed sum of Kshs.600,000/=, which was far less than the roughly Kshs.2.7 million in half salary withheld over twenty-one months and less than her terminal benefits. The court ordered the respondent to compute and pay all retirement benefits including withheld half salary, less Kshs.600,000/= to be released upon acquittal, and awarded the claimant costs of the suit. Judgment delivered at Nairobi on 17th June 2016.

Key legal issues

Whether terminal benefits can be withheld pending the outcome of a criminal case against a retired employee

Holding

Terminal benefits must be paid; the criminal prosecution is independent of the employment relationship, and as the respondent filed no counterclaim or civil claim, withholding was unjustified save for the disputed Kshs.600,000/= which is deferred until acquittal

Reasoning

The court held that retirement severs the contract, so the claimant's terminal dues accrue from her past employment independently of the criminal case. Fraud prosecution may end in a fine payable to the state, and compensation orders are rare and hard to enforce; the proper course is a concurrent civil claim, which the respondent did not file. The CBA allowed withholding of salary while she was an employee, but only the disputed Kshs.600,000/= could be held back.

p. 2

Whether the CBA clause permitting half salary during suspension applied after retirement

Holding

The CBA provision justified withholding during employment but could not justify withholding the entire terminal benefits, which far exceeded the disputed amount

Reasoning

The court acknowledged the CBA clause A5(c) permitting half salary during suspension pending a criminal case and held the respondent entitled to rely on it while the claimant was an employee. However, the disputed sum of Kshs.600,000/= was far less than the withheld half salary of about Kshs.2,713,956 over twenty-one months and the terminal benefits, so withholding the entire amount had no justification.

p. 2

Legal principles established

Terminal benefits accrue from employment and are independent of any criminal prosecution of the former employee; absent a civil claim or counterclaim, an employer has no justification to withhold them
A civil claim for the amount allegedly lost may be filed concurrently with criminal prosecution, and failure to do so removes any justification for withholding dues
A CBA provision permitting withholding of salary pending a criminal case binds the employee while employed, but withholding is limited to the amount in dispute

Court orders

1.The respondent shall forthwith compute and pay to the claimant her retirement benefits including half salary withheld up to retirement
2.The payment shall be less Kshs.600,000/= the subject of the on going criminal case
3.The sum of Kshs.600,000/= shall be released to the claimant upon her acquittal of the charges she is facing
4.The claimant to have costs of the suit

Jurisdiction invoked: Employment and Labour Relations Court original jurisdiction (statutory basis not expressly cited in judgment)

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Susan Nzisa Musella v Bank of Baroda (Kenya) Limited [2016] KEELRC 1072 (KLR)", Case Analysis (2016). Cause No 501 of 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1072/eng@2016-06-17

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