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ELRCPartially AllowedCause No. 1387 of 2014· [2016] KEELRC 1562 (KLR)

Samuel Kamau Irungu v Ritz Enterprises Limited [2016] KEELRC 1562 (KLR)

Employment and Labour Relations Court of Kenya
25 February 2016
2,738 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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A Kenyan court ruled that an employer cannot skip steps in a medical retirement process and then deny the worker notice pay, and must always issue a certificate of service.

What this practically means

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Executive summary

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The claimant, employed by the respondent from 12th January 2009 as a general worker and later store worker on a final salary of Kshs.12,581.00, exited employment on 30th April 2014 after his doctor at Mbagathi Hospital recommended that he be retired on medical grounds with immediate effect and rest for a year. The respondent computed and paid terminal dues of Kshs.37,037.00 without referring the medical report to its own doctor for confirmation as contemplated by clause 25(b) of the applicable CBA. The claimant sued for notice pay of 2 ½ months, prorate leave for four months, co-operative shares, service gratuity at 28 days per completed year, and a certificate of service. The respondent disputed the unsigned letter of computation, contended the claimant left voluntarily, and asserted all dues were paid. The court found no letter of termination issued and that the claimant was retired on medical grounds. It held that the respondent's failure to exercise its right under clause 25(b) to seek confirmation from its doctor could not be visited on the claimant to deny notice pay; with over five years' service, 2 ½ months' notice pay was due. Retirement benefits at 28 days per year were due, less what was already paid, to avoid double payment. Leave and co-operative shares having been paid, those claims were declined. A certificate of service was ordered under section 51 of the Employment Act. Judgment was entered for the claimant with 50% costs.

Key legal issues

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01

Entitlement to 2 ½ months' notice pay on retirement on medical grounds

Holding

The Claimant, having served over 5 years, was entitled to 2 ½ months' notice pay under clause 7 of the applicable CBA, awarded at Kshs.31,452.50

Reasoning

The court found the CBA in force (effective 1 July 2010 for 2 years and continuing) applied. Clause 25(b) obliged the employer, on receiving a medical report recommending retirement, to refer the employee to the employer's doctor for confirmation. The Respondent instead computed and paid dues immediately, forgoing its right. The court held the Claimant could not be denied notice pay for the employer's failure, and with service exceeding 5 years, the 2 ½ months' notice band under clause 7 applied, computed on the last salary of Kshs.12,581.00.

p. 5
02

Retirement benefits versus service pay

Holding

Retirement benefit at 28 days' pay per completed year (Kshs.58,711.30) was due, less the Kshs.28,160 already paid, leaving Kshs.30,551.30

Reasoning

Clause 25(c) of the CBA provided retirement benefits at 28 days' pay for each completed year of service. The Respondent had paid service pay at 22 days per year, a rate not contemplated by the retirement package. The court awarded the difference rather than the full benefit to avoid double payment for the same service benefit.

p. 5
03

Authenticity of the unsigned letter of termination/computation

Holding

Although the letter was unsigned and contested as inauthentic, its contents were confirmed by both parties' evidence

Reasoning

The Respondent argued, citing Agricultural Finance Co-operative & Another v Julia Muthanje Joseph, that an unsigned document should not be relied upon. The court found that the letter of 30th April 2014 was a computation of terminal dues, not a termination letter, and that its contents were confirmed by the Respondent's own witness, Paul Ashioya. The court proceeded on the parties' clear oral evidence rather than the contested document.

p. 3
04

Certificate of Service

Holding

A Certificate of Service is due under section 51 of the Employment Act and must be issued

Reasoning

Although no termination letter or notice was issued to the Claimant, the court held that a certificate of service is a statutory right under section 51 of the Employment Act and should ordinarily accompany the termination letter or notice; its absence did not extinguish the entitlement.

p. 5

Legal principles established

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  • Where a CBA entitles an employer to refer an employee's medical report to the employer's doctor for confirmation before retiring the employee on medical grounds, failure to exercise that right cannot be used to deny the employee notice pay due under the CBA
  • Payment of full retirement benefits at the higher rate precludes a separate award of service pay for the same years, to avoid double payment
  • An employee is entitled to a Certificate of Service under section 51 of the Employment Act notwithstanding absence of a termination letter

Court orders

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  1. 1.Notice pay awarded at Kshs.31,452.50
  2. 2.Retirement benefit awarded at Kshs.30,551.30
  3. 3.The Respondent to issue the Claimant with a Certificate of Service
  4. 4.Costs granted at 50%

Authorities

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Legislation

  • Employment Actsection 51
  • Employment and Labour Relations Court (Procedure) RulesRule 4(e)

Cases cited (1)

  • Agricultural Finance Co-operative & Another v Julia Muthanje Joseph
    [2013] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over a labour dispute (Cause No. 1387 of 2014) under the court's statutory mandate; Employment Act referenced for certificate of service

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, "Samuel Kamau Irungu v Ritz Enterprises Limited [2016] KEELRC 1562 (KLR)", Case Analysis (2016). Cause No. 1387 of 2014. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1562/eng@2016-02-25

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