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ELRCPartially AllowedNot stated in the judgment· [2018] KEELRC 857 (KLR)

Agnes Wachu Wamae & 104 others v Barclays Bank of Kenya [2018] KEELRC 857 (KLR)

Employment and Labour Relations Court
12 October 2018
2,461 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~10 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled Barclays could not cap redundancy severance at 16 years, awarding 105 former employees full severance for every year worked.

What this practically means

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Executive summary

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This first-instance claim was filed by Agnes Wachu Wamae and 104 others against Barclays Bank of Kenya Limited, challenging exit packages paid following a 2011 bank-wide redundancy. The Claimants accepted lumpsum payments computed at one and a half months' pay per completed year of service, capped at a maximum of 24 months (equivalent to 16 years of service), and later alleged fraudulent misrepresentation and concealment, contending that the capping deprived employees with over 16 years of service of severance pay due under section 40(1)(g) of the Employment Act, which prescribes not less than 15 days' pay per completed year. They claimed special damages of KShs 301,855,477 and full leave entitlement for 2011. The Respondent maintained the packages exceeded statutory entitlements, that discharge certificates were signed, and prayed for dismissal. Following a 2014 ruling setting aside prior proceedings and a consent, the suit was heard denovo. The court framed three issues: entitlement to severance for every completed year of service, full 2011 leave, and interest. It held section 40 is mandatory; an employer may pay above the statutory minimum but may not arbitrarily cap years of service, which discriminated against long-serving employees contrary to section 5(3) of the Employment Act and Article 41(1) of the Constitution. Judgment was entered for the 105 Claimants at 1.5 months' pay per completed year of service as set out in the statement of claim, payable within 30 days with interest at court rates from 31st January 2011. The 2011 leave claim was dismissed, and the Respondent was ordered to pay costs.

Key legal issues

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01

Whether an employer may cap the number of years of service for severance pay under an enhanced exit package

Holding

The cap of 16 years was unlawful and discriminatory; the Claimants are entitled to 1.5 months' pay for each completed year of service as claimed

Reasoning

The court held that while section 40 of the Employment Act permits payment above the statutory minimum of 15 days per completed year, an employer cannot arbitrarily cap the years of service. The cap unjustly benefited employees with less than 16 years of service, deprived those with more than 16 years of their lawful entitlement, and amounted to discrimination under section 5(3) of the Employment Act and Article 41(1) of the Constitution. The discrimination definition in ILO Convention No. 111 was applied.

p. 3
02

Whether the Claimants were entitled to payment in lieu of full annual leave for 2011

Holding

Claim dismissed; Claimants had been paid prorata leave up to the exit date

Reasoning

The exit date was 31st January 2011. The Claimants had already been paid prorata leave up to that date and could not claim full annual leave for the year 2011. The claim was found to have no merit and was dismissed.

p. 4
03

From what date interest should be calculated on any award

Holding

Interest at court rates from 31st January 2011, the date of exit

Reasoning

Having found the Claimants entitled to severance pay for each completed year of service, the court awarded interest at court rates running from 31st January 2011, the date all Claimants exited the Respondent's service, until payment in full.

p. 4

Legal principles established

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  • Section 40 of the Employment Act is mandatory but an employer may pay severance at a rate above the statutory minimum of 15 days pay per completed year of service
  • An employer may not arbitrarily cap the number of years of service to which severance pay applies, as doing so discriminates against long-serving employees contrary to section 5(3) of the Employment Act and Article 41(1) of the Constitution

Court orders

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  1. 1.Payment at one and a half (1.5) months salary for each completed year of service by each one of the Claimants, as set out in the statement of claim and annextures thereto within 30 days of this judgment
  2. 2.The Claims for payment in lieu of leave for the year 2011 are dismissed
  3. 3.The awards are payable with interest at court rates from 31st January, 2011, the date of exit, to payment in full
  4. 4.The Respondent to pay costs of the suit
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (first-instance claim)

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, "Agnes Wachu Wamae & 104 others v Barclays Bank of Kenya [2018] KEELRC 857 (KLR)", Case Analysis (2018). Not stated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/857/eng@2018-10-26

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