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ELRCPartially AllowedNot stated in the judgment as provided· [2019] KEELRC 541 (KLR)

Joseph Jaoko Olwal v Agroline Hauliers Limited [2019] KEELRC 541 (KLR)

Employment and Labour Relations Court
24 October 2019
877 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 awarded a retrenched driver unpaid house allowance and gratuity because his employer kept no pension scheme and never paid housing allowance.

What this practically means

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Executive summary

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The claimant, a driver employed by the respondent on 17th March 2011, was retrenched in March 2017 in a redundancy exercise affecting 50 employees, and was paid service pay, leave pay and two months' salary in lieu of notice. He sued for an additional one month's notice pay, house allowance at 15% of basic salary for six years, and pension dues for six years, all premised on the CBA then in force. The lawfulness of the redundancy was not challenged. The respondent denied the extra notice pay (having paid two months' notice pay under clause 9(b) of the CBA), denied the house allowance claim (asserting it was paid monthly), and denied deducting pension since it had no registered pension fund. The court perused the CBA and held that the claimant had received his full entitlement of two months' notice under clause 9(b), dismissing the claim for an extra month as misconceived. On house allowance, pay slips produced by both parties showed no housing payment, and the respondent failed to rebut the claim; the court awarded 15% of basic salary for six years, Kshs. 140,162.4. On pension, finding no NSSF deductions and no pension fund, the court applied Section 35(5) of the Employment Act and awarded gratuity at 15% of basic salary for six years, Kshs. 140,162.4. Total award Kshs. 280,324.8, with interest at court rates from filing until payment in full, and costs of the suit to the claimant. Judgment delivered 24th October 2019 by Mathews N. Nduma, Judge.

Key legal issues

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01

Entitlement to extra one month's notice pay

Holding

Claim dismissed; claimant was paid two months' salary in lieu of notice per clause 9(b) of the CBA

Reasoning

Clause 9(b) of the CBA entitled employees with a minimum of six consecutive years of service to two months' notice or payment of two months' salary in lieu. The respondent paid the claimant two months' notice pay at redundancy. Having received the full contractual entitlement, the claim for a further month was misconceived.

p. 2
02

House allowance at 15% of basic salary

Holding

Claim proved and awarded at Kshs. 140,162.4

Reasoning

Clause 20 of the CBA entitled unhoused employees to a housing allowance at 15% of basic pay. Pay slips produced by both parties showed no house allowance was paid. The claimant testified he was not housed for six years. The respondent failed to rebut the claim, so the claimant proved his entitlement on a balance of probabilities.

p. 2
03

Pension dues/gratuity

Holding

Gratuity awarded under Section 35(5) of the Employment Act at 15% of basic salary for six years, Kshs. 140,162.4

Reasoning

The pay slips showed no NSSF deductions, and the respondent produced no evidence that it operated any pension fund. Under Section 35(5) of the Employment Act, an employer providing no pension must pay gratuity on termination. The court therefore awarded gratuity at 15% of basic salary for each completed year of service.

p. 2

Legal principles established

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  • Under Section 35(5) of the Employment Act, an employer who does not provide any form of pension to an employee must pay gratuity upon termination of employment

Court orders

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  1. 1.Housing allowance calculated at 15% of the basic salary for six years in the sum of Kshs 140,162.4
  2. 2.Gratuity calculated at 15% of the basic salary for six years in the sum of Kshs. 140,162.4
  3. 3.Total award Kshs. 280,324.8
  4. 4.Interest at court rates from date of filing suit till payment in full
  5. 5.Costs of the suit

Authorities

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Legislation

  • Employment ActSection 35(5)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over employment dispute; reliefs premised on the CBA and the Employment Act (Section 35(5))

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, "Joseph Jaoko Olwal v Agroline Hauliers Limited [2019] KEELRC 541 (KLR)", Case Analysis (2019). Not stated in the judgment as provided. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/541/eng@2019-10-24

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