Nelson Keshei v Narok County Government & another [2019] KEELRC 612 (KLR)
The bottom line
#Kenya's Employment Court ruled that an employee who resigns from a fixed-term contract still earns gratuity for every full year actually served.
What this practically means
#Executive summary
#Key legal issues
#Whether an employee who resigns from a fixed-term contract before its expiry forfeits contractual gratuity for the years served
The claimant was entitled to gratuity for the full years actually served at 31% of annual basic pay; resignation on notice, accepted by the employer, did not forfeit the accrued entitlement.
The appointment letter expressly provided for service gratuity at 31% of annual basic pay for every year served. The court distinguished gratuity from pension under the HR Policy 2016, and held that the Employment Act permits termination on notice (sections 35 and 36). Since the resignation was voluntary, lawful and accepted, and no other record took away the benefit, gratuity accrued for the 3 full years served, computed at 60% of basic salary.
Whether the Human Resource Policy 2016 forfeiture clause barred the gratuity claim
The policy clause relied on governs pensions, not contractual gratuity, and the respondents did not produce the policy applicable at the time of appointment.
The court read the 2016 policy in whole and in context, finding clause D.32 dealt with benefits in the nature of pensions, which are foundationally different from gratuity, a gratis payment founded on contract or employer practice. The respondents also did not submit the prior policy applicable when the claimant was appointed in May 2013, so the forfeiture provision could not defeat the contractual gratuity claim.
Legal principles established
#- Gratuity is not mandatory under the Employment Act; it is payable only as a term of contract, private treaty, collective agreement or employer practice.
- A party to a fixed-term contract may terminate it on notice under sections 35 and 36 of the Employment Act, and where notice is issued and accepted the contract ends on those terms; requiring completion of the full term to earn gratuity would defeat the statute.
- Where gratuity is a contractual entitlement at 31% of annual basic pay for every year served, it accrues for the years actually served, not only at the end of the contract term.
Court orders
#- 1.The claimant is awarded Ksh.1,883,250.00 in gratuity
- 2.A Certificate of Service shall issue under section 51 of the Employment Act, 2007
- 3.The dues paid shall be subject to the provisions of section 49(2) of the Employment Act, 2007
- 4.Each party to pay own costs
- Jurisdiction invoked
- Employment and Labour Relations Court Act, 2011 (employment and labour relations jurisdiction)
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Nelson Keshei v Narok County Government & another [2019] KEELRC 612 (KLR)", Case Analysis (2019). Cause No. 265 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2019/612/eng@2019-09-27
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.