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ELRCAllowedELRC Cause (Mombasa), formerly CMCC No 1540 of 2012 (transferred from CMCC No 4790 of 2010, Nairobi)· [2020] KEELRC 97 (KLR)

Patrick Mutua Mbithi v Kenya Maritime Authority [2020] KEELRC 97 (KLR)

Employment and Labour Relations Court
10 December 2020
1,330 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~5 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled an employer cannot keep withholding your salary once the legal reason for doing so has been cancelled by a court.

What this practically means

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Executive summary

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The Claimant, formerly employed by the Respondent, Kenya Maritime Authority, as Finance and Administration Manager from 12th September 2006 until June 2007, sued for outstanding salary arrears of Kshs. 317,064. The suit, originally CMCC No 4790 of 2010 at Nairobi, was transferred to Mombasa as CMCC No 1540 of 2012 and later to the Employment and Labour Relations Court at Mombasa by order of Rika J in 2017. The Respondent's defence was that the Claimant failed to submit end-of-year PAYE returns for 2006 due by 28th February 2007, a task within his docket, causing KRA fines and penalties of Kshs. 1,629,166; it dismissed him on 15th June 2007 and claimed a lien over any sums due to him pending clearance. By a letter dated 31st October 2008, the Respondent admitted withholding the Kshs. 317,064 salary arrears as a lien against the alleged loss. That loss was the subject of Certificate of Surcharge Number 141 of 2010, which the High Court (W. Korir J) quashed on 23rd November 2011 in Judicial Review Miscellaneous Application No 288 of 2010, with no record of reversal. The court held that with the surcharge nullified, the basis for withholding the dues had evaporated and the continued withholding was unlawful. Judgment was entered for the Claimant for Kshs. 317,064 with interest at court rates from 23rd November 2011, and the Respondent was ordered to pay the costs. The Respondent filed no submissions.

Key legal issues

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01

Lawfulness of the Respondent's lien over the Claimant's salary arrears after quashing of the surcharge certificate

Holding

The Respondent admitted withholding the dues by its letter of 31st October 2008; once the High Court quashed the Certificate of Surcharge, the withholding became unlawful and judgment was entered for the Claimant.

Reasoning

The Respondent's letter dated 31st October 2008 admitted withholding Kshs. 317,064 as a lien against an alleged loss of Kshs. 1,629,166 arising from the Claimant's alleged dereliction of duty in failing to submit PAYE returns. The loss was quantified in Certificate of Surcharge Number 141 of 2010, which the High Court (W. Korir J) quashed on 23rd November 2011 and that decision was never reversed. With the surcharge nullified, the foundation of the lien vanished, and the continued withholding of the dues was unlawful.

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02

Interest on the withheld dues

Holding

Because the Respondent continued withholding the dues after the surcharge was nullified, interest was awarded from the date of the High Court judgment rather than from the date of this judgment.

Reasoning

The court found that the Respondent's obligation to release the dues crystallised on 23rd November 2011 when the Certificate of Surcharge was quashed. The Respondent's failure to release the sums from that date was a continuing unlawful withholding, justifying interest at court rates running from that date rather than only from the date of this judgment. The Respondent filed no submissions to contest the claim.

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Legal principles established

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  • Where the legal basis for an employer's withholding of an employee's dues is nullified by a competent court, the employer has no lawful basis to continue withholding the dues.

Court orders

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  1. 1.Judgment entered for the Claimant in the sum of Kshs. 317,064.00 in accrued salary arrears
  2. 2.Interest on the withheld sum to accrue at court rates from 23rd November 2011, the date of the High Court judgment quashing the Certificate of Surcharge
  3. 3.The Respondent to meet the costs of the case

Authorities

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Legislation

  • Income Tax Act (Cap 470)requirement to submit annual PAYE returns on or before 28th February
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction following transfer of CMCC No 1540 of 2012 by order of Rika J dated 23rd February 2017

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, "Patrick Mutua Mbithi v Kenya Maritime Authority [2020] KEELRC 97 (KLR)", Case Analysis (2020). ELRC Cause (Mombasa), formerly CMCC No 1540 of 2012 (transferred from CMCC No 4790 of 2010, Nairobi). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/97/eng@2020-12-10

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