Raphael Njoroge Mwaura & 12 others v Kenya Power & Lighting Company Limited [2020] KEELRC 210 (KLR)
The bottom line
#What this practically means
#Executive summary
#Key legal issues
#Computation basis of severance pay
Severance pay is payable at the deficit of 45 days' salary for each year worked, being the shortfall from the 60 days expected under the Human Resource Manual Part VI, given payment already made at 15 days per year
The judgment of 27th February 2020 found the applicants were paid 15 days' gross salary per year of service against the 60 days expected, leaving a deficit of 45 days. The Court directed computation of 45 days per year of service, less the 8 months' advanced basic pay received under the VER package, subject to tax.
Taxation of the award
The award is taxable notwithstanding the company's agreement to bear tax under the VER letters; the amounts payable are subject to tax
The company had agreed to bear all tax costs on the understanding that the exit was a voluntary early retirement. Having found the VER was in fact a disguised redundancy, the Court held the amount payable is taxable as per the law, though the parties disputed who bears the tax element.
Credit for VER payments and unpleaded liabilities
The 8 months' salary advance paid under the VER must be deducted; outstanding car loan liabilities may not be deducted as they were not pleaded
The Court found the applicants received a package including an 8 months' back salary advance based on VER, a position the Court found untenable, and directed that this be deducted. However, the respondent's claim for outstanding car loan liabilities of six applicants was a new matter never raised by counter-claim and could not be entertained at the computation stage.
Legal principles established
#- Where a VER is found to be a disguised redundancy, the severance award is taxable and the employer bears the tax as agreed in the VER letters
- Unpleaded set-off claims cannot be introduced at the computation stage
Court orders
#- 1.The Applicants to compute the amounts payable as illustrated by the Court (45 days' pay for each year worked, less 8 months' advanced basic pay, and less tax) and exchange the computation with the Respondents for reply or concurrence
- 2.The figures as agreed or disagreed upon to be submitted for the Court's further direction/adoption
- 3.Costs in the cause
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction to adopt computation of amounts due under its judgment of 27th February 2020 as a judgment of the Court
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Raphael Njoroge Mwaura & 12 others v Kenya Power & Lighting Company Limited [2020] KEELRC 210 (KLR)", Case Analysis (2020). Cause No 2575 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/210/eng@2020-11-11
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.