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ELRCPartially AllowedELRC Cause (Nairobi), Memorandum of Claim dated 21st September 2015, amended 17th October 2019· [2021] KEELRC 561 (KLR)

Albert Bernard Simba v K-Rep Bank Limited [2021] KEELRC 561 (KLR)

Employment and Labour Relations Court
2 November 2021
JKJ. W. Keli
4,312 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~17 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that once an employer pays gratuity, it must cover every completed year of service, not just some.

What this practically means

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Executive summary

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The Claimant, formerly employed by the Respondent bank as an HR consultant from 1st November 2010 to 30th April 2015 under successively renewed fixed-term contracts, claimed unpaid gratuity for completed years of service and a 2012 bonus/13th month salary of Kshs. 188,000/- alleging discrimination because other staff were paid. He sought Kshs. 795,000/- in gratuity, being three years at the rate the bank paid for one year (Kshs. 265,000/-), plus interest and costs. The Respondent maintained gratuity was discretionary under clause 7.2.5 of its Human Resources Policies and Procedures Manual, that the payment for one year was an exceptional send-off, and that bonus was payable only to permanent staff, relying on the Claimant's letter of 17th May 2012 confirming he was not eligible for the profit-sharing scheme. The court framed two issues: entitlement to gratuity for unpaid completed years and entitlement to the bonus. On gratuity, the court found the HR Manual was incorporated into the employment contract and thus enforceable; once the Respondent elected to pay, it could not cherry-pick the years of service, and the Claimant was underpaid for three years. On bonus, the Claimant adduced no evidence that other staff were paid or that he was entitled to it, and the claim was dismissed. Judgment was entered for the Claimant on the gratuity claim: a declaration that the withholding was unfair and unlawful, payment of Kshs. 795,000/- subject to statutory deductions, plus costs and interest from filing until payment in full.

Key legal issues

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01

Entitlement to gratuity for completed years of service under clause 7.2.5 of the Human Resources Manual

Holding

The Claimant, who served 4 complete years, was entitled to 10% of annual salary per year under clause 7.2.5; paying only 1 year was unfair and unlawful, and he was underpaid by 3 years

Reasoning

The court held the HR Manual, incorporated into the employment contract, was binding. The words 'may be eligible' did not grant the employer discretion to pay for only part of the service once it elected to pay. The number of years of service is determined by the law, not the employer's election. The court adopted the Coastal Bottlers decision where gratuity was expressly provided for under terms of service. The Claimant proved on a balance of probability gratuity of Kshs. 265,000 x 3 = Kshs. 795,000.

p. 4
02

Entitlement to bonus/13th month salary for 2012 and alleged discrimination

Holding

The claim failed for want of proof; the Claimant did not prove the bonus was paid to other staff or that he was entitled to it

Reasoning

The Claimant admitted on cross-examination that he had no evidence of payment of bonus/13th salary to other staff in 2012, and no witness on that fact. The Respondent's witness was unaware the 13th salary was paid in 2012. Applying the Pathfinder International authority, a party alleging differential treatment must lead evidence supporting it. The principle that he who alleges must prove applied, and the claim was dismissed.

p. 5

Legal principles established

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  • A Human Resources Manual expressly incorporated into an individual employment contract becomes an enforceable contract of employment binding on the parties
  • Whether the words 'shall' or 'may' convey a mandatory obligation or are simply permissive depends on context and the intention of the drafters
  • Once an employer elects to pay gratuity under its policy, it cannot cherry-pick the number of years of service for which to pay

Court orders

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  1. 1.A declaration that the withholding and/or refusal to pay the Claimant's gratuity for the entire complete years of service was unfair and unlawful
  2. 2.Payment of the Claimant's gratuity of Kshs. 795,000/- for the outstanding 3 complete years of service, subject to statutory deductions
  3. 3.Costs to the Claimant plus interest on the award at court rate from the date of filing suit until payment in full

Authorities

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Legislation

  • Employment ActPart 3
  • ConstitutionArticle 41

Cases cited (6)

  • Nicolas Wachira Koiga v NCR Kenya Limited
    (2013) eKLR
  • Peter Muturi Njuguna v Kenya Wildlife Service
    [2017] eKLR
  • Coastal Bottlers Ltd v George Karanja
    Cause No 373 of 2013
  • Republic v Kenya Airports Authority & another Exparte Moses Echwa
    [2015] eKLR
  • George Onyango Okuti v G4S Security Services Kenya Ltd
    (2013) eKLR
  • Pathfinder International Kenya Limited v Stephen Ndegwa Mwangi
    [2019] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 (employment contract dispute)

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, "Albert Bernard Simba v K-Rep Bank Limited [2021] KEELRC 561 (KLR)", Case Analysis (2021). ELRC Cause (Nairobi), Memorandum of Claim dated 21st September 2015, amended 17th October 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/561/eng@2021-11-02

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