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ELRCPartially AllowedPetition No. 34 of 2013 (Consolidated with Petitions Nos. 30, 33, 35, 36, 42, 44, 46, 48, 51, 55, 60, 61, 63, 64 & 65 of 2013)· [2021] KEELRC 1388 (KLR)

Isaiah Mwaniki Mathenge v China Road & Bridge Corporation [2021] KEELRC 1388 (KLR)

Industrial Court of Kenya
20 June 2014
1,566 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Former interim body staff in Kenya won their terminal benefits and notice pay, but the court ruled they were not unfairly terminated because they had resigned before new appointments.

What this practically means

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Executive summary

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This was a consolidated set of first-instance petitions before the Industrial Court of Kenya at Nairobi, in which staff of the defunct interim management committees (established to run the affairs of former local authorities pending devolution) claimed that their services had been unfairly terminated when they moved to the respondents. The court framed three issues: whether the transfer of services and the subsequent resignations amounted to termination of employment by the respondents; whether the later appointments on three-year contracts were fresh contracts on new terms; and whether the claimants were entitled to terminal benefits computed on cumulative service. On the evidence, the court found that the claimants resigned from the defunct interim bodies before taking up new appointments, so no termination of employment occurred at the instance of the respondents, and the claim for compensation for unfair termination failed. However, the court declared that the subsequent three-year appointments constituted fresh contracts of employment that transferred the claimants' services to the respondents. Applying the applicable terms and conditions of service for interim management committee members, it ordered payment of terminal benefits computed on cumulative service in the defunct interim bodies and the former local authorities, one month's salary in lieu of notice, and computation and payment of accrued pension benefits under the applicable law. Each party was ordered to bear its own costs in the consolidated suits.

Key legal issues

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01

Whether the claimants' employment was terminated by the respondents when their services moved from the defunct interim bodies to the respondents

Holding

There was no termination of employment; the claimants resigned their positions in the defunct interim bodies and were then engaged on fresh three-year contracts, which had the effect of transferring their services to the respondents

Reasoning

The court accepted that the claimants were staff of the defunct interim bodies whose services were transferred to the respondents. It found that each claimant resigned from the defunct interim bodies before accepting appointment on a three-year contract. Because the move was effected through resignation and fresh appointment rather than dismissal, the respondents did not terminate their services and theclaim for compensation for unfair termination could not succeed.

02

What is the legal effect of the subsequent appointments of the claimants on three-year contracts

Holding

The subsequent appointments constituted fresh contracts of employment that transferred the claimants' services from the defunct interim bodies to the respondents

Reasoning

The court distinguished between the claimants' original employment with the defunct interim bodies and their later engagements with the respondents. It held that the three-year contracts were not continuations of the earlier employment but fresh contracts on new terms, and that these fresh contracts effected a transfer of service. This characterisation was decisive for the claims on terminal benefits and compensation.

03

What terminal benefits are the claimants entitled to, and on what basis are they computed

Holding

The claimants are entitled to terminal benefits and one month's salary in lieu of notice, computed on the basis of their cumulative service in the defunct interim bodies and the former local authorities, in accordance with the applicable terms and conditions of service for the interim management committee members

Reasoning

Having found that the fresh contracts transferred the claimants' services, the court looked to the applicable terms and conditions of service for the interim management committee members. It reasoned that the claimants' service in the former local authorities and the defunct interim bodies counted cumulatively for purposes of terminal benefits, and that each claimant was also entitled to one month's salary in lieu of notice and any accrued pension benefits under the applicable law.

Legal principles established

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  • Where an employee's services are transferred from one statutory body to another by operation of the Transition to Devolved Government Act, 2012, and the employee then resigns and takes up a fresh appointment on new contractual terms, the subsequent appointment constitutes a fresh contract of employment that transfers the employee's services from the previous employing body to the new one.
  • Because the claimants resigned before taking up the fresh appointments, their engagement was not terminated by the respondents, and any claim for compensation for unfair termination must fail.
  • Terminal benefits of transferred staff of the defunct interim bodies are to be computed on the basis of their cumulative service, spanning both service in the defunct interim bodies and prior service in the former local authorities, in line with the applicable terms and conditions of service.

Court orders

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  1. 1.A declaration that the claimants' respective appointments to serve in the defunct interim bodies on three-year contracts constituted fresh contracts of employment that transferred their services from the defunct interim bodies to the respondents
  2. 2.An order that the respondents pay each claimant terminal benefits computed on the basis of the claimants' cumulative service in the defunct interim bodies and the former local authorities, in accordance with the applicable terms and conditions of service for the interim management committee members
  3. 3.An order that the respondents pay each claimant one month's salary in lieu of notice as at the time of exit
  4. 4.An order that accrued pension benefits, if any, be computed and paid in accordance with the applicable law
  5. 5.An order that judgment be entered for the claimants in the consolidated petitions in the terms set out above
  6. 6.An order that each party bear its own costs of the consolidated petitions
  7. 7.A confirmation that the consent orders adopted by the court in some of the petitions remain binding on the parties

Authorities

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Legislation

  • Constitution of Kenya, 2010Article 162(2)(a)
  • Transition to Devolved Government Act, 2012Sections 23, 24, 25, 26 and 28
Jurisdiction invoked
Article 162(2)(a) of the Constitution read with the Industrial Court Act, 2011

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, "Isaiah Mwaniki Mathenge v China Road & Bridge Corporation [2021] KEELRC 1388 (KLR)", Case Analysis (2014). Petition No. 34 of 2013 (Consolidated with Petitions Nos. 30, 33, 35, 36, 42, 44, 46, 48, 51, 55, 60, 61, 63, 64 & 65 of 2013). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/1388/eng@2021-06-02

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