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ELRCPartially AllowedCause No 647 of 2011· [2022] KEELRC 1190 (KLR)

Kenya Hotel & Allied Workers’ Union v Karen Blixen Camp Limited (Cause 647 of 2011) [2022] KEELRC 1190 (KLR)

Employment and Labour Relations Court
6 July 2022
JGJacob Gakeri
3,705 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
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The bottom line

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A Kenyan employer cannot deduct disputed sums from a court award on its own; it must use legal channels or risk interest piling up.

What this practically means

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Executive summary

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The respondent employer, against whom a judgment of Kshs.248,899/- plus costs of Kshs.40,000/- had been entered in favour of the claimant union on behalf of grievants, moved the court by Notice of Motion dated March 30, 2022 seeking an injunction restraining execution, and clarification of two issues: whether statutory deductions should be remitted by cheques drawn in favour of KRA, NHIF and NSSF, and whether sums of Kshs.7,838/- and Kshs.16,451/- (total Kshs.24,289/-) paid to the grievants at termination could be deducted from the decretal sum. The claimant had rejected the cheques and proclaimed the respondent's property through Mbusera Auctioneers. The claimant opposed, contending the court was functus officio, the decree was regular and unappealed, and the grievants were entitled to the full award. The court held it was not functus officio, as Rule 33(1)(c) permits applications for clarification of a judgment. On the merits it held that under section 49(2) of the Employment Act and the governing tax and social security statutes, the employer is obliged to deduct and remit statutory dues directly to the relevant bodies, though it erred in misdirecting the cheques to the claimant's counsel. However, the respondent had no mandate to deduct the Kshs.24,289/- already paid at termination, as the award was an exercise of judicial discretion and unilateral deduction amounted to adjudicating the dispute through the back door. Interest continued to run from judgment until payment in full. The application succeeded in part: the deduction was disallowed, statutory remittances upheld, interest confirmed, and each party was ordered to bear its own costs.

Key legal issues

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01

Functus officio / jurisdiction

Holding

The court has jurisdiction under Rule 33(1)(c) and section 80 of the Civil Procedure Act to clarify its own judgment; the doctrine of functus officio does not apply to an application for clarification.

Reasoning

Relying on Jersey Evening Post Ltd v Al Thani, the court held that functus officio only attaches once a judgment is perfected and does not prevent correction or clarification. Since the respondent sought clarification of two issues already canvassed at trial, Rule 33(1)(c) applied, and the court was not functus officio.

p. 6
02

Statutory deductions

Holding

The employer was entitled, indeed obliged, to make the statutory deductions and remit them directly to KRA, NHIF and NSSF; the decretal sum was not to be paid gross to the union.

Reasoning

Section 49(2) of the Employment Act makes payments subject to statutory deductions, and the employer alone bears the statutory obligation to deduct and remit PAYE under section 37(1) of the Income Tax Act, NHIF contributions under section 15(1A) of the NHIF Act and NSSF contributions under sections 19 and 20 of the NSSF Act. The union was not the employer. The error was only that the cheques were misdirected to the claimant's counsel.

p. 7
03

Deduction of terminal dues already paid (Kshs.24,289/-)

Holding

The respondent was not entitled to deduct the sum of Kshs.24,289/- from the decretal sum; the award was an exercise of judicial discretion which the court had made fully aware of payments made, and the respondent could not re-adjudicate the dispute by self-help.

Reasoning

The court had exercised its discretion under section 49 of the Employment Act with knowledge of amounts paid at termination. A party dissatisfied with an award must pursue a recognised legal mechanism; unilateral deduction amounted to adjudicating the dispute through the back door and unjust enrichment reversal by self-help.

p. 8
04

Interest on the decretal sum

Holding

Interest remained payable from the date of judgment until payment in full despite the respondent's prompt issuance of cheques, because the unauthorised deductions caused the claimant to reject them and payment was not perfected.

Reasoning

Although the respondent's efforts to pay by mid-December 2021 were creditable, the illegal deductions rendered the effort discreditable and the cheques were returned. The respondent thereafter took no steps to honour the judgment until warrants were obtained, during which interest accrued on the decretal sum.

p. 8

Legal principles established

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  • Statutory deductions on amounts awarded under section 49 of the Employment Act are to be made by the employer making the payments and remitted directly to the relevant statutory bodies, not routed through the claimant union.
  • A party against whom judgment has been entered cannot unilaterally vary the award by deducting sums it considers already paid; the decree may only be challenged through a recognised legal mechanism.
  • The functus officio doctrine does not bar a court from entertaining an application for clarification of its judgment under Rule 33(1)(c) of the ELRC (Procedure) Rules, 2016.
  • A judgment holder with an unappealed decree is entitled to execute without first consulting the judgment debtor or seeking clarification.

Court orders

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  1. 1.The respondent/applicant shall not deduct the sum of Kshs.24,289/- from the decretal sum
  2. 2.The respondent shall deduct and remit statutory dues to the relevant statutory bodies
  3. 3.The respondent shall pay interest on the decretal sum from date of judgment till payment in full
  4. 4.Each party to bear their own costs of the application

Authorities

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Legislation

  • Civil Procedure Act (Chapter 21, Laws of Kenya)Sections 1A, 1B, 3, 3A, 80
  • Employment and Labour Relations Court Act (No. 20 of 2011)Section 12
  • Employment and Labour Relations Court (Procedure) Rules, 2016Rules 33(1), 33(1)(c), 33(2)(3)
  • Constitution of Kenya, 2010Articles 159(2)(d), 48
  • Employment Act, 2007Sections 2, 49(1), 49(2)
  • Income Tax Act (Cap 470)Section 37(1)
  • National Health Insurance Fund Act (No. 9 of 1998)Sections 15(1A), 15(5)
  • National Social Security Fund Act (No. 45 of 2013)Sections 19, 20(1)
  • Civil Procedure RulesOrder 21 Rule 1

Cases cited (4)

  • Raila Odinga & another v IEBC and 2 others
    [2017] eKLR
  • Jersey Evening Post Ltd v Al Thani
    [2002] JLR 542
  • ICEA Lion General Insurance Co Ltd v Julius Nyaga Chomba
    (202) eKLR
  • Kenfreight (EA) Limited v Benson K. Nguti
    [2016] eKLR
Jurisdiction invoked
Sections 1A, 1B, 3 and 3A of the Civil Procedure Act; section 12 of the Employment and Labour Relations Court Act (No. 20 of 2011); Rules 33(1)(c) and 33(2)(3) of the Employment and Labour Relations Court (Procedure) Rules, 2016; Article 159(2)(d) of the Constitution of Kenya, 2010

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, "Kenya Hotel & Allied Workers’ Union v Karen Blixen Camp Limited (Cause 647 of 2011) [2022] KEELRC 1190 (KLR)", Case Analysis (2022). Cause No 647 of 2011. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/1190/eng@2022-07-06

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