Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCPartially AllowedAppeal No E014 of 2021· [2023] KEELRC 233 (KLR)

Moseti v University of Nairobi (Appeal E014 of 2021) [2023] KEELRC 233 (KLR)

Employment and Labour Relations Court
1 February 2023
JGJacob Gakeri
3,160 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~13 min to read original · ~4 min brief

The bottom line

#

A Kenyan court ruled that gratuity under a collective agreement runs from the CBA's effective date, not its later implementation date, but cannot be backdated to first employment.

What this practically means

#

Executive summary

#
This was a first appeal to the Employment and Labour Relations Court against a decision of Hon Lilian Lewa, Principal Magistrate, delivered on January 28, 2021, dismissing a claimant's claim for declaration that refusal to pay her correct gratuity was unlawful, terminal benefits of Kshs 2,128,596.72, costs and interest. The claimant, employed from June 1, 1989 until retirement on June 30, 2018, asserted entitlement to gratuity at 31% of basic pay for all 29 years of service, whereas the employer computed gratuity at 31% only from July 1, 2015 (the CBA implementation date). The CBA between the employer and KUDHEIHA, signed February 24, 2016, was effective from July 1, 2013 to June 30, 2017, with implementation from July 1, 2015. Gakeri J framed a single issue: the date from which gratuity at 31% of basic salary should be computed. Applying section 59 of the Labour Relations Act and authorities including Teachers Service Commission v KNUT and Mukiria Farmers Co-operative Society Ltd v Jacob Rukaria, the court held that retrospectivity in contract requires the parties' consent, that a CBA binds only for its agreed period, and that the CBA's sunrise date was July 1, 2013, not July 1, 2015. The respondent's computation was therefore erroneous, but backdating gratuity to 1989 had no contractual justification. Bamburi Cement Ltd v William Kilonzi, cited by the appellant, was distinguished. The appeal was allowed in part: the respondent was ordered to pay gratuity at 31% for July 1, 2013 to June 30, 2015 with interest at court rates, and given partial success, each party was to bear its own costs.

Key legal issues

#
01

Date from which gratuity at 31% of basic salary should be computed

Holding

The CBA's sunrise date was July 1, 2013 and sunset June 30, 2017; the respondent's computation from July 1, 2015 (implementation date) was erroneous and gratuity should run from July 1, 2013.

Reasoning

Clause 43 of the CBA stated it was effective from July 1, 2013 to June 30, 2017, with implementation from July 1, 2015. The court distinguished the effective date from the implementation date, holding the sunrise date was July 1, 2013. Since the respondent paid 31% gratuity from July 2015 to June 2018, it still owed gratuity for July 1, 2013 to June 30, 2015. Backdating to 1989 lacked contractual justification.

p. 6
02

Whether gratuity could be backdated to the date of employment (1989)

Holding

No - retrospectivity in contract requires the parties' consent, and no such agreement existed.

Reasoning

Relying on Teachers Service Commission v KNUT and section 59(5) of the Labour Relations Act, the court held there is a general presumption against retroactivity in contracts unless by consent. The CBA's express effective and implementation dates did not extend the 31% gratuity to pre-CBA years of service, and extending it would burden the respondent without agreement.

p. 4
03

Effect of expiry of a CBA before a successor is negotiated

Holding

A CBA binds only for the period agreed; after expiry without a continuation clause, statutory and constitutional provisions govern the employment relationship.

Reasoning

Following Mukiria Farmers Co-operative Society Ltd v Jacob Rukaria, the court held that a collective agreement binds the employer, union and unionisable employees only 'for the period of the agreement'. Clause 43 made no provision for continuation after the June 30, 2017 sunset date, and no other CBA was on record.

p. 5

Legal principles established

#
  • Retrospectivity in contractual engagements is a matter of agreement between the parties; backdating of CBAs is not uncommon but must be consented to.
  • A collective agreement binds the parties only for the period of the agreement; after expiry without a successor CBA, the Constitution and employment laws govern the relationship.
  • The court's role in contract construction is to give effect to the parties' intentions, not to rewrite the agreement.

Court orders

#
  1. 1.Appeal allowed to the extent that computation of gratuity at 31% of basic salary commences on July 1, 2013 as opposed to July 1, 2015
  2. 2.Respondent to pay the appellant gratuity from July 1, 2013 to June 30, 2014 and July 1, 2014 to June 30, 2015 with interest at court rates from the date of judgment till payment in full
  3. 3.Each party to bear own costs

Authorities

#

Legislation

  • Employment Actsection 26(2)
  • Labour Relations Actsection 59 (subsections 2, 3 and 5)
  • Constitution of KenyaArticle 41
  • Constitution of KenyaArticle 159(2)(d)
  • Constitution of KenyaArticle 48
  • Civil Procedure RulesOrder 21 Rule 1
  • Civil Procedure ActSection 1B

Cases cited (15)

  • Selle & another v Associated Motor Boat Co Ltd
    (1968) EA 123
  • Abdul Hammed Saif v Ali Mohamed Sholan
    (1955) EACA 270
  • Peters v Sunday Post Ltd
    (1958) EA 424
  • Benta Achieng Odinyo v University of Nairobi
  • Bamburi Cement Ltd v William Kilonzi
    (2016) eKLR
  • H. Young & Co (EA) Ltd v Javan Were Mbango
    (2016) eKLR
  • Pathfinders International Kenya Ltd v Stephen Ndegwa Mwangi
    (2019) eKLR
  • Paul Billy Nyagilo v East African Portland & Cement Co
    (2018) eKLR
  • Municipality of Mombasa v Nyali Ltd
    (1963) EA 371
  • Samuel Kamau Macharia & another v Kenya Commercial Bank Ltd and 2 others
    (2012) eKLR
  • Kenya Chemicals and Allied Workers Union v Milly Glass Works Ltd
    (2009) eKLR
  • Teachers Service Commission v Kenya National Union of Teachers (KNUT) and 3 others
    (2015) eKLR
  • Kenya Engineering Workers Union v Kenya Marine Contractors (EPZ) Ltd
    Industrial Court cause No 152 of 2012
  • Kenya Chemicals & Allied Workers Union v KEL Chemicals Ltd
    (2017) eKLR
  • Mukiria Farmers Co-operative Society Ltd v Jacob Rukaria & 5 others
    (2017) eKLR
On appeal from
Principal Magistrate's Court
Not stated
Jurisdiction invoked
First appeal from the decision of a Principal Magistrate in an employment claim

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Moseti v University of Nairobi (Appeal E014 of 2021) [2023] KEELRC 233 (KLR)", Case Analysis (2023). Appeal No E014 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/233/eng@2023-02-01

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