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ELRCPartially AllowedELRC.NAIROBI 607 OF 2019· [2023] KEELRC 1842 (KLR)

Mukuria v Chuna Co-opertive Savings and Credit Society Limited (Cause 607 of 2017) [2023] KEELRC 1842 (KLR)

Employment and Labour Relations Court
27 July 2023
BMB. O. M. Manani
2,183 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court awarded a retired Sacco employee Ksh. 801,900 in retirement benefits, ruling employers cannot unilaterally withhold CBA entitlements.

What this practically means

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Executive summary

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The Claimant, a former employee of the Respondent who rose from assistant accountant to acting credit officer over 26 years (December 1992 to December 2018), sued to recover a retirement benefit under clause 7D of a CBA dated April 7, 2016 between the Respondent and the Kenya Union of Commercial Food and Allied Workers. Clause 7D entitled a departing staff member to two months' salary for every year worked. The Respondent did not deny the CBA basis of the claim but argued that the Ministry of Co-operatives directed it not to pay the benefit to permanent and pensionable employees, as doing so would amount to illegal double payment of pension; it also objected to the computation using the exit salary of Ksh. 108,673.00. The court held that the CBA was infused into the Claimant's contract under section 59(3) of the Labour Relations Act and could not be varied unilaterally; the Respondent did not produce the Ministry circular nor cite any law outlawing payment to permanent and pensionable employees, and its decision amounted to irregular, discriminatory treatment. However, the CBA's effective date was January 1, 2015, and the benefit could not be backdated earlier. Using payslips, the court computed the award at Ksh. 101,565.00 for 2015-2017 and Ksh. 96,255.00 for 2018, awarding Ksh. 801,900.00, plus interest at court rates from the date of filing and costs. Judgment dated, signed and delivered online on July 27, 2023 by B. O. M. Manani, Judge.

Key legal issues

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01

Whether the Respondent could withhold the clause 7D benefit on the strength of a Ministry directive

Holding

No - the withholding was irregular, an unlawful unilateral variation, unproven by evidence, and discriminatory

Reasoning

The Ministry directive amounted to a variation of the Claimant's contract without consultation, contrary to section 10(5) of the Employment Act. The Respondent did not produce the circular it relied on, and cited no legal provision outlawing payment to permanent and pensionable employees. Other retirees were paid, evidencing discrimination.

p. 3
02

The period over which the benefit accrues

Holding

Only from January 1, 2015, the CBA's effective date, not the full 26 years

Reasoning

Clause 24 fixed the CBA's effective date as January 1, 2015, running three years or until joint revision. There was no provision for retroactive application, and no evidence a prior CBA granted a similar benefit for earlier years.

p. 3
03

The salary basis for computation

Holding

Not the exit salary of Ksh. 108,673.00, but Ksh. 101,565.00 (2015-2017) and Ksh. 96,255.00 (2018) per payslips

Reasoning

Applying the exit salary would ignore salary increments over time and be inequitable. Payslips produced in evidence established the salaries during the relevant period, with November 2018 presumed to be Ksh. 96,255.00.

p. 4

Legal principles established

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  • Once signed, a CBA is infused into the individual contracts of service of employees covered by it and cannot be varied unilaterally by the employer
  • Parties to a contract of service may agree on terminal benefits provided the agreement does not derogate from statutory minimums

Court orders

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  1. 1.Declaration that the Claimant is entitled to the retirement benefit under clause 7D of the CBA limited to the period from January 2015 to retirement
  2. 2.Award of Ksh. 801,900.00 as retirement benefit
  3. 3.Interest on the sum awarded at court rates from the date of institution of the suit
  4. 4.Costs of the case to the Claimant

Authorities

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Legislation

  • Labour Relations Actsection 59(3)
  • Employment Actsection 10(5)
  • ELRC Procedure RulesRule 28(3)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under employment dispute (ELRC Act); ELRC Procedure Rules referenced

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (3)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Mukuria v Chuna Co-opertive Savings and Credit Society Limited (Cause 607 of 2017) [2023] KEELRC 1842 (KLR)", Case Analysis (2023). ELRC.NAIROBI 607 OF 2019. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1842/eng@2023-07-27

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