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ELRCPartially AllowedAppeal No E023 of 2021· [2023] KEELRC 2173 (KLR)

Kibogy v Kerio Valley Development Authority (Appeal E023 of 2021) [2023] KEELRC 2173 (KLR)

Employment and Labour Relations Court
21 September 2023
MOM. Onyango
4,247 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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Kenya's Employment Court ruled an employer cannot cut an accepted retirement package or hide behind a union deal covering other job grades.

What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court at Eldoret against the decision of a Senior Resident Magistrate dismissing the Appellant's claim arising from a Voluntary Early Retirement (VER) package offered by the Respondent, Kerio Valley Development Authority. The Appellant, an accountant in job grade KV10, accepted a VER offer computed on her 30.12 years of service, including severance pay of Ksh. 1,539,471.08. Following a consent order in Nakuru ELRC Cause No. 68 of 2018 between the Respondent and the Kenya Plantation and Agricultural Workers Union, the Respondent revised her package downward to Ksh. 306,690.96 based on remaining years to retirement, and deducted tax of over Ksh. 555,000 notwithstanding Legal Notice No. 234 of 2018 exempting VER payments from income tax. The Trial Court held the Appellant was bound by the consent order as a unionisable employee. On appeal, the court held that the CBA covered only job grades KV4 to KV8, the Appellant was in grade KV10 and was not unionisable, and the consent order could not bind her. The court further held that the revised payment was not severance pay as defined in section 40(1)(g) of the Employment Act, and the Respondent could not unilaterally vary an accepted offer without a fresh offer. Grounds alleging denial of fair hearing and failure to consider evidence failed for want of proof. The appeal was allowed, the Trial Court's orders set aside, and the Appellant awarded Ksh. 1,232,780.12, the tax waiver, costs in both courts, and interest on the decretal sum from the date of the Trial Court's judgment.

Key legal issues

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01

Whether the Appellant was unionisable and bound by the consent order in Nakuru ELRC Cause No. 68 of 2018

Holding

The Appellant, in job grade KV10, was not covered by the CBA which applied to grades KV4 to KV8; she was not unionisable and the consent order did not bind her.

Reasoning

Appendix A of the CBA covered only job grades KV4 to KV8, while the Appellant was in grade KV10. Paragraph viii of Appendix C of the Industrial Relations Charter allows exclusion of categories of staff from union representation. Not being a union member or unionisable, she was not a party to the Nakuru suit, and the consent therein could not apply to her. The Trial Magistrate therefore erred in holding otherwise.

p. 10
02

Whether the Respondent could vary the accepted VER terms

Holding

The revised payment based on remaining years of service was not severance pay as defined in section 40(1)(g) of the Employment Act; the Respondent could not unilaterally vary the accepted offer.

Reasoning

The original offer, which the Appellant accepted, computed severance pay on years of service (30.12 years), consistent with the Employment Act definition. The revised payment based on remaining years to retirement is alien to the law. Any change of terms required a fresh offer for the Appellant to accept. The court awarded the difference of Ksh. 1,232,780.12.

p. 11
03

Whether the Appellant was entitled to the tax waiver

Holding

Yes; pursuant to Legal Notice No. 234 of 2018 the Respondent was not entitled to deduct tax from the VER package.

Reasoning

Legal Notice No. 234 dated 23rd November 2018 exempted severance pay, salary in lieu of notice, accumulated leave days, transport allowance and golden handshake for the 315 employees leaving under the VER programme. The Appellant qualified for the exemption, so deductions made against the waiver were unwarranted and the Appellant is entitled to the benefit of the waiver.

p. 11
04

Whether the Trial Court denied the Appellant a fair hearing and failed to consider her evidence

Holding

No; these grounds failed for lack of evidence.

Reasoning

The court found the Trial Magistrate considered the pleadings and evidence of both parties and analysed the issues. There was no proof the CBA was unregistered, that issue never having been pleaded in the Trial Court, nor proof that cross-examination was curtailed. Grounds 5, 6 and 7 of the Memorandum of Appeal accordingly failed.

p. 11

Legal principles established

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  • Only employees who benefit from a CBA are unionisable, and a consent order binding union members does not bind an employee outside the grades covered by the CBA.
  • A party cannot unilaterally vary accepted terms of an offer; a fresh offer would be required to substitute new terms.

Court orders

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  1. 1.Appeal allowed; orders of the Trial Court dismissing the Appellant's suit set aside
  2. 2.Award of Ksh. 1,232,780.12 to the Appellant being the difference between the initial VER offer she accepted and the revised amount paid
  3. 3.Declaration that the Appellant is entitled to tax waiver as per Legal Notice No. 234 of 2018
  4. 4.Costs of the suit awarded to the Appellant both in the appeal and in the lower court
  5. 5.Interest to accrue on the decretal sum from the date of Judgment of the Trial Court

Authorities

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Legislation

  • Labour Relations Actsections 59, 59(5), 59(f), 60
  • Employment Actsection 40(1)(g)
  • Income Tax Act (Cap. 470)section 13(2); Legal Notice No. 234 of 2018
  • Industrial Relations CharterClause B(11) and Appendix C
  • Cap. 441 (Laws of Kenya - Kerio Valley Development Authority establishing statute)

Cases cited (14)

  • Charles Kambo Wamai v Bamburi Cement Limited
    [2013] eKLR
  • Amos Kioko Musyoka & 7 others v Moors Group Limited
    [2021] eKLR
  • Amos Kioko Musyoka & 7 Others v CMC Motors Company Limited
    (Supra)
  • Kenya Union of Commercial Food and Allied Workers v Kenya National Library Services
    [2016] eKLR
  • Kenafric Industries Limited v Bakery Confectionary Food Manufacturing and Allied Workers Union
    [2014] eKLR
  • Kenya Chemical and Allied Workers Union v Bamburi Cement
    [2017] eKLR
  • James Mutisya Nzokila & Others v Kenya Nut Company Limited
    [2019] eKLR
  • Kenya Union of Commercial Food and Allied Workers v Machakos Water & Sewarage Company Limited & 2 others
    [2022] KEELRC 13518 (KLR)
  • Scarf v Jardine
    [1982] 7 App Cas 345
  • Praful Shah v Deposit Protection Fund Board as Liquidator of Trust Bank Ltd (In Liquidation) & Another
    2019 eKLR
  • Serah Njeri Mwobi v John Kimani Njoroge
    [2013] eKLR
  • Kipkutol Wilson v Kerio Valley Development Authority
    Eldoret ELRC No. 12 of 2019
  • Stanley Kaunga Nkarichia v Meru Teachers College & Another
    [2016] eKLR
  • Bwire v Wayo & Sailoki
    Civil Appeal 032 of 2021 [2022] KEHC 7(KLR)
On appeal from
Senior Resident Magistrate's Court (Eldoret Chief Magistrates Court, Employment and Labour Relations Cause No. 43 of 2019)
ELRC Cause No. 43 of 2019
Jurisdiction invoked
First appeal to the Employment and Labour Relations Court from the Senior Resident Magistrate's Court

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, "Kibogy v Kerio Valley Development Authority (Appeal E023 of 2021) [2023] KEELRC 2173 (KLR)", Case Analysis (2023). Appeal No E023 of 2021. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2173/eng@2023-09-21

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