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ELRCPartially AllowedNot stated in excerpt

Osawo v Chuna Co-operative Savings and Credit Society Limited (Cause 606 of 2019) [2024] KEELRC 2372 (KLR)

Employment and Labour Relations Court
27 September 2024
2,683 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~11 min to read original · ~4 min brief

The bottom line

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A retired Sacco employee won his Kshs 7.1 million gratuity claim under a CBA, though pension and NSSF contributions were deducted.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent Sacco from 1984 until his early retirement in 2018 as a unionisable employee, sued for Kshs 7,119,820/= being gratuity of two months' salary per year worked under clause 7(D)4 of the CBA plus baggage and passage allowance, and compensatory damages for breach of contract. The Respondent denied the claim, asserting the Claimant was permanent and pensionable, that it had contributed 12.5% of his basic salary to the Chuna Sacco Staff Pension Scheme and NSSF, that gratuity under the CBA applied only to contractual staff or on death, and citing a 2018 State Department for Co-operatives Inquiry Report which it said rendered dual pension and gratuity payments illegal. The court framed two issues: entitlement to gratuity and entitlement to general damages. It held the CBA binding since it remained in force until jointly revised and was never revised. Relying on the Court of Appeal's decision in Board of Management Ng'araria Girls Secondary School v KUDHEIHA Workers, it held that Section 35(6) of the Employment Act does not bar superior retirement benefits agreed in a CBA, provided pension and NSSF contributions are deducted to avoid double payment. Adopting the Claimant's last salary of Kshs 104,525/= from his payslips, the court awarded the gratuity of Kshs 7,119,820/= less the Respondent's pension and NSSF contributions, refused general damages for want of a basis, and ordered each party to bear their own costs.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the Claimant is entitled to the gratuity pay of Kshs 7,119,820/= upon retirement
  2. 2.Whether the Claimant is entitled to compensatory or general damages for breach of contract

Key legal issues

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01

Entitlement to gratuity under the CBA upon early retirement

Holding

The Claimant is entitled to gratuity of two months' salary per year worked under clause 7(D)4 of the CBA, computed on his last salary of Kshs 104,525, less the Respondent's pension and NSSF contributions

Reasoning

The court found the CBA binding since it was between the Respondent and the Claimant's union and had never been jointly revised, so it remained in force at retirement in 2018. Section 35(6)(b) of the Employment Act excepts gratuity under a CBA. Following the Court of Appeal in Ng'araria Girls, the court held superior CBA benefits are payable, deducting the 12.5% pension and NSSF contributions to avoid double payment. The Respondent produced no evidence to displace the last salary shown on the payslips.

p. 5
02

Compensatory or general damages for breach of contract

Holding

The prayer for general damages was refused as no basis was laid for it

Reasoning

The court noted that general damages for breach of contract in employment matters require a strong basis, with compensation governed by Section 49 of the Employment Act. Relying on D K Njagi Marete v Teachers Service Commission, where the Court of Appeal refused general damages absent a laid basis, the court declined the award since the Claimant had already been compensated through the gratuity payable under the CBA.

p. 6

Legal principles established

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  • A CBA that has not been jointly revised remains in force and binding between the parties beyond its initial three-year term
  • Section 35(6) of the Employment Act does not preclude parties from agreeing to gratuity or retirement benefits over and above statutory social security, but pension and NSSF contributions are deductible from CBA gratuity

Court orders

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  1. 1.That the claimant be paid his gratuity pay of Kshs 7,119,820/- less contributions made by the Respondent to the Pension Scheme and NSSF
  2. 2.Each party shall bear their own costs

The bench

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One judgment of the whole court — no separate or dissenting opinions.

Wrote the judgment

Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment and Labour Relations Court Act and the Employment Act, 2007

Relief refused

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Compensatory or general damages for breach of contract

No sufficient basis laid out for general damages in employment matters; compensation governed by Section 49 of the Employment Act

p. 6

Costs

Each party shall bear their own costs

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

In conclusion the Court hereby orders that the claimant be paid his gratuity pay of Kshs 7,119,820/less contributions made by the Respondent to the Pension Scheme and NSSF.
p. 6Final orders - gratuity payable less pension/NSSF deductions
Considering the nature of the claim, each party shall bear their own costs.
p. 6Costs order
this court finds the CBA to be binding between the parties since an agreement is always binding between parties
p. 4Binding nature of the CBA
an employee is entitled to have more than one social security scheme and that any pension monies paid to a scheme, such as NSSF, should be deducted from the benefit conferred by the superior social security scheme
p. 5Multiple social security schemes and deduction principle

Issues in the judgment

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minor

The claimant's claimed sums are inconsistent within the judgment: the claim pleads Kshs 7,119,820/- while CW1's evidence records a demand of Kshs 7,128,000/-

minor

The final order shows the figure '7,119,820/' with a trailing slash and no final digit, suggesting an omission in the typed judgment

minor

The judgment's coram describes the presiding officer as 'PRESIDING JUDGE-APPEALS DIVISION' although this is a first-instance claim, creating ambiguity as to the proper designation

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, "Osawo v Chuna Co-operative Savings and Credit Society Limited (Cause 606 of 2019) [2024] KEELRC 2372 (KLR)", Case Analysis (2024). Not stated in excerpt. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2372/eng@2024-09-27

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