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ELRCPartially Allowed· [2025] KEELRC 1109 (KLR)

Kawinzi v East Africa Portland Cement (Cause 24 of 2019) [2025] KEELRC 1109 (KLR)

Employment and Labour Relations Court
3 April 2025
1,379 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~6 min to read original · ~4 min brief

The bottom line

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Retiring employees in Kenya are entitled to gratuity immediately upon retirement, and late payment attracts court-rate interest even after a settlement.

What this practically means

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Executive summary

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The Claimant retired on 31/12/2017 and was entitled to gratuity under his contract of employment. The Respondent paid the gratuity in three instalments: Kshs. 1,000,000 on 15/2/2018, and Kshs. 3,469,717.25 and Kshs. 5,000,000 both on 20/2/2019. The claim was thereafter settled by consent, but the parties could not agree on interest and costs, which fell for the court's determination. The Claimant relied on Alfred Mwongera Mutema v Kenya Methodist University (interest at 12% p.a. from filing suit) and Omondi v Associated Motors and section 27 of the Civil Procedure Act (costs follow the event). The Respondent, relying on Haraf Traders v Narok County Government and Catherine Kavata Musuva v Safaricom Investment Cooperative Society, argued that a consent buries everything beneath it, that it faced financial difficulties but settled in good faith, and that no interest or costs should be awarded so as to encourage settlement. The court held that the contractual entitlement to gratuity arose immediately upon retirement, and that the consent settlement did not extinguish that entitlement. The Claimant was therefore awarded interest at court rates from the date of retirement (31st December 2017) until full payment on 20th February 2019. Recognising the Respondent's goodwill in settling, the court awarded only half the costs of the suit, to be taxed. Judgment dated at Nairobi, 3rd April 2025, Mathews Nduma, Judge.

Key legal issues

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01

Entitlement to interest on gratuity paid after retirement

Holding

The Claimant was entitled to gratuity immediately upon retirement on 31/12/2017; the Respondent's breach in delaying payment in three instalments entitles the Claimant to interest at court rates from the date of retirement until full payment on 20/2/2019.

Reasoning

The contract of employment required gratuity to be paid upon retirement on 31/12/2017. The Respondent paid in instalments, the last only on 20/2/2019, because of financial difficulties. The Claimant was forced to file suit due to this breach. Consent settlement did not extinguish the contractual entitlement, so interest compensates the Claimant for the period of delayed payment only.

p. 3
02

Costs where the suit was settled by consent

Holding

The general rule that costs follow the event is displaced in part: in recognition of the Respondent's goodwill in settling, the Claimant gets only half the costs.

Reasoning

Section 27 of the Civil Procedure Act makes costs discretionary and generally to follow the event. The Respondent argued that awarding costs against a party who settled in good faith discourages settlement. The court, while encouraging voluntary settlement, was cognisant of the expense the Claimant incurred because of delayed payment, and balanced these considerations by awarding half the costs.

p. 3

Legal principles established

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  • Gratuity is due and payable immediately upon retirement under the contract of employment, and delayed payment attracts interest
  • Consent settlement of a suit does not extinguish the underlying contractual obligations and entitlements of the parties
  • Although costs follow the event under section 27 of the Civil Procedure Act, the court may depart from the general rule where a respondent settles a claim in good faith, as an incentive to settlement

Court orders

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  1. 1.The Claimant is awarded interest at court rates on the gratuity from the date of retirement (31st December 2017) to 20th February 2019 when the amount was fully paid
  2. 2.The Claimant is awarded half the costs of the suit, to be taxed accordingly

Authorities

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Legislation

  • Civil Procedure Actsection 27

Cases cited (8)

  • Alfred Mwongera Mutema versus Kenya Methodist University
    (2018) eKLR
  • Omondi versus Associated Motors
    (Cause 1306 of 2018)[2023] KEELRC 3092 (KLR) (29 November 2023)
  • Machakos ELC Petition No. 6 of 2013 party of Independent candidate of Kenya and another versus Mutula Kilonzo and 2 others
    [2013] eKLR
  • Levben Products versus Alexander Films (SA) (PTY) Ltd
    1957 (4) SA 225 (SR) at 227
  • Fripp versus Gibbon and Co.
    1913 ADD 345
  • Catherine Kavata Musuva versus Safaricom Investment Cooperative Society Limited
    [2021] eKLR
  • Hussein Janmohamed & Sons versus Twentche Overseas Trading Co. Ltd
    [1967] EA 287
  • Haraf Traders Limited versus Narok County Government
    [2022] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over a settled employment claim (gratuity) with only interest and costs outstanding

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, "Kawinzi v East Africa Portland Cement (Cause 24 of 2019) [2025] KEELRC 1109 (KLR)", Case Analysis (2025). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/1109/eng@2025-04-03

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