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ELRCPartially AllowedNot stated in judgment (Statement of Claim dated 10th May 2020, amended 10th May 2021)· [2025] KEELRC 3692 (KLR)

Leshishi v Kenya Bankers Savings & Credit Co-operative Society Limited (Cause E386 of 2021) [2025] KEELRC 3692 (KLR)

Employment and Labour Relations Court
18 December 2025
CBC. N. BAARI
1,886 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~8 min to read original · ~4 min brief

The bottom line

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A Kenyan court awarded a retired driver his unpaid gratuity but barred a service pay claim because he was already in a provident fund and NSSF.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent from 2004 as a driver on permanent and pensionable terms, retired upon attaining the mandatory retirement age in 2016, after which he served on post-retirement fixed-term contracts that ended on 30th June 2018. He claimed pension/service pay at three months' salary per completed year of service amounting to Kshs.3,505,038.92, with interest and costs. The Respondent countered that dues under the permanent contract, including provident fund benefits, were fully settled; that no gratuity was payable under the provident fund scheme; and that for the second contract, gratuity of Kshs.283,524.37 was computed but lawfully applied against an outstanding Sacco loan of Kshs.350,612.77, leaving an unpaid balance. The Respondent later withdrew its counterclaim. The court framed three issues. On service pay, it applied section 35(6) of the Employment Act, 2007 and the Kenya Airways decision, holding that membership of the provident fund and NSSF barred a service pay claim, and dismissed that limb. On gratuity, the Respondent's witness admitted the Claimant's entitlement and the computed sum; the court ordered full payment of Kshs.283,524.37. On the loan offset, the court found the Respondent had produced no documentary evidence of the loan, the applicable policy, or the Claimant's savings, and that deductions from terminal dues require written consent, statutory authorization or a court order; the offset was held arbitrary and unlawful. Judgment delivered on 18th December 2025 at Nairobi, with costs awarded to the Claimant and interest on the gratuity from the date of judgment.

Key legal issues

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01

Entitlement to service pay for 2004–2016

Holding

Claimant not entitled to service pay or further pension, having received provident fund dues upon retirement in 2016

Reasoning

Section 35(6) of the Employment Act bars service pay for members of NSSF, pension or provident funds. The Court of Appeal in Kenya Airways held that membership of a pension or provident fund precludes a service pay claim as it would amount to double benefit. The Claimant admitted receiving provident fund benefits in 2016, the Respondent's evidence of payment was uncontested, and no contract obligating additional pension, gratuity or service pay was produced.

p. 4
02

Entitlement to gratuity for the fixed-term contract ending 30th June 2018

Holding

Claimant entitled to the computed gratuity of Kshs.283,524.37

Reasoning

Employees on fixed-term contracts are entitled to benefits expressly provided in the contract, and gratuity must be paid where it is a contractual term. RW1 confirmed the Claimant was entitled to gratuity under the post-retirement contract and that the Respondent computed it at Kshs.283,524.37 but did not pay it. The Respondent's admission bound it.

p. 4
03

Lawfulness of applying gratuity to offset a Sacco loan

Holding

The offset was arbitrary and unlawful

Reasoning

Deductions from terminal dues require written consent, statutory authorization or a court order, and the employer bears the burden of proving lawful deductions. The Respondent produced no documentary evidence of the loan's existence or amount, confirmed the loan agreement was distinct from the employment contract, and produced neither the loan statement nor the policy relied upon. It also led no evidence on the Claimant's savings and shares.

p. 5

Legal principles established

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  • An employee who is a member of NSSF, a registered pension or provident fund, or a gratuity scheme is not entitled to service pay
  • Deductions from an employee's dues require written consent, statutory authorization or a court order; the employer bears the burden of proving lawful deductions

Court orders

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  1. 1.The claim for pension/service pay for the period 2004–2016 is dismissed
  2. 2.The Respondent shall pay the Claimant Kshs.283,524.37 on account of gratuity
  3. 3.Interest shall accrue on the gratuity at court rates from the date of the judgment until payment in full
  4. 4.The Respondent shall bear the costs of the suit
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 and the claimant's employment contract

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, "Leshishi v Kenya Bankers Savings & Credit Co-operative Society Limited (Cause E386 of 2021) [2025] KEELRC 3692 (KLR)", Case Analysis (2025). Not stated in judgment (Statement of Claim dated 10th May 2020, amended 10th May 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/3692/eng@2025-12-18

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