[2018] KEELRC 2270 (KLR)
The court held that the claimant's entitlement to gratuity accrued upon expiry of his contract, and the respondent's failure to pay prompted the filing of the suit. The court determined that interest should be reckoned from the date of filing suit, as that is when the court became seized of the matter. The court...
Source-derived case information.
- Citation
- [2018] KEELRC 2270 (KLR)
- Parties
- Claimant: Prof. Alfred Mwongera Mutema; Respondent: Kenya Methodist University
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Nairobi
- Jurisdiction
- Kenya
- Case Number
- Cause 1887 of 2016
- Procedural Posture
- Employment Cause / Ruling on Application for Interest on Gratuity
- Outcome
- Application for interest on gratuity allowed at court rates from date of filing suit.
- Judges
- DI Wasike
- Legal Topics
- Gratuity Entitlement, Interest Award, Employment Contracts, Delay in Payment
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Prof. Alfred Mwongera Mutema
Claimant
Kenya Methodist University
Respondent
Procedural Posture
Employment Cause / Ruling on Application for Interest on Gratuity
Legal Issues
- 1 Whether the claimant is entitled to interest on the gratuity amount withheld by the respondent.
- 2 What is the appropriate rate of interest to be applied to the gratuity amount?
- 3 From which date should the interest on the gratuity amount commence?
Ratio Decidendi
The court held that the claimant's entitlement to gratuity accrued upon expiry of his contract, and the respondent's failure to pay prompted the filing of the suit. The court determined that interest should be reckoned from the date of filing suit, as that is when the court became seized of the matter. The court further held that, in the absence of exceptional circumstances or an agreement to the contrary, interest should be awarded at court rates, which is 12% per annum. No exceptional circumstances were demonstrated to warrant a higher rate. Therefore, interest is payable on the admitted gratuity amount at 12% per annum from the date of filing suit until payment in full.
Court Disposition
Application for interest on gratuity allowed at court rates from date of filing suit.
Orders
- Interest is payable on the admitted gratuity amount at the rate of 12% per annum from the date of filing suit until payment in full.
Full Case Text
Judgment text and source record
26 paragraphs
REPUBLIC OF KENYA
IN THE EMPLOYMENT AND LABOUR RELATIONS COURT OF
KENYA AT NAIROBI
CAUSE NUMBER 1887 OF 2016
PROF. ALFRED MWONGERA MUTEMA……………….….…..CLAIMANT
VERSUS
KENYA METHODIST UNIVERSITY…………..…………..RESPONDENT
RULING
1. On 25th April, 2017 the court directed that it would entertain the application dated 9th March, 2017 only to the extent of the issue of interest payable, the rate thereof and commencement date. The court summarily rejected other aspects of the application.
2. Mr Gacheru for the claimant submitted that the rate of interest applicable was the bank rate. According to counsel, the evidence on record indicated that the gratuity sum was due to the claimant on or about 24th March, 2015 when the contrast expired. He submitted that clause 1. 0 of the contracts stated that the claimant was entitled to gratuity of 31% of the total basic salary earned for the period after satisfactory completion of the said period.
3. Counsel further submitted that the gratuity amount having already accrued to the claimant and the respondent having withheld it, the respondent was doing so unjustly. Had the respondent borrowed this money from a bank to do what he did, it could have paid interest at bank rates. Counsel further submitted that there was nothing under section 26 of the Civil Procedure Act that excluded the court from awarding interest higher than court rates.
4. Ngunjiri for the respondent submitted that claimant was not entitled for any interest since case law had established that for a party to be entitled to an award of damages he must have been deprived of use of his goods and money by a wrongful act on the part of the defendant. Counsel relied on the case of Later Vs Mbiyu [1965] EA 392cited in the case ofFrancis Joseph Kamau Ichatha Vs HFCK.
5. According to the counsel at no time had the respondent denied the claimant’s claim for gratuity payment, the respondent who is currently undergoing financial constraints engaged the claimant in negotiations as to how the gratuity could be paid. From the letter exchanged it was clear that both the claimant and the respondent were exchanging offers on the number of installments to be paid as such gratuity was not unjustly or unfairly withheld from the claimant. Alternatively, the respondent submitted that if at all interest is ordered the interest should be at court rates which is 12% and further that the period should be from the date of filing suit.
6. There is no dispute that the claimant is entitled to gratuity. This entitlement accrued upon the expiry of his contract. The respondent did not pay the gratuity when it fell due prompting the claimant to file suit. The court became seized of the matter when the suit was filed. This therefore ought to be the period from which interest payable should be reckoned.
7. Concerning the interest rate courts have always awarded interest at court rates unless agreed to the contrary by the parties or in exceptional circumstances. No exceptional circumstances have been demonstrated in this case to warrant awarding of interest at a different rate.
8. In conclusion the court orders that interest is payable on the admitted gratuity amount at the rate of 12% p.a. from the date of filing suit until payment in full.
9. It is so ordered.
Dated at Nairobi this 23rd day of February, 2018
Abuodha J. N.
Judge
Delivered this 23rd day of February, 2018
In the presence of:-
…………………………………………...…… for the Claimant
……………………………………………. for the Respondent
Abuodha J. N.
Judge