https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1617

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT NYERI** **ELRC APPEAL NO. E007 OF 2025** **BETWEEN** **MURANGA FARMERS CO-OPERATIVE UNION LTD............APPELLANT** **AND** **LUCY NYAMBURA WAMBU.....................................................RESPONDENT** *(Being an appeal from the Judgment of the Chief Magistrates court at Murang’a delivered by Hon. P.N Maina on 19th March 2025 in the Chief Magistrates' court at Murang’a CMERLC No. 13 of 2020)* **JUDGMENT** 1. The Respondent instituted a claim against the Appellant before the Chief Magistrate’s Court at Murang’a in *CMELRC Cause No. 13 of 2020, Lucy Nyambura Wambu v Murang’a Farmers Co-operative Union Ltd****.*** The Respondent averred that she had been employed by the Appellant with effect from 1st October 1985 and was subsequently declared redundant, initially with effect from 16th January 2020, which date was later revised to 1st February 2020. 2. The Respondent contended that, pursuant to a letter dated 31st January 2020, the Appellant acknowledged owing her Kshs 3,764,718.70, which amount was to be settled in instalments over a period of six years. She further acknowledged having received Kshs 977,013.30 on account of the said sum. Before the trial Court, she sought a total of **Kshs 11,275,997.28,** comprising gratuity, arrears, unremitted National Hospital Insurance Fund (NHIF) and National Social Security Fund (NSSF) contributions, and interest on the unpaid gratuity. 3. The Appellant opposed the claim through its Statement of Defence dated 15th December 2020. While admitting liability for the sum of Kshs 3,764,718.70, the Appellant maintained that the balance was contractually payable within six years, that is, on or before February 2026. 4. The Appellant therefore asserted that the suit was premature, having been instituted approximately nine months after the parties had reached the said payment arrangement. 5. Consequently, the Appellant urged the trial Court to dismiss all claims exceeding the admitted sum of Kshs 3,764,718.70. 6. It is noteworthy that, by a Ruling delivered on 26th August 2021, the trial Court allowed the Respondent’s application dated 21st December 2020 and entered judgment on admission for the sum of **Kshs 3,764,718.70**. This was pursuant to the Court’s finding that the Appellant had unequivocally admitted owing the Respondent that amount. 7. The matter thereafter proceeded for hearing on the residual claims. The Respondent testified in support of her case, whereas the Appellant elected not to call any witness. 8. Upon considering the evidence and submissions on record, the learned Trial Magistrate entered judgment in favour of the Respondent in the sum of **Kshs 11,275,997.28.** The Court found that the Respondent had proved her entitlement to gratuity and further held that her claim, supporting tabulations, and computation of interest had not been controverted. The Court consequently adopted an interest rate of 8% as a fair average return and awarded the Respondent costs of the suit. **The Appeal** 1. Aggrieved by the Judgment and Decree of the trial Court, the Appellant lodged the present Appeal challenging the decision on the following six grounds set out in the Memorandum of Appeal: 2. **THAT the learned magistrate erred in law and in fact by failing to appreciate that partial admission of the claim for Kshs 3,764,718.70 was not an express admission of the full claim of Kshs 11,275,997.28.** 3. **THAT the learned magistrate erred in fact by failing to appreciate that the memorandum of agreement executed on 2nd January 1998 between the Appellant and the Respondent clearly outlined the terms and conditions of service including the entitlement to gratuity and interest thereon.** 4. **THAT the learned magistrate erred in fact by failing to appreciate that the Respondent was not entitled to gratuity and interest thereon on account of redundancy as per clause 4 of the memorandum of agreement executed on 2nd January 1998.** 5. **THAT the learned magistrate erred in law by failing to correctly apply the legal principles governing gratuity.** 6. **THAT the learned magistrate erred in law and in fact by failing to appreciate that the Respondent was a member of the National Social Security Fund and as such, she was not entitled to gratuity.** 7. **THAT the learned magistrate erred in law and in fact in arriving at the conclusion that the Respondent’s claim on gratuity and interest was merited.** 8. Consequently, the Appellant prays that the Appeal be allowed, the Judgment delivered by the trial Court on 19th March 2025 be set aside, and that the costs of both the suit and the Appeal be awarded to the Appellant. **Submissions** 1. The Appeal was canvassed by way of written submissions. On the Appellant’s part, it was submitted that the letter dated 31st January 2020 made no reference to gratuity or interest and, therefore, did not constitute an admission of liability in respect of those claims. According to the Appellant, the claims for gratuity and interest remained unverified and contingent, thereby negating any suggestion that there had been an admission beyond the amounts expressly acknowledged. 2. The Appellant further submitted that the Respondent’s claim for gratuity and interest was legally untenable as she fell within the category of employees expressly excluded under Clause 4 of the Collective Bargaining Agreement. It was the Appellant’s contention that the trial Court erred in law and fact by awarding gratuity and interest to the Respondent. 3. The Appellant further posited that, at all material times, the Respondent’s employment was governed by the Collective Bargaining Agreement executed on 2nd January 1998, which constituted a binding contract between the parties. On this score, the Appellant argued that the Respondent’s rights and entitlements, including any claim for gratuity, could only arise within the confines of the said agreement. To fortify this argument, reliance was placed on the cases of ***National Bank of Kenya Ltd v Pipeplastic Samkolit (K) Ltd & another (2001) eKLR*** and ***Musau v Odwar (2025) KEHC 6754 (KLR).*** 4. It was further submitted that the admission made by the Appellant was specific, limited and unequivocal, being confined solely to the admitted sum, and did not extend to the claims for gratuity and interest. To this end, the Appellant contended that the trial Court erred in finding that the Respondent was entitled to gratuity on the basis of the partial admission. In support of this position, the Appellant relied on the cases of ***Corat Africa v Mbombu t/a Kyalo & Associates (2025) KEHC 3101 (KLR)*** and ***Njau v Ngungu (2025) KEHC 3348 (KLR).*** 5. The Appellant further contended that the interpretation adopted by the trial Court was inconsistent with the well-established principles governing contractual interpretation. Relying on the case of ***Mukiria Farmers’ Co-operative Society Ltd [2017] KECA 432 (KLR),*** it was submitted that the intention of the parties is to be ascertained from the plain and ordinary meaning of the terms of Clause 4 of the Collective Bargaining Agreement, which, according to the Appellant, limited entitlement to gratuity to instances where termination was on grounds other than gross misconduct or redundancy. 6. Further reliance was placed on the case of ***Bamburi Cement Limited v William Kilonzi [2016] KECA 546 (KLR),*** where the Appellant argued that gratuity is only payable upon termination of employment where such entitlement is expressly provided for in either the employment contract or the applicable Collective Bargaining Agreement. It was therefore the Appellant’s position that neither the Respondent’s contract of employment nor the Collective Bargaining Agreement expressly provided for payment of gratuity in the event of termination on account of redundancy. 7. The Respondent, on the other hand, submitted that the Appellant did not controvert her evidence regarding the basis of her claim and instead elected to rely on mere denials. 8. Citing the case of ***Mbithi v Mureithi and 2 Others, Nairobi City County KEELC 20489 (KLR),*** the Respondent argued that the absence of any objection to the documents produced in evidence meant that their correctness and probative value remained unchallenged. 9. The Respondent further submitted that the Appellant did not dispute its failure to invest the gratuity funds and equally failed to controvert the assertion that, as the entity responsible for payment, it was liable for both the principal amount and the accrued interest. In support of this proposition, reliance was placed on the case of ***Mati and Another v Gicheru [2025] KEHC 2062 (KLR).*** 10. It was further submitted by the Respondent that the Appellant failed to remit the gratuity funds to the Provident Fund as had been intended and required. According to the Respondent, a refusal to award interest on the gratuity would result in unjust enrichment on the part of the Appellant at her expense. 11. The Respondent further contended that the Appellant did not challenge her computations of interest, including the interest accrued up to the year 2016 and the additional interest earned up to the year 2020. 12. Citing the decision in ***In re Estate of Onesmus Kibira Wanjohi (Deceased) (2025) KEHC 4079 (KLR),*** the Respondent submitted that written submissions are not a substitute for evidence and cannot take the place of evidence that ought to have been adduced during the hearing. It was therefore argued by the Respondent that the Appellant’s failure to tender evidence in support of its defence was fatal to its case. **Analysis** **and Determination** 1. Being a first appellate Court, this Court is obligated to re-evaluate and reconsider the evidence adduced before the trial Court, together with the impugned Judgment, and to arrive at its own independent conclusions as to whether the Appeal is merited. In doing so, the Court is entitled to subject the entire record to a fresh and exhaustive scrutiny and draw its own findings, while bearing in mind that it did not have the advantage of seeing or hearing the witnesses testify. This position was affirmed in ***Selle & Another v Associated Motor Boat Co. Ltd & Others (1968) EA 123.*** 2. Having considered the Record of Appeal, the parties’ rival submissions, and the applicable law, the Court is of the view that the appeal turns on the following two issues for determination: 3. ***Whether the trial Court erred in finding that the Respondent was entitled to gratuity and interest thereon; and*** 4. ***Whether the reliefs awarded to the Respondent by the trial Court are sustainable.*** **Gratuity and interest** 1. The Appellant has taken issue with the learned Trial Magistrate’s decision to award the Respondent gratuity together with interest thereon. 2. In the judgment, the learned Trial Magistrate held that the redundancy benefits tabulated in the letter dated 31st January 2020 amounted to gratuity as the same went ahead to thank the Respondent for the services rendered to the Appellant over the years. 3. The Court further found that gratuity had been expressly admitted in the pleadings and that, in light of the Appellant’s admission of liability for redundancy dues, including the partial payment of Kshs 977,013.30, leaving a balance of Kshs 3,764,718.70, the Respondent had established her entitlement to gratuity. 4. It is settled that gratuity is only payable where it is expressly provided for in the employment contract or a Collective Bargaining Agreement. 5. It is evident from the record that at the trial Court, the Respondent exhibited a Memorandum of Agreement dated 2nd January 1998, executed between the Kenya Union of Commercial Food and Allied Workers and the Appellant. Clause 4 of the Agreement provides as follows; ***“When the services of an employee are terminated by either party for any reason other than dismissal for gross misconduct or redundancy and after completing three years of service, such an employee shall be paid gratuity calculated at the rate of two months' current salary for each completed year of service.”*** 1. A proper construction of the above clause reveals that entitlement to gratuity was dependent on both the mode of exit from employment and the length of service. In that regard, employees who exited service by way of dismissal on grounds of gross misconduct or redundancy were expressly excluded from receiving gratuity. 2. It therefore follows that the Respondent, having exited employment through redundancy, was not eligible for gratuity under the terms of Clause 4 of the Memorandum of Agreement. 3. What’s more, there is no evidence on record to demonstrate that the said Agreement was subsequently reviewed or varied by the parties to introduce any entitlement to gratuity outside the framework provided under Clause 4. 4. In my respectful view, the letter dated 31st January 2020 did not, in itself, create an entitlement to gratuity in favour of the Respondent. Contrary to the finding by the Trial Magistrate, the Appellant’s expression of appreciation for the Respondent’s years of service did not override or oust the clear and express provisions of Clause 4 of the Memorandum of Agreement. 5. Further, I must state that the Appellant’s failure to adduce evidence did not, of itself, entitle the Respondent to gratuity. To award the Respondent gratuity solely on the basis of the Appellant’s failure to call evidence is tantamount to the Court rewriting the Memorandum of Agreement, contrary to well-settled principles of law. 6. Regardless of the Appellant’s failure to call evidence, the Respondent remained under a duty to prove, on a balance of probabilities, that she was entitled to gratuity as prayed. 7. Accordingly, this Court finds that the learned Trial Magistrate erred in treating the redundancy payments tabulated in the letter dated 31st January 2020 as gratuity. If the Appellant had intended those sums to constitute gratuity, nothing would have prevented it from expressly stating so. 8. Having so found, it follows that the award of interest on gratuity equally cannot stand. **Whether the reliefs awarded are sustainable** 1. For the reasons set out above, this Court finds that the reliefs of gratuity and interest awarded to the Respondent by the trial Court are not sustainable. 2. Further, it is noted that the trial Court awarded the Respondent unremitted NSSF and NHIF contributions. This is notwithstanding the fact that the Respondent did not particularise the specific periods during which the alleged non-remittances occurred. In the circumstances, the basis for that award was not properly established. In any event, the appropriate remedy in respect thereof would have been an order directing remittance to the respective statutory bodies, as such deductions are payable to the relevant Funds and not to the Respondent as a monetary award. **Orders** 1. All in all, this Court finds the Appeal to be meritorious and the same is hereby allowed. 2. Consequently, the Judgment of the trial Court in Murang’a CMELRC No. 13 of 2020 delivered on 19th March 2025 is hereby set aside. 3. Each party shall bear its own costs both in this Court and at the trial Court. **DATED, SIGNED** and **DELIVERED** at **NYERI** this **12th** day of **June** 2026. **………………………………** **STELLA RUTTO** **JUDGE** **In the presence of:** For the Appellant Mr. Kasogho with Mr. Wesonga For the Respondent Mr. Mbuthia Court Assistant Ndati **ORDER** In view of the declaration of measures restricting Court operations due to the COVID-19 pandemic and in light of the directions issued by His Lordship, the Chief Justice on 15th March 2020 and subsequent directions of 21st April 2020 that judgments and rulings shall be delivered through video conferencing or via email. They have waived compliance with Order 21 Rule 1 of the Civil Procedure Rules, which requires that all judgments and rulings be pronounced in open Court. In permitting this course, this Court had been guided by Article 159(2)(d) of the Constitution which requires the Court to eschew undue technicalities in delivering justice, the right of access to justice guaranteed to every person under Article 48 of the Constitution and the provisions of Section 1B of the Civil Procedure Act (Chapter 21 of the Laws of Kenya) which impose on this Court the duty of the Court, inter alia, to use suitable technology to enhance the overriding objective which is to facilitate just, expeditious, proportionate and affordable resolution of civil disputes. **STELLA RUTTO** **JUDGE**