[2018] KEELRC 1812 (KLR)

REPUBLIC OF KENYA

IN THE EMPLOYMENT AND LABOUR RELATIONS COURT

AT NAIROBI

CAUSE NO. 1543 OF 2013

PAUL BILLY NYAGILO.............................................................CLAIMANT

VERSUS

EAST AFRICAN PORTLAND & CEMENT LIMITED....RESPONDENT

RULING

Introduction

1. Justice Maureen Onyango delivered Judgment in this suit on 26. 1.2018 whereby she directed the respondent to tabulate and pay the claimant the following within 30 days:

(a) Salary for the entire period he was on suspension before dismissal.

(b) Gratuity for the entire period he worked as a unionsable employee.

2. On 12. 3.2018, the parties reported to me that they have settled the issue of salary arrears but the issue of gratuity had not been settled. They further told the Court that they had differed over the salary applicable in calculating the claimant’s gratuities and asked the Court to interprete clause 21 of CBA dated 17. 10. 2007, which was in force in 2009 when the claimant joined management. The Court directed the counsel to file written submission, which I have carefully considered herein.

Claimant’s Case

3. The claimant submitted that the salary applicable in assessing his gratuity is gross pay. He relied on clause 21(d) of the CBA which provided that “gratuity will be based on the rate of monthly pay due to the employee on the date of his/her resignation or retirement”. He contended that, the said clause, which is binding on the respondent does not mention Basic pay anywhere and that if that was the intention of the negotiators, nothing would have been easier than to state so. He urged the Court to find that the monthly pay applicable herein was the Kshs.124,264. 80 which he was earning before being promoted to a pensionable management position.

4. In the alternative the claimant urged that, at the very worst the Court should order that the salary applicable is the Basic salary plus House Allowance as it was submitted by the Defence in her written submissions filed on 13. 11. 2014 at page 17 paragraph 67.

Respondent’s Case

5. The respondent admitted that the claimant is entitled gratuity for 16 years at the rate of 72 days per year based on his monthly pay as provided under clause 21 of the 2009 – 2012 CBA. According to her, the monthly pay applicable under clause 21 of the CBA is the basic pay. She cited Katiwa Kanguli Vs Bamburi Cement [2014] eKLR, Tailors & Textile Workers Union Vs African Cotton Workers [2013] eKLR and Republic Vs The Retirement Benefits Appeals Tribunal & 2 others [2014] eKLR to support her submissions.

Analysis and Determination

6. There is no dispute that the respondent was ordered by the Court to compute and pay the claimant his gratuity for 16 years worked. It is therefore not for this Court to do the computation. The only issue for determination is what was meant by “monthly pay” in clause 21 of the 2009-2012 CBA vis-à-vis computation of gratuity.

7. The said clause provided as follows:

“Gratuity shall be paid to the eligible employees including nonunionisable staff in accordance with the following rules:

(c) Above 10 completed years of service - 72 days’ pay per year of service.

(d) The gratuity will be paid based on the rate of monthly pay due to the employees on the date of his or her resignation or retirement.”

8. The said clause did not define the term “monthly pay” but obviously, it also never described it as the basic salary. The Court was also not told what was the practice by the respondent in dealing with similar cases in the past. Instead, the respondent referred the Court to judicial precedents to urge that only Basic salary was applicable in computing gratuity. The cited cases are however distinguishable from the facts of this case.

9. In Katiwa Kanguli Vs Bamburi Cement [2014] eKLR, there was no dispute that the applicable pay in calculating gratuity was the basic pay. However, the issue for determination was whether the basic pay applicable was the one payable before the claimant became a pensionable management staff or the one he was earning before retirement as a pensionable manager. The claimant did not have evidence to back his claim for the latter basic pay and as such, the Court held that the salary applicable was the basic pay he was earning before ascending to the managerial position. In Tailors and Textile Workers Union Vs

African Cotton Workers [2013] eKLR, the claimant prayed for gratuity based on the basic pay and the Court granted the same. Finally, in Republic Vs the Retirement Benefits Appeals Tribunal and 2 others [2014] eKLR the Trust Deed of the Pension Scheme expressly defined the pensionable salary as the annual basic salary and the Court quashed computation of pension based as a consolidated pay.

10. The summary of the foregoing opinions is that the pay applicable in computing pension or gratuity is dictated by the express agreement between the parties to the contract or CBA or the scheme’s Trust Deed. The problem posed by the present case is the failure by the negotiators of the CBA to define the term “monthly pay”. That default puts the Court to the task of examining closely the components of the claimants monthly pay to ascertain whether they all qualify for consideration in calculating his gratuity.

11. The payslip for May contained Basic pay of kshs.47,004, House Allowance of Ksh.9,400. 80, Acting Allowance of Kshs.25,146, Telephone Allowance of Kshs.7,000 and Field Allowance of Kshs.35,714. After a careful consideration of the said components of the claimant’s salary, I find that Acting Allowance cannot be part of monthly pay for purposes of calculating his gratuity because it was a temporary benefit. In addition, the Telephone allowance and Filed allowances cannot be included in the meaning of salary or wages by the appointment letter and the CBA for 2009-2012 produced by the employer during the trial.

12. The Appointment letter dated 15. 7.2003 offered the claimant the post of Sales Assistant Job Group “E” at a Basic salary of Kshs.25,589 per month plus House Allowance of Kshs. 20% of the Basic salary per month. Clause 2 of the CBA 2009 -2012, provided the structure of wages for all categories of unionisable staff to include only the basic wages plus House Allowance. Those two components of the employee’s pay must be the ones which were intended by the CBA to be the monthly pay for purposes of calculating gratuity. The rest of the allowances were given to facilitate the claimant to perform his duties as an employee.

13. The foregoing position is fortified by respondent in paragraph 37 of her defence where she pleaded as follows:

“37. The Respondent further submits that in computing terminal dues, the claimant’s gross salary should consist of house allowance and basic salary. The claimant is not entitled to telephone allowance and field allowance since the same were paid in order to facilitate his duties as an employee.”

Disposition

14. In consideration of all the matters and findings herein above and the admission by the respondent, I find and hold that, in this case, the monthly pay for purposes of computing the claimant’s gratuity is the basic salary plus house allowance as at the time he left the unionisable position in favour of a pensionable position in the respondent’s management in November 2009. Under clause 2 of the said CBA, effective 1. 7.2009 the salary structure for job Grade “E” in which the claimant was serving was Kshs.52,174 Basic pay plus Ksh.10. 435 House Allowance totaling to Kshs.62,609. The said sum is the monthly pay applicable in computing gratuity for the claimant under clause 21 of the CBA for 2009 – 2012. The respondent can now proceed to compute and settle the claimant’s gratuities within 10 days from today.

Mention on 19/6/2018 to confirm settlement.

Dated, Signed and Delivered in Open Court at Nairobi this 8th day of June, 2018

ONESMUS N. MAKAU

JUDGE