Nyangangali v Board of Trustees of Kenya Kazi Services Limited Staff Pension Scheme [2023] KEELRC 2896 (KLR)

Nyangangali v Board of Trustees of Kenya Kazi Services Limited Staff Pension Scheme (Cause 1743 of 2015) [2023] KEELRC 2896 (KLR) (10 November 2023) (Judgment)

Neutral citation: [2023] KEELRC 2896 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nairobi

Cause 1743 of 2015

NJ Abuodha, J

November 10, 2023

Between

Calistus Wekesa Nyangangali

Claimant

and

The Board of Trustees of Kenya Kazi Services Limited Staff Pension Scheme

Respondent

Judgment

1. In the Statement of Claim dated 8th September 2015, the Claimant sought payment of retirement benefits and pleaded that the Respondent employed him in 1994 and was forced to retire on medical grounds on 22nd October, 2014 after working for 20 years.

2. The Claimant averred that its employer established a pension scheme under the provisions of Retirement Benefits Act,1995. The scheme constituted a Board of Trustees the Respondent herein which was given the mandate to collect and manage contributions towards the retirement of staff made by both the employer and staff members.

3. The Claimant further averred that he became a member and his contributions were deducted from his salary by the employer who was to remit his contribution and that of the employer to the Respondent.

4. The Claimant averred that on 15th December,2013 he was involved in a road accident and suffered injuries. He stayed home for a long period and on 14th October,2014 the doctors at PCEA Kikuyu Hospital recommended that he be retired on medical grounds as by the nature of his injuries he could not continue working as a security guard.

5. The Claimant averred that his employer on 22nd October,2014 accepted the doctors’ recommendation on retirement and retired him from 1st November,2014 and was paid his terminal dues. The Claimant further averred that under the scheme specifically section 13(b), the Respondent was required to pay him, apart from the accrued benefits, an additional lump sum benefit equal to three times the annual basic salary as a member who left on ill-health.

6. It was the Claimant’s position that the Respondent only paid him his accrued benefits but not those related to ill-health retirement and at the time of his retirement the Claimant was earning a monthly basic salary of Kshs 12,003 which equates to 144,036/ annually.

7. The claimant therefore prayed for a declaration that the withholding of his retirement benefits by the Respondent was unlawful, illegal and unfair; an order for the Respondent to pay Kshs 432,108/= being the three times of his annual pay; an order for exemplary damages for unfair suffering and costs and interests.

8. In its statement of Response, the Respondent agreed to the Claimant being retired on medical grounds but denied that the Claimant was a registered member of the scheme hence it had no obligations towards the Claimant. The respondent therefore prayed that the claimant’s suit be dismissed with costs. The matter proceeded as undefended cause and was disposed of by way of written submissions.

Claimant’s Submissions 9. The Claimant on the issue of whether he had discharged his burden of proof under section 47(5) of the Employment Act submitted that as per the scheme rules he was a member of the Respondent by virtue of sections 5 and 6(d) and (e) which made it a pre-requisite of all employees of Kenya Kazi Services Limited to be members of the Respondent. It was not denied that he was an employee of the respondent and that the latter separately paid out the accrued benefits to the Claimant on being retired.

10. On the issue of whether the decision to withhold the Claimant’s retirement benefits was unlawful, illegal and unfair the Claimant submitted that there was legitimate expectation created upon being retired on ill-health as a compulsory member to be paid an additional lump sum benefit equal to three times his annual basic salary on top of his accrued benefits and on this he relied on the case of Republic versus Principal Secretary Ministry of Transport, Housing and Urban Development Ex Parte Soweto Residents Forum CBO [2019] eKLR.

11. It was the Claimant’s submission that he met the conditions set in the above case on legitimate expectation which was set by section 13(b) of the Scheme Rules hence the decision to withhold the same was unlawful.

Analysis and Determination 12. The Court has reviewed and considered the pleadings, evidence and submissions by Counsel in the matter and is of the view that the only issue for determination is whether the claimant was a member of the Respondent and if he is entitled to the withheld lump sum benefits.

13. The Claimant was a member of the Respondent’s Scheme. The Court has looked at the payslips attached by the Claimant and as much as the Respondent denied that the Claimant was not its member, the Court is convinced that by virtue of section 5 and 6 of the members booklet, the Claimant was supposed to be a member of the scheme to continue being in employment and section 7 provided that the booklet was only available to members. It therefore goes without say that the Claimant was a member of the Respondent since from the attached pay slips deductions were being made and remitted to the Respondent Scheme by his employer.

14. On the issue of withheld lump sum benefits, I have noted that the Respondent has not denied that he paid the Claimant his accrued benefits and the only issue at hand was the three times lump sum amount of the annual basic salary upon retirement on ill-health.

15. A look at the member booklet at section 13(b) the section provides as follows;For members who die in service or leave employment on account of ill-health, there shall be paid, apart from the accrued benefits an additional lump sum benefit equal to three times the annual basic salary of a member at the time of death or ill-health retirement.

16. It is not in dispute that the Claimant was retired on medical grounds and he attached medical reports on the same. The Claimant therefore had the legitimate expectation to benefit from the lump sum amount on account of ill-health.

17. The threshold in determining a claim for an alleged breach of a legitimate expectation is as determined in Mary M Gitao & 3 others v Chief Registrar – Judicial Service Commission & 3 others [2017] eKLR where it was stated that the court will deliberate over three key considerations;(1)1) Whether a legitimate expectation has arisen(2)Whether it would be unlawful for the authority to frustrate such an expectation and(3)If it is found that the authority has done so, what remedies are available to the aggrieved person.”

18. In this case the same was well provided for in the member booklet and the Claimant expected at his early retirement due to ill-health he would be entitled to the said lump sum amount of three times his annual basic salary which is Kshs 432,108/=.

19. The Court finds and holds that the Respondent’s action was unlawful, illegal and unfair. The Court therefore awards the Claimant the said amount of Kshs 432,108/= together with costs and interests at court rates until payment in full.

20. It is so ordered

DATED AT NAIROBI THIS 10TH DAY OF NOVEMBER, 2023DELIVERED VIRTUALLY THIS 10TH DAY OF NOVEMBER, 2023ABUODHA NELSON JORUMJUDGE