Leshishi v Kenya Bankers Savings & Credit Co-operative Society Limited (Cause E386 of 2021) [2025] KEELRC 3692 (KLR)
The bottom line
#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
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the Claimant is entitled to pension/service pay for the period 2004–2016
- 2.Whether the Claimant is entitled to gratuity for the contract ending 30th June 2018
- 3.Whether the Respondent lawfully applied the Claimant's gratuity to offset a Sacco loan
Key legal issues
#Entitlement to service pay for 2004–2016
Claimant not entitled to service pay or further pension, having received provident fund dues upon retirement in 2016
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.
Entitlement to gratuity for the fixed-term contract ending 30th June 2018
Claimant entitled to the computed gratuity of Kshs.283,524.37
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.
Lawfulness of applying gratuity to offset a Sacco loan
The offset was arbitrary and unlawful
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.
Legal principles established
#- 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
#- 1.The claim for pension/service pay for the period 2004–2016 is dismissed
- 2.The Respondent shall pay the Claimant Kshs.283,524.37 on account of gratuity
- 3.Interest shall accrue on the gratuity at court rates from the date of the judgment until payment in full
- 4.The Respondent shall bear the costs of the suit
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Employment and Labour Relations Court jurisdiction under the Employment Act, 2007 and the claimant's employment contract
Relief refused
#Pension/service pay at 3 months' pay per completed year of service (Kshs.3,505,038.92) for 2004–2016
Claimant was a member of the provident fund and NSSF and received his provident fund benefits in 2016; service pay is not payable to members of such schemes
Costs
The Respondent shall bear the costs of the suit
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The claim for pension/service pay for the period 2004–2016 is dismissed.
The Respondent shall pay the Claimant Kshs.283,524.37 on account of gratuity.
Interest shall accrue on (b) at court rates from the date of this judgment until payment in full.
In my considered view, I find and hold that the application of the Claimant’s gratuity to a loan arbitrary and unlawful.
By law, deductions from an employee’s dues require either a written consent, a statutory authorization or a court order.
Issues in the judgment
#Inconsistency in dates of retirement: the Claimant's case states a retirement notice indicating 25th July 2016, but his cross-examination testimony states he retired on 27th July 2016, while the contract was later extended to 30th June 2018
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#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.