Introduction
The Supreme Court of Kenya, sitting as a five-judge bench, was called upon to resolve a question that has troubled Kenyan employment law for decades: whether public officers whose employment is terminated prematurely in the public interest are entitled to be paid salaries and allowances up to their expected retirement age, particularly where their terms of service were described as “permanent and pensionable.”
Background & Brief Facts
The appeal arose from a long-running dispute between three former senior employees of Telkom Kenya Limited and their employer, following their compulsory retirement in 1991.
The Appellants had joined the Respondent at entry level in the 1960s and 1970s and rose steadily to senior management positions. Their records were unblemished, marked by commendations and awards for exemplary service. In July 1991, however, they were abruptly placed on compulsory leave on allegations of persistent laxity in the performance of their duties. No particulars were supplied, no warnings had previously been issued, and despite repeated written requests, the appellants were never accorded a hearing. On 22 October 1991, they were formally retired in the public interest. Although they were paid pension, gratuity, accrued benefits, and one month’s salary in lieu of notice, they challenged the legality of the retirement and sought damages equivalent to the salaries and allowances they would have earned until the mandatory retirement age.
The High Court found that the Respondent had acted in breach of its own regulations and the principles of natural justice and awarded the appellants substantial sums representing anticipated future earnings. On appeal, the Court of Appeal reversed that decision, holding that claims for anticipatory salaries were speculative, unsupported by statute, and contrary to public policy.
Issues
- Whether premature retirement of public officers in the public interest creates a legal or contractual basis for the payment of anticipatory salaries and allowances.
- What reliefs should issue?
Determination
The Supreme Court admitted the appeal under Article 163(4)(b) of the Constitution, on certification that it raised a matter of general public importance, narrowly framed around the availability of anticipatory salaries and allowances under the former constitutional and statutory regime.
In a decisive judgment, the Supreme Court held that neither the former Constitution nor the repealed Employment Act (Cap 226) created any legal or contractual entitlement to anticipatory salaries or allowances following termination, whether lawful or unlawful. The Court rejected the argument that the description “permanent and pensionable” created a non-terminable engagement lasting until retirement age, emphasising that every contract of employment is, by its nature, terminable. Employees are paid for services actually rendered, and once the employment relationship comes to an end, there is no legal basis for remuneration beyond that date.
In its analysis, the Supreme Court emphatically rejected the proposition that “permanent and pensionable” employment creates a non-terminable engagement lasting until retirement age. Echoing the Court of Appeal’s reasoning in Engineer Francis N. Gachuri Vs Energy Regulatory Commission, Industrial Cause No. 203 of 2011: “There is no provision for payment of damages to the date of retirement. The fact that the Claimant’s contract was referred to as permanent and pensionable does not mean it could not be terminated. No employment is permanent. That is why the Employment Act does not mention the word ‘permanent employment”.
It reaffirmed that remedies for wrongful or unlawful termination are confined to what is contractually or statutorily provided for, such as notice pay, accrued benefits, and pension entitlements. Even where termination is found to be procedurally unfair, courts are not entitled to award salaries for periods during which no services were rendered.
On the question of anticipatory salaries and allowances, the Court reaffirmed a consistent judicial position that such claims have no statutory or contractual foundation. Citing with approval the decision of the Employment and Labour Relations Court in D.K. Njagi Marete v Teachers Service Commission (2013) eKLR, as upheld by the Court of Appeal in D.K. Njagi Marete v Teachers Service Commission [2020] KECA 840 (KLR), the Supreme Court observed that employment remedies must be proportionate and are not intended to facilitate unjust enrichment. An award of salaries up to retirement would amount to double remuneration from public funds for services not rendered.
While the Supreme Court agreed that the appellants’ retirement was procedurally unlawful, having been effected without a hearing despite express provisions in the respondent’s regulations, it held that procedural unfairness does not translate into an entitlement to anticipatory salaries. Under Telkom’s Posta Code J and Personnel Circular No. 4 ‘C’ of 1974, an employee retired in the public interest was entitled only to one month’s salary in lieu of notice, accrued leave, and pension or gratuity. Those entitlements had already been paid.
The Court also rejected any claim of legitimate expectation founded solely on permanent and pensionable status, citing Communications Commission of Kenya & 5 Others v Royal Media Services Ltd & 5 Others [2014] KESC 53 (KLR) and Tunoi & Another v Judicial Service Commission & Another [2016] KECA 530 (KLR) for the proposition that only expectations grounded in law or express statutory provision are protected, and that clear statutory provisions override any contrary expectation.
Conclusion.
In the result, the Supreme Court dismissed the appeal and upheld the judgment of the Court of Appeal. In doing so, it authoritatively settled the law that permanent and pensionable employment does not guarantee service until retirement, and that claims for anticipatory salaries and allowances, whether arising under the former or current constitutional order, are legally untenable, speculative, and contrary to public policy.
By Sheilla Koech and Shalom Mataya.
