Featured
Legal position on gratuity
5 months ago
Definition
Gratuity is a monetary gift from an employer to an employee. It is a gratuitous pay and is, by its very nature, discretionary.
Payment of a gratuity and the applicable terms and conditions are governed by one’s contract and by the employer’s policies.
The rationale for payment of gratuity is in appreciation of services rendered and also as a retirement benefit.
General rules
- It is normally paid at the end of the contract.
- It is not normally paid if the employer has made arrangements for a pension scheme.
- Unlike NSSF, where both an employer and employee contribute, an employee does not contribute towards gratuity.
- It is normally paid at the rate of one month’s basic salary for every year of service. However, it could be less or more depending on the terms of the contract.
- In most cases, it is not paid if an employee is summarily dismissed. This was the holding in Bamburi Cement Limited v W K [2016] eKLR.
- As long as an employee’s contract provides for gratuity, the employee will be entitled to the payment whether or not he is a member of NSSF (Wells Fargo Limited v J I G [2018] eKLR).
- Where the contract provides that gratuity will be payable upon successful completion of a contract and the employee is terminated before the end of the contract through no fault of his, the gratuity will be payable on a pro-rata basis (B P S v Kenya Urban Roads Authority [2014] eKLR).
An employee who receives a gratuity is not entitled to service pay – Section 35(5) of the Employment Act, 2007.
XOX
Disclaimer
The information on this website is for general guidance on your rights and responsibilities and is not legal advice. If you need more details on your rights or legal advice about what action to take, please contact a lawyer.
We try to ensure that the information on this website is accurate. However, we will not accept liability for any loss, damage or inconvenience arising as a consequence of any use of or the inability to use any information on this website.
We assume no responsibility for the contents of linked websites. The inclusion of any link should not be taken as an endorsement of any kind by us of the linked website or any association with its operators. Further, we have no control over the availability of the linked pages.
Leave a Reply
This site uses Akismet to reduce spam. Learn how your comment data is processed.
Dear Ann,
Good morning. Kindly confirm to me whether a Union Official(kudheiha) officer is supposed to attend a disciplinary hearing. Can an employee also bring in a none employee, an outsider working in another organization as a representative.
The employee can attend with a union representative or a fellow employee.
Hi Ann, there was an inquiry I made to you but went unanswered or rather unnoticed. It was about an employee claiming for unpaid rest days (off days) totaling 1644 equivalent to 533000/- These dates back from 2002. Kindly advice on the most appropriate way to address this.
Under the Employment Act, such a claim can only be made for the past 3 years, claims beyond that are time-barred. It’s the employer’s responsibility to keep records, therefore, if the claim is valid, it should be settled at usual overtime rates.
Hi Anne, Thank you so much for your articles they been such a source of information.Kindly where can i get the full notes on judgments mentioned above.
Thank you in advance.
Caroline Wanga.
Thanks. You can get them at http://kenyalaw.org/caselaw/. I normally initial the names of the individuals.
there is this guy who came for advice. he had worked for company X for 8years on temporary appointment…. is he entiltled to anything after dismisal?
What do you mean by temporary appointment?
Can a separation agreement help me win a court case against an employee who has a fairly strong discrimination case against my company.
I don’t understand your question.
Hi. If an employee resigns before lapse of his contract, will he be entitled to his gratuity?
Gratuity is only paid if provided in the contract and subject to the terms of the contract.
Hi Ann i was working with parliamentary service commission under a 5 year contract..i later served the commission with a 2 months notice of intendend resignation after working for 4 months am i eligible for gratuity payment for the six months i received my salary?
Gratuity is only payable if provided in your contract or in your terms and conditions of service.
This is so good. Up to date information, well researched.
Thank you
Hi, kindly what is the standard formula for calculating service pay ?
15 days’ pay for every year worked.
Hi Anne, HOW LONG AFTER ONES CONTRACTS END WITH GOVERMENT SHOULD THEIR GRATUITY BE PAID? ITS’ BEEN SLIGHTLY OVER A MONTH AND I FEEL i M BEING TAKEN ROUND IN CIRCLES?
Confirm from the terms of service that govern your employment.
VERY EDUCATIVE.
Asante