How to settle the terminal dues of a deceased employee
2 weeks ago
This article examines the special rules that apply to the payment of terminal dues and other entitlements upon the death of a worker.
Notice of death
The employer is required to give notice of the death to the labour officer or the Deputy County Commissioner of the area in which the employee was employed as soon as the information is received – Section 24(1) of the Employment Act.
Payment of terminal dues
By ‘terminal dues’ I mean the salary, accrued leave and other payments due from the employer to an employee.
The dues should be paid to the deceased’s legal representatives, upon production of letters of administration in respect of the deceased’s estate.
When should the payment be made?
Within 30 days of production of the letters of administration.
In reality, it takes 6 months or more to obtain letters of administration. The process is commenced by the deceased’s next of kin, usually the spouse and adult children, for the High Court to appoint them as the deceased’s legal representatives. The process can be complicated and extended if the application is contested.
Under the laws of succession, only the court-appointed legal representatives can receive money due to the deceased and apply it appropriately. It is an offence to deal with the property of a deceased person unless one is a legal representative.
This rule places the employer and the deceased’s family in a difficult position because the family may be desperate for the money.
If the employer releases the money to the deceased’s spouse or other beneficiaries declared by the deceased in the employer’s records, as is often done, there is a risk that the person who is paid may not be ultimately appointed as the legal representative, in which case, if they are not willing to pay over the funds to the legal representatives, the employer will have to pay the legal representative.
From my experience, most employers readily take on this risk, mainly on compassionate grounds.
Notice of payment
Within 7 days of paying the legal representative, the employer is supposed to notify the labour officer.
What if no claim is made for the dues?
According to Section 24(4) of the Employment Act, if no claim is made within 3 months of the death or if the employer is in any doubt, they should pay the money to the labour officer or the District County Commissioner to be held in trust for the deceased’s estate. Question: Does anybody have practical experience in this?
What about other entitlements?
Insurance money and pension are payable to the deceased’s nominated beneficiary.
Please share your experiences with these provisions and feel free to share this article 🙂
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