Advertisements

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 practice

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.payment

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.

***THE END***

Please share your experiences with these provisions and feel free to share this article 🙂

THIS ARTICLE IS COPYRIGHTED!

 

About Anne Babu

Anne is an Advocate of the High Court of Kenya and the Founding Partner of Anne Babu & Co. She has practised employment law for close to 12 years and her employment law practice has been recognized by the prestigious Chambers & Partners. She is a repository junkie and a lover of editing.

Advertisements

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

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.


Comments

  1. Mark Antony says:

    Thanks Anne, the article on settlement of dues for the deceased is really informative as we’ve been grappling with same issues since the inception of Counties given that there exist staff with different terms and conditions of service. Your article has been of much help to us, we look forward to reading more of your informative articles.

    Regards

    1. Anne Babu says:

      Asante

  2. Susan Muriithi says:

    Thank you for the informative piece Senior. I have an opinion that slight differs and I stand guided. In the case of ‘Jane Sella Wanja Amos v Mary Igandu Njagi [2016] eKLR’ the Court held;

    ‘There is issue raised in regards to the final dues and insurance policy held by the deceased prior to
    his demise. The law in regards to Insurance policies and final dues is clear and on this I agree with the
    submissions made by the respondent the same is paid to the nominated person.’

    I believe this means in a case where a next of kin in nominated by the deceased prior to his/her death. The nominee is the rightful beneficiary of the dues.

    1. Anne Babu says:

      Hi Susan, I agree with the judge in respect of the insurance money but not the final dues which form part of the estate and which should be managed by the administrator. It does not appear that anyone brought the provisions of the Employment Act in that regard to her attention and she therefore did not consider them in making her decision.

  3. Mercy Kabachia says:

    Dear Anne,
    Thank you for enlightening us on various legal matters.
    In your article ‘How to settle the terminal dues of a deceased employee’ you mentioned
    employers who releases the money to the deceased’s spouse or other beneficiaries as declared by the deceased in the employer’s records is risky. Does that mean employers asking employees to indicate beneficiaries is an exercise in futility because someone else may be appointed as the legal representative after death? I believe the employees wish ought to be honoured.

    1. Anne Babu says:

      Their wishes will be respected with respect to insurance payments and pension. For terminal dues, both the Law of Succession Act and the Employment Act require the dues to be paid to the legal representative.

  4. Susan W says:

    Good morning,
    I have one experience. An employee died. He had listed one woman as his wife, but on his death, another woman appeared, and her proof that she was his wife was his old NHIF card (remember the A5 size manila paper ones?) in which this second woman was listed as his wife.

    The company chose to pay the money to the Public Trustee to hold in Trust until such a time that the administrators of the employees estate were appointed, after which they would release the money to said administrator(s).

    1. Anne Babu says:

      Super! Thanks for sharing your experience.

  5. Charles T says:

    Thank you Anne for your always insightful blog.

    I agree with the process. My practice has been to hold the payment until there is a letter of administration (LOA) because there emerges other people once a death occurs. I have experienced a tussle between children and their surviving father and wives fighting over the dues of the deceased husband. My practice has been to wait for the LOA.

    On the pension part, Pension Trustees are treated or viewed as equivalent to the public trustee. You can transfer the organization’s final dues to the public trustee but not pension, Those who have undergone the Trustees certification program will confirm this. Trustees are required to make a judicious judgement or decision on who rightly benefits, In most cases, employees do not update their beneficiaries. Case in example is where the deceased had nominated a parent or a brother but he or she had a family and especially children. The trustees are empowered to establish who is a rightful beneficiary even if there was no nomination. I have experienced cases where a staff died but had not updated their family. As such, the mother was nominated but the deceased had a child. Should the Trustees just pay the mother and ignore the child? I do not think so.

%d bloggers like this: