Telkom ordered to pay former employees Sh7.2bn

Over 2,600 former employees of Telkom will have the best valentine following a landmark judgement that they be paid over Sh7.2billion in terminal dues.

A four member Retirement Benefits Authority tribunal (RBA) established that the 2,613 retrenched workers of the communication body were underpaid their pensions by the Trustees of Teleposta Pensions Scheme and Provident Fund which they were members.

Tribunal members concurred with lawyer Titus Koceyo for the retrenchees that they (former workers) were not paid in accordance with the prevailing trust deed and schemes rules.

Therefore the trustees were directed to pay interest on the sums payable to each retrenchee from the date of exit until payment in full “ which shall not be less than the investment interest declared in the years that the benefit has remained due.”

Mr Koceyo had told the RBA tribunal comprising Kakai Cheloti (chairman) ,Veronicah L Owenda (Mrs),Job N Momanyi and Muthomi Thiankolu that Telkom was the sponsor of the scheme and that the formula invoked in calculating the terminal dues was wrong.

The tribunal said testimony received from an International Actuarist, Mr Robert Oketch of NBC Holdings Proprietary(Pty) Limited of South Africa indicated that there was variance in t he amounts received by the retrenchees.

The tribunal said, Mr Oketch compared the computed figures received by the thousands of retrenchees upon exit and what they were supposed to receive upon retiring before concluding they were underpaid.


Telkom had relied on figures calculated by actuarists engaged Alexander Forbes Financial Services (E.A) when they paid the workers they retrenched.
Telkom had discounted the amounts they released to its former workers.

Said the tribunal members in their judgement: “ In our view any computation of the appellants benefits by application of a discounting ( reducing) factor at age 55 is contrary to Regulation 16 (1) as they reduced accrued rights and interests.”

The tribunal ruled that the board of trustees of the Teleposta pension scheme and provident fund had a fiduciary obligation requiring them to act in the best interest of the beneficiaries and “ pay them the right amounts owing.”

Allowing the appeal by the former retrenchees as presented by Mr Koceyo , the tribunal established that they have proved their case.

“We hereby direct the trustees of the Teleposta to compute and pay to each of the retrenchees (2,613) the benefits due to them by applying the rules of the scheme on accrued rights which is- a pension equal to 1/480th of each retrenchees final pensionable salary for each completed month of pensionable service.” the tribunal determined.

The trustees will offset from any monies found due to each appellant (retrenchee) any amounts so far paid.

The trustees were directed to prepare and submit to each retrenchee an account showing the amount owing.

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