Lead image for Court throws out Sh1bn Migori pension recovery suit.
The Employment and Labour Relations Court has dismissed a Sh1 billion suit by the Local Authorities Provident Fund Board against Migori County Government after finding the board lacked the legal capacity to sue.
Justice Nzioki wa Makau ruled that the board ceased to exist after Parliament repealed the law that created it - the Local Authorities Provident Fund Act - ending its bid to recover alleged unremitted pension contributions meant to secure the employees’ retirement benefits.
The repealed Act was replaced with the County Governments Retirement Scheme Act, 2019.
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However, the new Act was declared unconstitutional in December 2022 in a separate case following a finding that it was enacted without adequate public participation and conflicted with several constitutional provisions.
Justice Makau’s ruling leaves unresolved the underlying dispute over the alleged pension arrears because the LAP Fund’s case was determined on a preliminary legal objection.
The legal dispute arose from a claim filed in February 2022 in which the LAP Fund Board sought Sh1 billion from Migori County Government and its Chief Finance Officer. The board alleged the money represented provident fund contributions deducted from employees but never remitted.
Migori County responded with an objection asking the court to strike out the case. It argued the Local Authorities Provident Fund Board had ceased to exist after the County Governments Retirement Scheme Act came into force in October 2019 and that only the County Governments Retirement Scheme could institute such proceedings.