OWEYA: Employment fraud and the pension dilemma facing Kenya

Swahili proverbs always pack a punch. One of my favourites is “Mchumia juani hula kivulini”. Loosely translated, it’s a saying that is freighted with age-old wisdom about the beauty of delayed gratification and of the well-earned reward. For generations, that’s also the wisdom that has underpinned Kenya’s pension bargain: a life of labour is repaid with dignity in retirement.

However, after a nationwide authentication exercise directed by the Public Service Commission (PSC), an authentication report submitted to the Ethics and Anti-Corruption Commission and the Directorate of Criminal Investigations in February 2024 revealed at least 520 cases of forgery across 48 Ministries, Departments and Agencies. In response, a directive, issued through a circular dated March 11, 2024, barred payment of salaries, benefits and even pensions to officers who secured employment using fraudulent documents.

On its face, the principle seems unimpeachable: fraud should not pay. Article 226 of the constitution requires the recovery of public funds unlawfully obtained. That position is clear, but pension law rarely is.

Section 18(4) of the Employment Act provides that an employee dismissed for lawful cause is entitled to all benefits due up to the date of dismissal. Section 5 of the Pensions Act declares that every officer has an “absolute right” to pension and gratuity once statutory conditions are met. The Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations further state that benefits vest immediately upon contribution.

If pension is deferred pay, that is deducted monthly, invested and accrued, can it be erased by a later discovery of fraud? Our courts have now split into three schools of thought.

The first school treats fraudulent entry as original sin: it voids the employment from the beginning, and with it any claim to pension. In Musumba v Kenya Maritime Authority (delivered in February 2026), Justice Monica Mbaru held that a pension cannot arise from employment secured through fraud.

The court emphasised the constitutional obligation to recover public funds and ordered a refund of salaries received during the pendency of the employment. Crucially, the court was unmoved by the argument that the employee had served continuously without any allegation of non-performance.

The second school insists that a pension is a vested right that survives dismissal. In Kyalo & 6 others v Kenya Railways Corporation & 8 others (delivered in March 2025), the court held that a pension is vested and that withholding it was unconstitutional. The court’s reasoning did not turn on the manner of termination, rather it insisted that public officers were entitled to their accrued pension, notwithstanding how the employment ended.

Felister Waithiegeni Mugweru v National Police Service Commission & 2 others echoes that principle too: dismissal does not automatically extinguish someone’s pension, and that any limitation must be exceptional, justified and communicated.

Then there is the middle ground, where the courts attempt to separate public recovery from private property. In Fadhil Juma Kisua v Kenya Ports Authority (2018), the employee was refunded only his own contributions, not the employer’s share. It is a rough compromise that punishes the fraud but protects what the worker personally paid in.

Some officers used forged certificates to secure initial employment. Others entered service lawfully, worked for years, and later used fake papers to obtain promotions. If someone lawfully worked for 15 years and only used a forged certificate to obtain a promotion in year 16, is it just to deny them the pension accrued during the lawful years of service?

The difference matters because the law of contracts and the logic of pensions treat beginnings differently from later misconduct. Fraud at entry arguably vitiates the contract ab initio. Fraud in promotion may only affect the benefits linked to that advancement.

The Retirement Benefits (Occupational Retirement Benefits Schemes) Regulations provide that benefits vest immediately to a member. That opens a path to split the pension to preserve what was earned during legitimate service and deny the increment traceable to a fraudulent promotion.

However, complications linger. For one, performance can sometimes constrain the appetite for recovery. In Amara & another v Nairobi Water and Sewerage Co. Ltd; Ethics and Anti-Corruption Commission (Interested Party), the court declined recovery of salaries because the employer failed to prove that the employees had not performed their duties satisfactorily.

That sits uneasily beside Musumba, where performance did not matter because the employment was deemed void from inception. That principle will inevitably weigh heavily in cases involving pension claims where long service was competently rendered.

To be clear, Kenya must fight fraud decisively. Public offices carry a sacred duty to look out for the affairs of the nation in a way that is above reproach. But at the moment, the legal landscape is too fragmented.

Public institutions face uncertainty. Pension trustees are caught between fiduciary duty and anti-corruption directives. What Kenya needs now is clarity through a Court of Appeal pronouncement or comprehensive PSC guidelines that draw firm lines.

Advocate of the High Court of Kenya and a legal practitioner specialising in governance, pensions and regulatory compliance