Court of Appeal Pronounces Itself on The Question of Renewal of Fixed Term Contracts in Employment.

1.1 Introduction

The Court of Appeal in Transparency International-Kenya v Teresa Carlo Omondi (Civil Appeal No.81 of 2018) pronounced that the doctrine of legitimate expectation does not apply in renewal of a fixed -term contract and that non-renewal of the fixed term contract is not unfair dismissal or unfair termination.  The debate as to whether non-renewal of a fixed term contract by the employer should be viewed as unfair termination has been a recurrent issue among employers and employees in Kenya. Courts in Kenya have been called upon to shed light and give directions on whether renewal of a fixed term contract is indeed a right to the employee or whether it is entirely the employer’s discretion.

1.2 A survey of judgements on renewal of fixed term contracts

To begin with, the Employment and Labour Relations Court[1] has been vibrant on the issue of whether non-renewal of fixed term contracts should be viewed as unfair dismissal. This is evident from the several occasions where the court has been called upon to make a determination on the issue. The court has consistently held that non-renewal of a contract does not amount to unfair dismissal.[2]

A good example was seen in the case of Samuel Chacha Mwita v Kenya Medical Research Institute[3] where the court held that given that a fixed term contract rightfully expires on the given expiry date, termination upon expiry or non-renewal of the said contract does not amount to unfair dismissal. The said position was also buttressed in the case of Margaret Ochieng v National Water & Pipeline Corporation[4] where the court held that to expect an automatic renewal of a fixed term contract defeats the very purpose as to why the contract was entered into. Additionally, the case of Rajab Barasa & Others v Kenya Meat Commission highlighted that the employer retains the discretion to renew a contract or not and can fail to renew a contract even where the contract expressly provides for a renewal clause.[5] Further the court in Bernard Wanjohi Muriuki v Kirinyaga Water & Sanitation Company held that an employer is under no obligation to give reasons for refused renewal of a contract as to require such reasons would visit  unwarranted burden on part of the employer who usually is also  not required by law to give reasons for turning down job applicants. [6]

The upshot from the above decided cases by the Employment and Labour Relations Court is that the renewal of a fixed term contract is incumbent on the employer who has the discretion to decide whether or not to renew the contract after the expiry of the contract. This ,however, does not mean that  an employee cannot challenge non-renewal of a contract. This can be done though on limited grounds. This was illustrated in the case of Ruth Gathoni Ngotho Kariuki v Presbytery Church of East Africa & Another[7] , where the employee was to be given three months’ notice of non-renewal, but the same was not issued to them. The employee successfully challenged the non-renewal and the court held that there was legitimate expectation by the employee that their contract would be renewed.

1.3 Court of Appeal in Teresa Carlo Omondi v Transparency International -Kenya

The Employment and Labour Relations Court in Teresa Carlo Omondi v Transparency International -Kenya had a different view from what courts have previously held. The court ruled in favour of the claimant and held that the employee had the legitimate expectation that their contract would be renewed. Therefore, non-renewal of the fixed term contract by the employer amounts to unfair dismissal within the meaning of section 49 of the Employment Act and warrants a remedy by court as required by Section 12 of the Employment and Labour Relations Court Act.[8] The said decision prompted an appeal by the appellant in the Court of Appeal case of Transparency International-Kenya v Teresa Carlo Omondi , where the Court of Appeal reiterated and held that the doctrine of legitimate expectation does not apply in renewal of a fixed -term contract and that non-renewal of the fixed term contract is not unfair dismissal or unfair termination.[9] The appellate court also made reference to the case of Francis Chire Chachi vs Amatsi Water Services Company Limited  where the court held that the employers have no obligation to give reasons for refusing to renew a fixed term contract.[10]

[1] The Constitution of Kenya 2010, article 162

[2]Samuel Chacha Mwita v Kenya Medical Research Institute(2014)eKLR

[3] Ibid.

[4] Margaret Ochieng v National Water & Pipeline Corporation(2014)eKLR

[5] Rajab Barasa & 4 Others v Kenya Meat Commission(2016)eKLR

[6] Bernard Wanjohi Muriuki v Water & sanitation Company Ltd & Another (Cause No.1541 of 2010)

[7] Ruth Gathoni Ngotho Kariuki v Presbytrery Church of East Africa & Another (2012)eKLR

[8] Teresa Carlo Omondi v Transparency International-Kenya(2017)eKLR

[9] Transparency International-Kenya v Teresa Carlo Omondi (Civil Appeal No.81 of 2018)

[10] Francis Chire Chachi vs Amatsi Water Services Company Limited(2012)eKLR