In 2023, we published an article discussing the Court of Appeal’s decision in Transparency International Kenya v Teresa Carlo Omondi (Civil Appeal No. 18 of 2018) [2023] where the Court held that legitimate expectation does not arise in a fixed term contract therefore the non-renewal of a fixed term contract cannot constitute unfair termination.
However, a recent decision by the Employment and Labour Relations Court (ELRC) in Mweni v Child Welfare Society of Kenya (Appeal E040 of 2024) [2025] KEELRC 1951 (KLR) departs from the earlier position taken by the Court of Appeal. The ELRC has held that where the terms of a fixed-term contract provide for renewal based on performance, availability of funds, conduct of the employee, productivity to the organisation, and human resource needs, an employee had a legitimate expectation that an employer would follow the pre-requisite considerations for renewal outlined in the contract. Failure to demonstrate adherence to the conditional renewal clauses in the fixed term contract amounts to unfair termination.
Background to the case
The Appellant was employed by the Respondent and worked on consecutive renewed one-year fixed term contracts from 2012 to 2023. Her final contract was due to expire on 30 June 2023, but she was verbally informed of her termination on 3 July 2023 without prior notice, written communication, or performance evaluation, and received no explanation for non-renewal.
The Appellant challenged the termination, asserting that the history of renewals and a contractual clause linking renewal to performance, funding, conduct, productivity, and organisational needs gave rise to a legitimate expectation that these conditions would be properly considered before any decision regarding non-renewal was made.
The ELRC’s findings
The ELRC found the termination unfair, holding that the employer’s failure to assess or document the contractually stipulated conditions breached the employee’s legitimate expectation. Furthermore, once the issue of legitimate expectation was raised, the burden shifted to the employer to justify its decision, which it failed to do, having provided no evidence of compliance with the required process.
Key takeaways for employers
The recent decision by the ELRC suggests a divergence in approach from that of the Court of Appeal, in relation to the renewal of fixed-term contracts. As such, and out of an abundance of caution, employers should:
- Ensure that all conditional renewal clauses in fixed-term contracts are objectively assessed and documented before making renewal decisions.
- Clearly communicate decisions regarding renewal or non-renewal to the employee, with supporting records maintained.
- Be aware that failure to follow these steps may expose them to claims of unfair termination based on legitimate expectation.
Practical implications
This decision underscores the importance of transparency and procedural fairness in managing fixed-term employment relationships. Employers are advised to review their contract terms and renewal procedures to ensure compliance with the latest judicial guidance.
For further advice on managing fixed-term employment relationships, or for assistance in reviewing your organisation’s contracts and renewal procedures, please contact our team.
