Kenya Medical Research Institute v Maria Mukhwana [2019] KECA 176 (KLR)
The bottom line
#Kenyan employers must tell employees when a renewable fixed-term contract won't be renewed; silence counts as unfair termination, though compensation may be modest.
What this practically means
#Executive summary
#Key legal issues
#Whether non-renewal of a fixed term contract with an express renewal clause amounts to unfair termination
Non-renewal amounted to unfair termination because the letter of offer stated the contract was renewable and renewal was to be based on job performance evaluation, yet the appellant gave no communication on renewal and unilaterally extended the contract.
The Court distinguished authorities holding that fixed term contracts carry no expectations beyond expiry because here there was express provision for renewal. Having invited the employee to rely on renewal based on performance evaluation, the employer was obliged to communicate a decision not to renew. Its silence, followed by a unilateral three-month extension with a reduced notice period, was unfair treatment of the respondent.
Whether the loan participation conduct could found a legitimate expectation of renewal
The trial Judge's finding that the appellant's participation in the loan transaction warranted expectation of renewal was a misdirection not supported by the evidence.
The evidence showed the respondent approached the appellant for a loan and was referred to Imarika Sacco; the check-off system was implemented at the Sacco's request. The Court held that salary check-off arrangements do not bind an employer to retain an employee for the life of a loan, and the plea that the appellant caused the respondent to take the loan was unsupported.
Whether the award of 12 months' salary was a proper exercise of discretion
The discretion was improperly exercised; compensation was reduced to the equivalent of 3 months' salary.
The Judge relied on the erroneous loan finding and failed to consider that the fixed term contract was terminable by either party on 3 months' notice or payment in lieu. Had he taken that into account, he would not have awarded maximum compensation of 12 months' salary. The Court interfered and substituted an award of 3 months' salary.
Whether the 14% interest rate should be disturbed
The rate of 14% per annum was left undisturbed as no improper exercise of discretion was shown.
Under Section 26 of the Civil Procedure Act the award of interest is at the court's discretion. The appellant did not demonstrate that the Judge misdirected himself in fixing 14% per annum, so the rate stands, running from the date of the ELRC judgment until payment in full.
Legal principles established
#- Fixed term contracts carry no rights, obligations or expectations beyond the date of expiry, unless the contract contains an express renewal clause.
- Where a fixed term contract contains an express renewal provision, the employer must inform the employee if it does not intend to renew; silence and unilateral extension do not satisfy that duty.
- There is no obligation on an employer to give reasons for not renewing a fixed term contract unless the contract itself calls for additional justification.
- An employer's agreement to effect loan check-off deductions does not warrant continued employment for the life of the loan.
Court orders
#- 1.Set aside the award of 12 months' salary (Kshs. 3,944,208.00) and substituted an award of 3 months' salary (Kshs. 986,052.00) as compensation for unfair termination
- 2.Declined to interfere with the award of 2 months' salary in lieu of notice
- 3.Set aside the total ELRC award of Kshs. 4,767,411.00 and substituted a total award of Kshs. 1,643,420.00
- 4.Directed that interest on Kshs. 1,643,420.00 accrue at 14% per annum from the date of the ELRC judgment until payment in full
- 5.Ordered each party to bear their own costs of the appeal
- 6.Ordered the appellant to bear the costs of the suit in the ELRC
- On appeal from
- Employment & Labour Relations Court at Mombasa
- E&LRCC No. 182 of 2016
- Jurisdiction invoked
- First appellate jurisdiction over the Employment & Labour Relations Court (appeal as of right from the ELRC)
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
Cite this brief
#Cite this brief
Caselaw, "Kenya Medical Research Institute v Maria Mukhwana [2019] KECA 176 (KLR)", Case Analysis (2019). Civil Appeal No. 145 of 2018. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2019/176/eng@2019-11-14
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.