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ELRCPartially AllowedNot stated in judgment· [2012] KEELRC 260 (KLR)

Ruth Gathoni Ngotho-Kariuki v Presbyterian Church of East Africa and Presbyterian Foundation [2012] KEELRC 260 (KLR)

Industrial Court of Kenya
11 December 2012
BOByram Ongaya
6,559 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~26 min to read original · ~4 min brief

The bottom line

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A Kenyan hospital nurse won KSh 5.1 million because her employer missed the contract deadline for saying it would not renew her job.

What this practically means

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Executive summary

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The Claimant, a nursing officer in charge at PCEA Kikuyu Hospital, sued the Presbyterian Church of East Africa and the Presbyterian Foundation for breach of a three-year fixed term contract and a training bonding contract. Her contract, mandatorily renewable, expired on 31.03.2010; under clause 6 the Board was to communicate any refusal to renew three months before expiry. Instead, on 5.05.2010 the Secretary General informed her the contract would not be renewed and required her to vacate immediately. The court held the failure to timeously communicate non-renewal constructively renewed the contract from 01.04.2010, and that termination without contractual notice or payment in lieu, and without the Section 41 hearing and notification, was unfair and in breach of contract. It further held the bonding contract dated 13.01.2009, under which she undertook to work five years after completing her Masters, was itself a contract of service which the Respondents breached and unfairly terminated. The court awarded admitted and proved specific claims including gratuity, leave, weekend coverage, workshop pay, unpaid April–May 2010 salary, notice pay, fees balance and Ksh.233,333.34 for unpaid extra duties grounded on Article 41 fair labour practices and Article 25(b) freedom from servitude. As between twelve months' compensation and expectation-based damages, only one remedy was appropriate; 36 months' salary (Ksh.3,764,844) was awarded. The five-year bond salary claim and Ksh.80,000 medical reimbursement were refused. Judgment of Ksh.5,141,148.34 with interest, a certificate of service and costs were granted.

Key legal issues

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01

Breach of the fixed term contract commencing 01.04.2010

Holding

The mandatory renewal clause and three-month notice requirement meant the contract was constructively renewed from 01.04.2010; termination on 5.05.2010 breached it

Reasoning

The contract obliged the Hospital Board to renew and to communicate any refusal three months before expiry, i.e. by 01.01.2010. Notification of non-renewal came only on 5.05.2010, after expiry. Failure to comply meant the contract did not lapse but was constructively renewed. Termination without the contractual three months' notice or salary in lieu was unfair and in breach of contract.

p. 7
02

Status and breach of the Bonding Contract

Holding

The bonding contract was an independent contract of service; terminating it without notice and hearing under Section 41 was unfair

Reasoning

The bond obliged the Claimant to work five years post-training, meeting the statutory definition of a contract of service. Renewal of the fixed term contract was a foundational implied term. Termination required Section 41 notification and hearing, which was not given; the bond was breached and unfairly terminated.

p. 9
03

Unfairness of termination

Holding

Termination was unfair; the reason (effluxion of time) was not genuine given the employer's breach

Reasoning

Under Section 43, the employer must prove the reason for termination. The alleged effluxion of time was not genuine because the Respondents failed to notify non-renewal three months before expiry, and neither contractual notice nor payment in lieu under clause 5 was given.

p. 8
04

Remedies

Holding

Specific admitted and proved claims awarded; 36 months' salary for lost expectation of employment; five-year bond claim refused

Reasoning

The court awarded specific admitted sums, salary for April–May 2010, notice pay, and extra-duty pay grounded in Article 41 fair labour practices. As between 12 months' compensation under Section 49(1)(c) and expectation-based damages, only one may be awarded; 36 months' salary was chosen. The five-year claim failed as the bonding contract had not taken effect.

p. 12

Legal principles established

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  • Employers are not obliged to give reasons for non-renewal of fixed term contracts unless such an obligation is created in the expiring contract
  • Where a contract makes renewal mandatory and sets timelines for communicating refusal, failure to comply results in constructive renewal of the contract
  • A bonding contract obliging an employee to work for an employer for a fixed period after training is a contract of service under the Employment Act
  • Imposing extra contractual duties without pay is unfair labour practice and amounts to slavery or servitude prohibited under Article 25(b)
  • Compensation for loss of future employment and twelve months' compensation for unfair termination are alternative, not cumulative, remedies

Court orders

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  1. 1.Judgment entered for the Claimant against the respondent for Ksh.5,141,148.34/= plus interest at court rates from the date of judgment till full payment
  2. 2.The respondent to issue and deliver to the Claimant her certificate of service
  3. 3.The respondent to pay the costs of the cause

Authorities

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Legislation

  • Employment Act, 2007Section 43(1)-(2)
  • Employment Act, 2007Section 41
  • Employment Act, 2007Section 45
  • Employment Act, 2007Section 49(1)(c), 49(4)(f)
  • Employment Act, 2007Section 74(1)(f) and 28
  • Employment Act, 2007Section 2 (definition of contract of service)
  • Industrial Court Act, 2011Section 12(3)(viii)
  • Constitution of Kenya, 2010Article 41
  • Constitution of Kenya, 2010Article 25(b)

Cases cited (3)

  • Bernard Wanjohi Muriuki Vs Kirinyaga Water and Sanitation Company Limited and Tana Water Services Board
    Cause No.1541 of 2010
  • Francis Chire Chachi - Vs Amatsi Water Services Company Limited
    Cause No. 1548 of 2010
  • Robert Muriithi Ndegwa versus The Minister for Tourism
Jurisdiction invoked
Industrial Court Act, 2011 (including Section 12(3)(viii)); Industrial Court as first-instance employment cause

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (25)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Ruth Gathoni Ngotho-Kariuki v Presbyterian Church of East Africa and Presbyterian Foundation [2012] KEELRC 260 (KLR)", Case Analysis (2012). Not stated in judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2012/260/eng@2012-12-11

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.