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ELRCDismissedCause No 206 of 2013· [2014] KEELRC 992 (KLR)

Isaiah Makhoha v Basco Products (K) Ltd [2014] KEELRC 992 (KLR)

Industrial Court of Kenya
16 May 2014
RSRadido Stephen
1,360 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Industrial Court confirmed that when a fixed term contract simply expires, an employer's decision not to renew it is not unfair termination.

What this practically means

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Executive summary

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The Claimant, employed as a loader, pleaded he was engaged on 5 May 2011 as a casual, then on successive three-month written contracts from August 2011, and that his services were terminated without notice, hearing or cause on 14 February 2013. He sought a declaration of unfair termination, twelve months' compensation, salary in lieu of notice, leave pay, salary arrears of Kshs 182,400 and a certificate of service. The Respondent's case, presented on the pleadings and documents without oral testimony under Rule 21 of the Industrial Court (Procedure) Rules, 2010, was that the last fixed term contract ran from 15 November 2012 to 14 February 2013, expired by effluxion of time and was not renewed due to low business volume, with final dues, leave-in-lieu payments and overtime paid at each contract's end. The court framed two issues: whether non-renewal of a fixed term contract may amount to unfair termination, and whether the Claimant proved any relief. Holding that fixed term contracts are recognised by the Employment Act, that the contracts had no automatic renewal clause and that no legitimate expectation of renewal was shown, the court held that non-renewal does not constitute unfair termination under Kenyan law, distinguishing the South African position under section 186(b) of the Labour Relations Act. All monetary reliefs were also declined, the Claimant having admitted receipt of leave cash payments and February 2013 wages. The claim was dismissed with no order as to costs.

Key legal issues

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01

Whether failure to renew a fixed term contract amounts to unfair termination

Holding

No - where the fixed term contract has no automatic renewal clause, the employer has discretion to renew or not, and non-renewal is not unfair termination under Kenyan law

Reasoning

The relationship was governed by successive written 3-month contracts, the last expiring 14 February 2013. The contracts contained no provision for notice of renewal or non-renewal, and no contractual or statutory obligation to notify expiry was shown. The Claimant demonstrated no legitimate expectation of renewal. Unlike South Africa's Labour Relations Act s 186(b), Kenya's statutory framework does not subject non-renewal to unfair dismissal challenge. A claim of unfair labour practice might raise different considerations, but was not pleaded.

p. 3
02

Entitlement to notice pay, leave pay and salary arrears

Holding

All reliefs declined because the contract expired rather than being terminated, leave was paid in cash at each contract's end, and February 2013 wages were paid

Reasoning

Since the contract expired by effluxion of time, pay in lieu of notice was not payable. The Claimant admitted under cross-examination receiving cash in lieu of leave at the end of each contract, confirmed by signed appendices. The February 2013 wages were calculated at Kshs 6,008 and the balance acknowledged as received as final dues.

p. 3

Legal principles established

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  • Under the current Kenyan statutory framework, non-renewal of a fixed term contract containing no automatic renewal clause does not amount to unfair termination or wrongful dismissal; the employer retains discretion to renew or not.
  • Fixed term contracts are recognised and envisaged by the Employment Act; even permanent contracts with a retirement age are fixed term contracts.
  • The Kenyan legal position differs from South Africa, where section 186(b) of the Labour Relations Act subjects non-renewal of fixed term contracts to the unfair dismissal regime.

Court orders

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  1. 1.The Memorandum of Claim filed in Court on 16 July 2013 is dismissed with no order as to costs

Authorities

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Legislation

  • Employment Actdefinition of 'contract of service'; sections 9(1)(a), 10(2)(e), 37
  • Industrial Court (Procedure) Rules, 2010Rule 21
  • Labour Relations Act (South Africa)section 186(b)
Jurisdiction invoked
Industrial Court jurisdiction under the Industrial Court Act over employment and labour relations disputes (Cause filed under the Industrial Court (Procedure) Rules, 2010)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (7)

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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, "Isaiah Makhoha v Basco Products (K) Ltd [2014] KEELRC 992 (KLR)", Case Analysis (2014). Cause No 206 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2014/992/eng@2014-05-16

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