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ELRCPartially AllowedCause No. 290 of 2012· [2015] KEELRC 562 (KLR)

Banking Insurance & Finance Union (Kenya) v Prime Bank Limited [2015] KEELRC 562 (KLR)

Employment and Labour Relations Court
20 August 2015
HWHellen S. Wasilwa
890 words in judgment
View original judgmentRead on Kenya Law Watch case
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The bottom line

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Kenya's Employment Court ruled that letting a fixed-term contract roll over repeatedly creates an expectation of renewal, so ending it without proper notice is unfair termination.

What this practically means

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Executive summary

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The Grievant, John Thagichu Kamau, a driver employed by Prime Bank Limited since 2000 and represented by his union, BIFU, claimed unfair and unlawful termination of employment. He served successive fixed-term contracts which were renewed over time, with the last contract running from 1/7/2008 to 30/6/2011. On 30/6/2011 he was handed a letter stating his contract had expired under clause 16(a), with no prior notice of non-renewal, despite a contract clause requiring the employer to notify the employee 3 months before expiry - a fact the respondent admitted in cross-examination. The respondent maintained that all bank employees served on fixed-term contracts, that the Grievant was never discriminated against, and that his contract simply expired, with his provident fund contribution of Kshs. 253,958 paid out. The court framed two issues: whether the Grievant was dismissed or his contract lapsed by affluxion of time, and whether he was entitled to benefits. Holding that the pattern of successive renewals created a reasonable expectation of automatic renewal absent prior notice, the court found the notice given on the date of expiry breached the contract terms and amounted to unfair termination. The court awarded 12 months' salary compensation of Kshs. 463,200, a Certificate of Service, and costs to the claimant, read in open court on 20th August 2015.

Key legal issues

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01

Whether the Grievant's contract lapsed by affluxion of time or amounted to unfair termination

Holding

The Grievant was unfairly terminated because notice of non-renewal was given only on the date of expiry, in breach of the contract clause requiring 3 months' notice and of his reasonable expectation of renewal

Reasoning

The court observed that over the years the Grievant's contracts had been renewed over time and on occasion continued to be served even after lapse due to administrative delay, creating a pattern of automatic renewal. The contract itself required the employer to inform the employee 3 months before expiry. The respondent admitted no such notice was given. Notice given only on 30/6/2011, the date of expiry, breached the contract and the Grievant's legitimate expectation, amounting to unfair termination.

p. 2
02

Remedies for unfair termination

Holding

The Grievant was awarded 12 months' salary as compensation for unfair termination, computed at Kshs. 38,600 per month, plus a Certificate of Service and costs

Reasoning

Having found unfair termination, the court exercised its power to award the equivalent of 12 months' gross salary as compensation, calculating 12 x 38,600 = 463,200. The court also ordered issuance of a Certificate of Service, a statutory entitlement of a departing employee, and made the respondent liable for the costs of the suit.

p. 2

Legal principles established

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  • Repeated renewal of fixed-term contracts creates a reasonable expectation of automatic renewal unless prior notice of non-renewal is given
  • Notice of non-renewal given only on the date of expiry of a fixed-term contract breaches the contract terms and constitutes unfair termination

Court orders

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  1. 1.Respondents to pay the Grievant 12 months salary compensation for unfair termination of Kshs. 463,200
  2. 2.Respondents to issue the Grievant a Certificate of Service
  3. 3.Respondents to pay costs of the suit
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over unfair termination of employment claims

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, "Banking Insurance & Finance Union (Kenya) v Prime Bank Limited [2015] KEELRC 562 (KLR)", Case Analysis (2015). Cause No. 290 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/562/eng@2015-08-20

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