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ELRCDismissedCause No. 931 of 2013· [2016] KEELRC 39 (KLR)

George Makau & 2 others v Label Converters Limited [2016] KEELRC 39 (KLR)

Employment and Labour Relations Court of Kenya
14 November 2016
MMM. Mbaru
4,077 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 confirmed that a fixed-term contract that simply expires is not a dismissal, so the employees' claims for compensation and terminal dues failed.

What this practically means

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Executive summary

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Three rewinders claimed unlawful and unfair termination and unpaid terminal dues from Label Converters Limited, asserting they were employed from 12th March 2008 and declared redundant on 1st March 2013 contrary to sections 40, 41, 43 and 45 of the Employment Act. They sought notice pay, leave pay, house allowance, overtime, underpayments, service pay, twelve months' compensation and damages for unfair labour practices. The Respondent maintained the Claimants served under one-year fixed term contracts, the last running from 1st March 2012 to 28th February 2013, which simply lapsed and were not renewed, with all dues paid. The court framed two issues: the nature of the employment relationship and the remedies due. Applying section 10 of the Employment Act and Chacha Mwita v KEMRI, the court held the parties were bound by their written fixed term contracts, and absent proof of fraud, misrepresentation or illegality, non-renewal upon expiry was not unfair termination or an unfair labour practice. Relying on Veronica Moraa v Indu Farm, the court held non-renewal due to reduced work volume was legitimate. The court found no notice payable since the contract had an end date; leave and overtime were shown paid on the Claimants' own payslips; and service pay was excluded by NSSF and NHIF contributions under section 35(5) and (6). All claims were dismissed with each party bearing its own costs, delivered by M. Mbaru, J, on 14th November 2016.

Key legal issues

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01

Nature of employment relationship

Holding

The Claimants were employed on written one-year fixed term contracts, the last of which lapsed on 28th February 2013; non-renewal was not unfair termination

Reasoning

The court applied section 10 of the Employment Act and the authority in Chacha Mwita v KEMRI to give effect to the written contract terms. The Claimants admitted written contracts, applied for renewal, and knew the contract would lapse on 28th February 2013. No fraud, misrepresentation or illegality was proved to justify departing from the agreed terms.

02

Whether non-renewal amounted to redundancy under section 40

Holding

No redundancy arose; the contracts lapsed by their own terms and the redundancy provisions were not triggered

Reasoning

The Claimants argued low work volumes amounted to redundancy. The court held the employment relationship was regulated by written terms that simply lapsed, and relied on Veronica Moraa v Indu Farm where non-renewal due to reduced work volume was held legitimate.

p. 8
03

Terminal dues: notice pay, leave, overtime, service pay

Holding

None due: the contract had an end date, leave was paid in February 2013, overtime was paid per payslips, and NSSF/NHIF contributions excluded service pay

Reasoning

The court examined the payslips attached by the Claimants themselves, which showed payment of 21 leave days and overtime hours. It invoked sections 28, 35(5)-(6) and 10(6)-(7) of the Employment Act. As the contract lapsed rather than being terminated prematurely, section 35 notice did not apply.

p. 8

Legal principles established

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  • A fixed term contract terminates automatically upon the expiry of its stated end date, and such termination does not constitute a dismissal
  • Parties are bound by the terms of a written employment contract unless fraud, misrepresentation or illegality is proved
  • There is no obligation on an employer to give reasons for non-renewal of a fixed term contract

Court orders

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  1. 1.The claims are dismissed
  2. 2.Each party shall bear own costs

Authorities

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Legislation

  • Employment Actsection 2 (definition of contract of service)
  • Employment Actsections 10(2), 10(6), 10(7)
  • Employment Actsections 28, 35, 35(5), 35(6)
  • Employment Actsections 40, 41, 43, 45, 62
  • Constitution of Kenyaarticle 41

Cases cited (6)

  • Isaiah Makhoha versus Basco Products (K) Ltd
    [2014] eKLR
  • Bernard Wanjohi Muriuki versus Kirinyaga Water and Sanitation Co. Ltd & Another
    [2012] eKLR
  • KUDHEIHA Workers versus Family Health Options Kenya
  • Chacha Mwita versus KEMRI
    Cause No. 1901 of 2013
  • Veronica Moraa and 28 Others versus Indu Farm (Epz)
    [2016] eKLR
  • SA Rugby (Pty) Ltd v CCMA & Others
    (2006) 27 ILJ 1041 (LC)
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act over a claim of unfair termination and terminal dues

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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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, "George Makau & 2 others v Label Converters Limited [2016] KEELRC 39 (KLR)", Case Analysis (2016). Cause No. 931 of 2013. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/39/eng@2016-11-14

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