Isaiah Okode Nyamundhe v Kenya Institute Of Education [2016] KEELRC 451 (KLR)

Employment and Labour Relations Court

24 October 2016

HWHellen Wasilwa

2,367 words in judgment

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The bottom line

Kenya's Employment Court ruled that letting a fixed-term worker's contract lapse without notice or a hearing was unlawful termination worth over Kshs 1.2 million.

What this practically means

Executive summary

The claimant, appointed as a senior clerical officer in 1990 and last engaged on a fixed-term contract dated 1st September 2008 expiring 31st December 2010, sued the respondent after his contract was not renewed, relying on a Government circular of 20th March 2009 that raised the mandatory retirement age in the public service from 55 to 60 years. He sought reinstatement, salary to age 60, damages, settlement of his loan, costs and interest. The respondent admitted the circular but denied that it converted his contract into one renewable as of right, asserting discretion to renew and justifying non-renewal on poor performance and prior disciplinary issues, while attributing non-payment of terminal dues to the claimant's failure to clear. The claim was disposed of by written submissions. The court found the contract was renewable in accordance with its terms and, together with the circular, entitled the claimant, who had not attained 55 years as at 5th March 2009, to serve until 60. The respondent's late notification of non-renewal, without the 3 months' notice the contract required, and its failure to subject the claimant to any disciplinary process before withholding renewal, amounted to unlawful termination. The court declared the non-renewal an unlawful termination and awarded notice pay, 12 months' compensation and gratuity, with costs and interest. Reinstatement and payment of the outstanding loan were not granted.

Key legal issues

Application of the Government circular raising retirement age to 60

Holding

The circular applied to the claimant, who had not attained 55 years as at 5th March 2009, and his contract was renewable until age 60 in accordance with its provisions.

Reasoning

The court construed the circular of 20th March 2009 read with the contract clause stating the agreement could not be renewed after age 55. It concluded the contract was renewable and could run until the employee attained 60 years, giving the claimant an expectation of renewal.

p. 4

Legitimate expectation of renewal

Holding

The claimant had a legitimate expectation of automatic renewal based on the circular, the contract terms, the late notice of non-renewal and the approval of his loan application by his Head of Department.

Reasoning

The respondent waited until 21st December 2010 to notify non-renewal of a contract expiring 31st December 2010, without giving the 3 months' notice required by the contract. The loan approval after the circular reinforced the expectation, making non-renewal a breach of the circular and the contract.

p. 5

Disciplinary process before non-renewal

Holding

If the respondent wished not to renew for disciplinary or performance reasons, it should have subjected the claimant to a disciplinary process, which it did not.

Reasoning

The respondent justified non-renewal on poor performance and disciplinary issues. The claimant's appraisals indicated high performance, and he had been absolved in the disciplinary matter. Denying renewal without any disciplinary process rendered the non-renewal unlawful.

p. 5

Legal principles established

Where a fixed-term contract is renewable in accordance with its provisions and a government circular mandates renewal of contracts expiring before retirement age 60, non-renewal without notice or a disciplinary process constitutes unlawful termination.

Court orders

1.3 months' salary as notice for non-renewal (Kshs. 156,321)
2.12 months' salary as compensation for unlawful termination (Kshs. 625,284)
3.Gratuity under the last contract being 31% of all earned salary (Kshs. 437,698.80)
4.Total award of Kshs. 1,219,303.80
5.Respondent to pay costs of the suit plus interest at Court rates from the date of judgment

Authorities

Legislation

Employment Act, 2007Section 47(5)
Employment Act, 2007Sections 35(2) and (3)
Constitution of KenyaArticles 27(2), 28, 41(1), 47(1)

Cases cited (3)

George Onyango Akuti vs G4S Security Services Ltd
Ruth G. Ngotho vs Presbyterian Church & another
Cause No. 905/2010
Margaret A. Ochieng vs. National Water Conservation & Pipeline Corporation
(2014) eKLR

Jurisdiction invoked: Articles 27(2), 28, 41(1) and 47(1) of the Constitution of Kenya as invoked in the claim

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.

Kenya Medical Research Institute v Maria Mukhwana [2019] KECA 176 (KLR)
[2019] KECA 176 (KLR)14 Nov 2019

Cite this brief

Caselaw, "Isaiah Okode Nyamundhe v Kenya Institute Of Education [2016] KEELRC 451 (KLR)", Case Analysis (2016). Cause No. 1948 of 2012. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/451/eng@2016-10-24

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