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ELRCDismissedNot stated in judgment (memorandum of claim filed 24th December, 2012)· [2016] KEELRC 1135 (KLR)

Veronica Moraa & 28 others v Indu Farm (Epz) [2016] KEELRC 1135 (KLR)

Employment and Labour Relations Court

27 May 2016

ANAbuodha Jorum Nelson

1,032 words in judgment

View original judgment Read on Kenya Law Watch case

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The bottom line

The Employment and Labour Relations Court ruled that not renewing a fixed-term contract is not redundancy, so the employees got no termination notice.

What this practically means

Executive summary

Three claimants, employed on fixed term contracts earning between Kshs.11,873 and Kshs.14,000 per month, were served with uniform termination letters on 31st January 2012 citing reduced volume of work, effective 1st February 2012. They sued claiming the termination was on account of redundancy and was unfair because no notice of termination or declaration of redundancy was issued and they were not heard. The dispute was referred to the Minister for Labour, but the respondent rejected the conciliator's recommendation. The respondent's case was that the claimants were on fixed term contracts which lapsed on their expiry dates and were simply not renewed due to a steep drop in sales; all affected employees were paid terminal dues including one month's salary, house allowance, transport allowance and gratuity. Counsel for the respondent relied on the Isaiah Makhoha and Benard Wanjohi Muriuki cases, arguing that non-renewal of a fixed term contract is not redundancy. The court framed the sole question as whether the claimants were wrongfully declared redundant. It found it was common ground that they were fixed term contract employees and that the letters informed them of non-renewal. Holding that parties are bound by their voluntary contract and that renewal was a management discretion exercised on business considerations, the court found no redundancy under section 40 of the Employment Act and held the notice clause inapplicable since the contracts were not terminated prematurely. The claim was dismissed with no order as to costs.

Key legal issues

Whether the non-renewal of fixed term contracts amounted to wrongful redundancy

Holding

It did not. The claimants were fixed-term contract employees whose contracts expired and were not renewed at the discretion of the management; the termination letters did not amount to a redundancy under section 40 of the Employment Act.

Reasoning

The claimants did not dispute that they were on fixed term contracts subject to renewal at management's discretion, considering business performance. The letters stated the respondent would not renew the contracts due to reduced volume of work. Expiry of a fixed term is automatic termination by effluxion of time, distinct from the redundancy process under section 40 of the Employment Act. The one-month notice clause applied only to premature termination, so no notice was payable.

p. 2

Legal principles established

Non-renewal of a fixed term contract on its expiry is not redundancy under section 40 of the Employment Act; a notice clause applies only to premature termination, not to expiry of the fixed term
Courts will not interfere with a contract voluntarily entered into except on grounds of illegality, fraud or unconscionability

Court orders

1.The claim is dismissed
2.No order as to costs

Authorities

Legislation

Employment Actsection 40

Cases cited (2)

Isaiah Makhoha vs. Basco Products (K) Ltd
Benard Wanjohi Muriuki v. Kirinyaga Water and Sanitation company Ltd

Jurisdiction invoked: Employment and Labour Relations Court jurisdiction over employment disputes (Employment Act; memorandum of claim under the court's employment jurisdiction)

Key timeline

Practical implications

Frequently asked questions

Cite this brief

Caselaw, "Veronica Moraa & 28 others v Indu Farm (Epz) [2016] KEELRC 1135 (KLR)", Case Analysis (2016). Not stated in judgment (memorandum of claim filed 24th December, 2012). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/1135/eng@2016-05-27

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