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ELRCPartially AllowedCause No 894 of 2017· [2020] KEELRC 1515 (KLR)

Ann Kisese Musau & 12 others v Lawrence Gelmon & 6 others [2020] KEELRC 1515 (KLR)

Employment and Labour Relations Court of Kenya
6 March 2020
MOMAUREEN ONYANGO
4,711 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~19 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that fixed-term contracts end on their expiry date when donor funding stops, and past renewals don't guarantee renewal.

What this practically means

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Executive summary

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Eight former employees sued to challenge the termination of their employment by the 4th Respondent (PHDA), a non-profit registered under the NGO Coordination Act, seeking general damages, certificates of service, terminal dues and interest. They alleged that various Respondents changed operating platforms over the years and that the non-renewal of their contracts in 2016 was unlawful, unfair and malicious, following interviews conducted to terminate them. The Respondents, through Lawrence Gelmon, Joseph Kimani and CEO Peter Wati Mwaura, maintained that the Claimants were on fixed one-year contracts with the 4th Respondent which lapsed on 30th September 2016 when the PEPFAR grant was not renewed, that contracts were not automatically renewable, and that all dues including gratuity were paid. The 6th Respondent denied ever being the employer and pleaded limitation. Maureen Onyango J framed five issues. She declined to strike out the claim against the unserved 3rd Respondent, applying Boyes v Gathure and ICDC v Sum Modez Industries, finding no prejudice. She held that only the 4th Respondent was the employer; the 3rd Respondent merely funded the projects and the 5th and 7th Respondents were not legal entities. The claim against the 6th Respondent was time barred under section 90 of the Employment Act, its last contract being in 2014. On termination, the court found the contracts expressly provided for expiry on 30th September 2016 and termination on withdrawal of donor funds; no legitimate expectation of renewal arose from past renewals, and the section 41 procedure was unnecessary. Relying on Amatsi Water Services v Chachi, the court declined to rewrite the contract. The court ordered the 4th Respondent to issue certificates of service under section 51(2) of the Employment Act, dismissed the damages and terminal dues claims, and ordered each party to bear its own costs.

Key legal issues

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01

Whether failure to serve the 3rd Respondent with summons invalidated the claim against it

Holding

No; the claim against the 3rd Respondent was not struck out as it was aware of the suit and suffered no prejudice

Reasoning

Rule 11(2) of the ELRC Rules requires service of summons with the statement of claim, but following Boyes v Gathure and ICDC v Sum Modez Industries, failure to serve does not necessarily nullify proceedings. The 3rd Respondent was aware of the suit and demonstrated no prejudice, so the court declined to strike out the claim against it.

p. 6
02

Whether an employment relationship existed between the Claimants and the various Respondents

Holding

Only the 4th Respondent (PHDA) was the Claimants' employer at the time of termination; the 5th and 7th Respondents were projects, not legal entities, and the 3rd Respondent was only a funder

Reasoning

The contracts annexed by the Claimants identified only the 4th Respondent as employer. The Respondents' witnesses testified that the 5th and 7th Respondents were projects and not legal entities, and that the 3rd Respondent funded but did not employ. The Claimants adduced no evidence that the 3rd Respondent was privy to their contracts.

p. 6
03

Whether the claim against the 6th Respondent was time barred

Holding

Yes; the last contract with the 6th Respondent was in 2014, more than three years before suit, contrary to section 90 of the Employment Act

Reasoning

Section 90 of the Employment Act requires claims arising from a contract of service to be commenced within three years. The 6th Respondent's evidence that the last contract with the Claimants was in 2014 was uncontroverted, and no evidence proved the 6th Respondent was employer in September 2016.

p. 6
04

Whether the Claimants' employment was unlawfully terminated

Holding

No; the fixed-term contracts lapsed by effluxion of time on 30th September 2016 and no legitimate expectation of renewal arose

Reasoning

Clauses 1.1, 1.3 and 6.1 of the contract provided for automatic expiry on the stated date and termination upon reduction or withdrawal of donor funds. The PEPFAR grant ended on 29th September 2016 and was not renewed. Previous renewals did not create a legitimate expectation; section 45(2) unfair termination did not apply and section 41 procedure was not required.

p. 7

Legal principles established

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  • A fixed term contract terminates on its sunset date unless extended in the terms stated in the contract, and a court cannot rewrite the terms of a contract freely entered into by the parties.
  • Non-service of summons, without demonstrated prejudice, does not render a suit a nullity as procedural missteps are not fundamental.
  • No legitimate expectation of renewal arises where the fixed-term contract expressly provides for termination by effluxion of time or withdrawal of donor funds.

Court orders

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  1. 1.Declined to strike out the case against the 3rd Respondent
  2. 2.The 4th Respondent is ordered to issue the Claimants with certificates of service as prescribed in Section 51(2) of the Employment Act 2007
  3. 3.Claims for general damages for unlawful termination and terminal dues dismissed
  4. 4.Each party shall bear its own costs

Authorities

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Legislation

  • Employment Actsection 90
  • Employment Act 2007Section 51(2)
  • Employment Actsection 45(2)
  • Employment Actsection 41
  • NGO Coordination Actsection 10
  • Limitation of Actions Act (Cap. 22)section 4(1)
  • Employment and Labour Relations Court RulesRule 11(2)

Cases cited (8)

  • Margaret A. Ochieng vs. National Water Conservation and Pipeline Corporation
    [2014] eKLR
  • Bernard Wanjohi Muriuki vs. Kirinyaga Water and Sanitation Company Limited & Another
    [2012] eKLR
  • Teresia Carlo Omondi vs. Transparency International
    [2017] eKLR
  • Shadrack Dei Kinyili vs. National Cash Registers (NCK-R)
    [2018] eKLR
  • Arthur Njuguna Karogi vs. National Government Constituencies Development Fund Board
    [2018] eKLR
  • Boyes vs. Gathure
    1969 E.A 385
  • Industrial and Commercial Development Corporation vs. Sum Modez Industries Ltd
    C.A Civil Appeal No. 229 of 2001
  • Amatsi Water Services vs. Francis Shire Chachi
    [2018] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act and the Employment and Labour Relations Court Rules (first-instance employment claim)

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Ann Kisese Musau & 12 others v Lawrence Gelmon & 6 others [2020] KEELRC 1515 (KLR)", Case Analysis (2020). Cause No 894 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1515/eng@2020-03-06

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