Muia & 4 others v Company (Cause E038 of 2017) [2021] KEELRC 983 (KLR)
The bottom line
#A Kenyan court declared KenGen violated these employees' rights, but awarded nothing because they signed the new inferior contracts anyway.
What this practically means
#Executive summary
#Key legal issues
#Legitimate expectation of renewal for 5 years
Legitimate expectation established: the employer made an express promise of renewal for 5 years subject to performance, and the petitioners met the conditions, their annual appraisals showing good performance.
Clause 6 of the contracts and Clause 2.5.3 of the HR Manual promised renewal for 5 years subject to performance. The petitioners requested renewal 6 months before expiry and their annual appraisals showed scores of 79-87%, rated 'Good'. The Board was required to rely on annual appraisal reports under Clause 2.6.2, and its use of a new end-of-contract appraisal tool breached an express term. Hence expectation of 5-year renewal was legitimate.
Whether the variation of contracts from 5 years to 1 year was unlawful
The variation was lawful; the petitioners voluntarily consented and proved no vitiating factors.
The burden lay on the petitioners to show the one-year contracts were not freely executed. They did not demonstrate duress, mistake, misrepresentation or fraud, had the opportunity to consider the benefits, and signed willingly. Their consent to the variation from five years to one year was therefore lawful, notwithstanding the earlier breach of legitimate expectation.
Constructive dismissal
Claim fails; by accepting the new contracts the petitioners condoned the employer's conduct and waived the right to sue.
Although the employer's conduct in breaching the HR Manual would have entitled the petitioners to exit and sue for constructive termination (as in John Nduba v AMREF), they voluntarily accepted the one-year contracts and enjoyed their benefits. The Coca Cola constructive dismissal principles were therefore not met on these facts.
Violation of fundamental rights
Discrimination, fair labour practices and fair administrative action rights were violated.
The respondent treated the petitioners differently from their colleague Conel Ofwona based on irrelevant considerations despite better or comparable performance, contrary to section 5 of the Employment Act and Article 27. The Board used a strange appraisal tool contrary to its own HR Manual, violating Article 41. The administrative action varying terms and imposing PIP was taken without a fair hearing or written reasons, violating Article 47.
Reliefs
Only declarations granted; all other reliefs declined because the petitioners consented to the new contracts.
Having found rights violations, declarations issued. However, compensation, extension of the contract to 5 years, permanent stay of clauses, and injunctions were all declined: the petitioners voluntarily signed the one-year contracts, remain in employment, and the court cannot rewrite the contract to correct a bad bargain. The petition was dismissed with no order as to costs.
Legal principles established
#- Fixed-term contracts do not carry an expectancy of automatic renewal, but legitimate expectation arises where the employer makes an express promise of renewal subject to conditions the employee fulfils.
- An employer is bound by the express provisions of its own HR Manual in exercising discretion over contract renewal, and must exercise that discretion reasonably and fairly.
- An employee who voluntarily signs a new contract with inferior terms waives the right to sue for constructive termination.
- The court cannot rewrite a contract to correct a bad bargain.
Court orders
#- 1.Declaration that the petitioners' right to fair labour practices, right to fair administrative action and freedom from discrimination were violated by the respondent
- 2.Dismissal of the petition with no order as to costs
- Jurisdiction invoked
- Articles 22, 23(3) of the Constitution and section 12(3) of the Employment and Labour Relations Court Act
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Muia & 4 others v Company (Cause E038 of 2017) [2021] KEELRC 983 (KLR)", Case Analysis (2021). Petition dated 16.3.2021 (ELRC). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2021/983/eng@2021-09-23
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.