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ELRCDismissedMalindi CM ELRC Appeal (from Malindi CM ELRC No. E43 of 2021)· [2023] KEELRC 2280 (KLR)

Baya & another v Antoneta (Appeal E009 of 2022) [2023] KEELRC 2280 (KLR)

Employment and Labour Relations Court
21 September 2023
1,914 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 paying notice and giving written reasons for ending fixed term contracts protects employers from unfair termination claims.

What this practically means

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Executive summary

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This is a first appeal from the judgment of the learned magistrate in Malindi CM ELRC No. E43 of 2021 delivered on 24 August 2022, which dismissed the appellants' claims for severance pay, payment of the 5 months' unexpired term of their fixed term contracts, and compensation for unfair termination. The appellants, employed as chef and gardener on annual fixed term contracts running 1 January to 31 December 2021, had their employment terminated by notices dated 28 June 2021 after the sale of Kipepeo House, the place of work. They received their June gross wage, one month's notice pay, and a bonus one month's gross wage. On appeal, the appellants contended the trial court erred in finding no unfair termination and in failing to award severance pay. The court, re-evaluating the record as required on a first appeal, held that although the Employment Act, 2007 abolished termination at will and requires reasons for termination even where notice issues, the respondent did give written reasons - the sale of the premises - which amount to a lawful operational requirement/redundancy situation, with due process under Section 40(1) followed. The court further held that a fixed term contract does not create a legitimate expectation of renewal, that severance pay is not due and not prorated for service under one year, and that payment for the unexpired term was not warranted where termination was lawful. The magistrate's judgment was confirmed and the appeal dismissed, with each party bearing its own costs.

Key legal issues

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01

Whether termination by notice under a fixed term contract constitutes unfair termination

Holding

No, where the underlying reason (operational requirement from sale of premises) is lawful and legitimate and due process under Section 40(1) was followed

Reasoning

The Employment Act, 2007 abolished termination at will; even with notice under Sections 35 and 36, the employer must give reasons under Sections 40, 43, 44 and 45. Here the respondent gave reasons in writing - the sale of Kipepeo House - which amount to redundancy/operational requirement, with notice and payment in lieu. Notice issued on 28 June 2021 taking effect 30 June 2021, and terminal dues including a bonus month's wage were paid.

p. 3
02

Entitlement to severance pay

Holding

Severance pay is not due where service under the fixed term contract is under one year and is not prorated

Reasoning

The appellants were employed under annual fixed term contracts; the last contract ran from 1 January to 31 December 2021 and was terminated on 28 June 2021, less than a year of service. Under the redundancy provisions (Sections 2 and 40 of the Employment Act), severance pay attaches to years of service; service under a year does not attract prorated severance pay. The bonus of one month's wage paid was also not due.

p. 4
03

Claim for unexpired term of the fixed term contract

Holding

Not payable where termination is due to a lawful operational requirement and due process under Section 40(1) is followed

Reasoning

Termination arising from sale of the work premises is an operational requirement which is lawful and legitimate, provided the employer undertakes due process under Section 40(1), i.e. issuance of notice or payment in lieu, which was done. The court also considered the employer's procedures and payment of terminal dues under Section 45(5)(a) in deciding justness and equity.

p. 4

Legal principles established

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  • A fixed term contract of employment does not create a legitimate expectation of renewal.
  • Even where notice or payment in lieu issues, the employer must still give reasons for termination and follow the Employment Act procedures.
  • Failure to give an employee reasons for termination results in both procedural and substantive unfairness.
  • On a first appeal the court must re-evaluate the entire record and arrive at its own findings.

Court orders

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  1. 1.The judgment of the learned magistrate in Malindi CM ELRC No. E43 of 2021 delivered on 24 August 2022 is confirmed
  2. 2.The appeal is dismissed
  3. 3.Each party to bear own costs

Authorities

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Legislation

  • Employment Act, 2007Section 10(3)(c)
  • Employment Act, 2007Sections 35 and 36
  • Employment Act, 2007Section 35(4)
  • Employment Act, 2007Section 35(6)
  • Employment Act, 2007Section 40
  • Employment Act, 2007Section 40(1)
  • Employment Act, 2007Sections 43, 44 and 45
  • Employment Act, 2007Section 45(5)(a)
  • Employment Act, 2007Section 47(5)
  • Employment Act, 2007Section 2
  • Employment and Labour Relations Court (Procedure) Rules, 2016Rule 21
  • Constitution of Kenya, 2010not specified

Cases cited (4)

  • Gas Kenya Limited v Odhiambo
    Appeal No. E006 of 2022
  • Transparency International Kenya v Teresa Carlo Omondi
    [2023]
  • Kenya Union of Commercial Food and Allied Workers v Meru North Farmers Sacco Limited
    Cause No. 74 of 2013
  • Oyombe v Eco Bank Limited
    (Civil Appeal 185 of 2017) [2022] eKLR
On appeal from
Malindi Chief Magistrate's Court (ELRC)
Malindi CM ELRC No. E43 of 2021
Jurisdiction invoked
First appeal from the trial court (ELRC appellate jurisdiction over subordinate court employment decisions)

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, "Baya & another v Antoneta (Appeal E009 of 2022) [2023] KEELRC 2280 (KLR)", Case Analysis (2023). Malindi CM ELRC Appeal (from Malindi CM ELRC No. E43 of 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/2280/eng@2023-09-21

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