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ELRCPartially AllowedCause No E002 of 2023· [2024] KEELRC 962 (KLR)

Osoti v Trees for the Future INC (Cause E002 of 2023) [2024] KEELRC 962 (KLR)

Employment and Labour Relations Court
2 May 2024
3,788 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~15 min to read original · ~4 min brief

The bottom line

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Renewing a Kenyan employee's contract yearly creates an expectation of renewal — ending it without valid reasons or fair process amounts to unfair termination.

What this practically means

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Executive summary

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The Claimant, formerly Country Director of the Respondent, sued claiming he was constructively and unfairly terminated from a purported 4-year contract, seeking 12 months' compensation, notice pay, salary for the unexpired contract term, costs and a certificate of service. The Respondent maintained that the Claimant was on annual one-year contracts, that the 4-year contract he produced was a forgery, that he was sent on paid administrative leave to facilitate an internal audit after governance concerns, and that his contract simply lapsed by effluxion of time in December 2022. The court framed four issues. On constructive dismissal, it held that resignation is a salient ingredient and, the Claimant never having resigned, that claim failed. On the contract term, the court found the Claimant had not sufficiently proved the 4-year contract, noting he was custodian of the company seal and the forensic examiner's forgery evidence was uncontroverted. However, on justification, the court held that the annual renewals from 2019 to 2022 created a legitimate expectation of renewal, and non-renewal without sufficient notice or valid reasons rendered the termination unfair. The court awarded a declaration of unfair termination, unconditional release of December 2022 salary of Kshs 533,333.33, and one month's salary (Kshs 533,333.33) as compensation, ordered issuance of a certificate of service within 14 days, and awarded costs to the Claimant. Claims for notice pay and salary for the remainder of the contract period were declined.

Key legal issues

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01

Whether the Claimant was constructively dismissed

Holding

No - constructive dismissal requires resignation and the Claimant never resigned.

Reasoning

The court adopted the Black's Law Dictionary definition and Lord Denning's formulation in Western Excavating, holding that a salient ingredient of constructive dismissal is the employee leaving service through resignation. The Claimant instead received a notice of non-renewal dated 23rd November 2022 and did not allege resignation, so the claim failed.

p. 6
02

Whether the Claimant's contract was for four years or lapsed by effluxion of time

Holding

The Claimant failed to prove the 4-year contract; the contract lapsed by effluxion of time in December 2022.

Reasoning

The Respondent's copy was unsigned while the Claimant's was stamped and sealed, but the Claimant, as Country Director, was custodian of the company seal and may have prepared and sealed his own contract. The forensic document examiner's evidence of forgery was uncontroverted, no forwarding email was produced, and no plausible explanation was given for only the Claimant holding a 4-year term.

p. 7
03

Whether the non-renewal of the Claimant's contract was justified

Holding

No - the annual renewals since 2019 created a legitimate expectation of renewal, and non-renewal without sufficient notice or valid reasons was unfair termination.

Reasoning

Previous contracts were renewable subject to performance, funding and existence of the position, none of which was cited in the non-renewal letter. Having rolled over the contract annually from 2019 to 2022, the Respondent created a legitimate expectation, breaching which the law deems the employee unfairly terminated.

p. 7
04

Whether the Claimant was entitled to the remedies sought

Holding

Partially - one month's salary as compensation and December 2022 salary were awarded; notice pay and salary for the remainder of the contract term were refused; a certificate of service was ordered.

Reasoning

Given the Claimant remained on full salary on administrative leave and the contract lapsed within a month of notice, one month's salary was deemed sufficient compensation. Notice pay failed because notice was given; salary for the unproved remainder of term was declined under Section 49; the certificate of service is a statutory right under Section 51.

p. 7

Legal principles established

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  • Constructive dismissal requires that the employee leave the employer's service through resignation, with or without notice.
  • A fixed term contract generally carries no expectation of renewal, but annual renewals may create a legitimate expectation of renewal, failing which non-renewal amounts to unfair termination.
  • Where an employer has created a legitimate expectation of renewal, it owes the employee sufficient notice and valid reasons for non-renewal; absence of both renders the termination unfair.

Court orders

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  1. 1.A declaration that the Claimant was unfairly terminated.
  2. 2.Unconditional release of the Claimant's Salary for December, 2022 at Kshs. 533,333.33/-
  3. 3.One months' salary as compensation for the unfair termination at Kshs. 533,333.33/-
  4. 4.The Respondent shall bear the costs of the suit.
  5. 5.The Respondent to issue the Claimant with a certificate of service within 14 days of the judgment.

Authorities

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Legislation

  • Employment ActSection 41
  • Employment ActSections 41, 43, 44, 45 and 47
  • Employment ActSection 49
  • Employment ActSection 51

Cases cited (7)

  • Pius Kimaiyo Langat v Co-operative Bank of Kenya ltd
    [2017] eKLR
  • Coca Cola East Africa LTD v Maria Kagai Ligaga
    (2015) eKLR
  • Milton M Isanya v Aga Khan Hospital Kisumu
    (2017) eKLR
  • Kenya Engineering Workers Union v Narcol Aluminium Rolling Mills Limited
    2015 eKLR
  • Nguru v Buds and Blooms Limited
    [2022] KEELRC 4007 (KLR)
  • Western Excavating ECC Ltd v Sharp
    (1978) 2 WLR 344
  • Samuel Chacha Mwita v. Kenya Medical Research Institute
    (2014) eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction under the Employment Act (not expressly cited in a specific provision in the judgment)

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (4)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Osoti v Trees for the Future INC (Cause E002 of 2023) [2024] KEELRC 962 (KLR)", Case Analysis (2024). Cause No E002 of 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/962/eng@2024-05-02

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