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ELRCPartially AllowedNot stated in the judgment as provided (Memorandum of Appeal dated 5th October, 2022)· [2024] KEELRC 2479 (KLR)

Halar Industries Limited v Muia (Appeal E170 of 2022) [2024] KEELRC 2479 (KLR)

Employment and Labour Relations Court of Kenya
11 October 2024
AJAbuodha Nelson Jorum
3,996 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~16 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court confirmed that fixed term contracts simply expire on their end date, so non-renewal is not unfair termination.

What this practically means

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Executive summary

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This is a first appeal to the Employment and Labour Relations Court against the judgment of Honourable P. K. Rotich, which had found in favour of a Claimant (now Respondent) that his dismissal amounted to wrongful termination and awarded him one month's notice pay of Kshs 17,960.88, twelve months' gross salary as damages of Kshs 215,530.36, and costs. The Appellant argued the Respondent was engaged throughout on independent fixed term contracts, not as a casual or permanent employee, so the contracts expired by effluxion of time without any termination requiring justification. The Respondent maintained the contracts were void for non-compliance with sections 9(3) and (4) of the Employment Act and that his continuous nine-year service converted his employment to permanent status under section 37. Guided by the Selle principles, the court found the Respondent was paid monthly per payslips and NSSF records and signed fixed term contracts each year from 2010 to 2019; he was never a casual employee, and section 37 cannot convert a fixed term contract into permanent employment. The Respondent's challenge to the validity of the contracts failed because he signed them without complaint over the years. The court held that fixed term contracts end at their expiry, the employer need not justify non-renewal, and lapse of time is not unfair termination. Since there was no unfair termination, neither damages nor notice pay were payable, and a maximum 12-month award requires justification. The appeal succeeded; the lower court judgment was substituted with an order dismissing the suit, with costs of the appeal and the lower court to the Appellant.

Key legal issues

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01

Whether the Respondent's employment assumed permanency under section 37 of the Employment Act

Holding

The Respondent was not a casual employee but was engaged on fixed term contracts; section 37 cannot convert a fixed term contract into permanent employment

Reasoning

The court examined payslips and NSSF statements showing monthly payment, and the contracts showing the Respondent signed a contract each year with defined start and end dates. Since the Respondent was never a casual employee paid at the end of each day, the conversion mechanism in section 37 was inapplicable. The contracts, being fixed term, could not assume permanency.

p. 7
02

Whether the Respondent was unfairly terminated

Holding

No; the fixed term contract ended by effluxion of time and the lapse of time is not unfair termination

Reasoning

Having found the Respondent was on fixed term contracts which he accepted without complaint, the court held that the contracts carried no expectation of renewal beyond expiry. The Respondent knew the contract would end on the expiry date, received his final dues, and acknowledged he had no further claims.

p. 7
03

Whether the trial Magistrate erred in awarding 12 months' salary compensation and notice pay

Holding

Yes; the Respondent was not entitled to damages for unfair termination or notice pay, and maximum awards must be justified

Reasoning

Since there was no unfair termination, the statutory basis for compensation under section 49 fell away. Further, invoking Court of Appeal authority, the court noted that a maximum 12 months' award must be explained and cannot be capricious; the trial Magistrate gave no reasons for the maximum award.

p. 8

Legal principles established

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  • Section 37 of the Employment Act converts casual employment to term contract; it cannot convert a fixed term contract into a permanent contract
  • Fixed term contracts end by effluxion of time and non-renewal does not amount to unfair termination
  • An award of maximum 12 months' compensation must be justified with sound judicial principles

Court orders

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  1. 1.The appeal is found merited and succeeds
  2. 2.The order of the lower Court entering judgment in favour of the respondent is substituted with an order dismissing the suit in the lower Court
  3. 3.The appellant shall have costs of the Appeal and costs in the lower court
On appeal from
Magistrates' Court (trial court)
Not stated
Jurisdiction invoked
First appellate jurisdiction over the trial court's judgment in an employment dispute (Employment and Labour Relations Court)

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, "Halar Industries Limited v Muia (Appeal E170 of 2022) [2024] KEELRC 2479 (KLR)", Case Analysis (2024). Not stated in the judgment as provided (Memorandum of Appeal dated 5th October, 2022). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2024/2479/eng@2024-10-11

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