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ELRCPartially Allowed· [2025] KEELRC 647 (KLR)

Oyoo v Registered Trustees of the Sisters of Mercy (Kenya) t/a The Mater Misericodiae Hospital (Employment and Labour Relations Cause 717 of 2019) [2025] KEELRC 647 (KLR)

Employment and Labour Relations Court
28 February 2025
6,458 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~26 min to read original · ~4 min brief

The bottom line

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A Kenyan court ruled that letting an employee keep working past a fixed-term contract's expiry date automatically renews it, so firing him afterwards was unfair.

What this practically means

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Executive summary

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The claimant, formerly a Senior Financial Accountant (from December 2011 on permanent and pensionable terms) and later Acting Financial Controller of the respondent hospital, sued for unfair termination. By a letter dated 6th December 2017 he was appointed substantive Credit Control Manager on a one-year term contract expressed to lapse automatically on 28th February 2018, on higher salary. He alleged he signed the contract under duress and that his permanent employment was unfairly terminated by a letter dated 26th March 2018 titled non-renewal of contract. The respondent maintained the contract lapsed by effluxion of time. The court found the claimant accepted the new position freely, with no proof of duress, and parties were bound by the contract. However, because the respondent allowed the claimant to work past the 28th February 2018 expiry date - he was on his 26th day of work when terminated on 26th March 2018, and was paid salary to 31st March 2018 plus one month's notice pay - the contract was deemed automatically renewed into an open-ended one. Termination after that date therefore fell to be tested against the fairness threshold in section 45(2) of the Employment Act, which the respondent failed to meet as to both reason and procedure. The court distinguished Transparency International - Kenya v Omondi. On remedies, only section 49 relief was available: the court awarded three months' salary as compensation (Kshs. 2,095,974/-), refused the claims for the unexpired contract term and pension contributions, found notice pay already paid, and ordered a certificate of service under section 51, costs, interest from judgment, and a 30-day stay.

Key legal issues

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01

Whether the termination of the claimant's employment was lawful and fair

Holding

The termination on 26th March 2018 was unlawful and unfair; the effluxion-of-time defence only applied up to 28th February 2018, and the respondent's continued engagement and payment of salary thereafter renewed the contract, making termination subject to section 45(2) fairness requirements.

Reasoning

The claimant held a permanent and pensionable contract from 2011 and later a one-year term contract expiring 28th February 2018. The termination letter issued on 26th March 2018, when the claimant had worked 26 days past expiry and was paid salary to 31st March 2018 plus notice pay. That conduct amounted to automatic renewal into an open-ended contract. No valid reason or fair procedure under sections 43 and 45(2) was shown for the post-expiry termination.

p. 8
02

Whether the contract of 6th December 2017 was signed under duress so as to invalidate the variation of the claimant's permanent and pensionable terms

Holding

No vitiating factor was established; the claimant accepted the new position of Credit Control Manager on higher salary and gave no evidence of duress.

Reasoning

The claimant alleged he signed the 2017 contract under duress given the atmosphere of management dismissals, but conceded he had no evidence of duress. He signed a hearty appreciation letter of his own free will. The court found the contract was a new position freely accepted with higher salary backdated, fully performed, and binding.

p. 8
03

What remedies were due on a finding of unfair termination

Holding

Only remedies under section 49 of the Employment Act were available; the court awarded three months' salary as compensation (Kshs. 2,095,974/-), notice pay having already been paid, plus a certificate of service under section 51.

Reasoning

Applying the section 49(4) factors - length of service since 2011, good disciplinary record, one-year term contract, notice pay already received, and the claimant's consultancy business and mitigation - the court found three months' gross salary adequate. Damages for the unexpired contract term and pension contributions are not provided for under section 49 in an unfair termination claim.

p. 12

Legal principles established

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  • Where an employer allows an employee to continue working past the stated expiry date of a fixed-term contract and pays salary beyond that date, the contract is deemed renewed and becomes open-ended, so any subsequent termination must satisfy the fairness threshold under section 45(2) of the Employment Act.
  • The burden of proving the reason(s) for termination and their fairness rests on the employer.
  • Parties are bound by the terms of a freely executed contract unless vitiating factors such as duress are proved.

Court orders

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  1. 1.Judgment entered for the claimant against the respondent for compensation for unfair termination of Kshs. 2,095,974/- payable subject to statutory deductions
  2. 2.Costs of the suit to the claimant
  3. 3.Interest at court rates from the date of judgment
  4. 4.Certificate of service to issue under section 51 of the Employment Act covering the entire period of service
  5. 5.Stay of execution granted for 30 days

Authorities

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Legislation

  • Employment Act, 2007section 41
  • Employment Act, 2007section 42(1)
  • Employment Act, 2007section 43
  • Employment Act, 2007section 44(3) and (4)
  • Employment Act, 2007section 45
  • Employment Act, 2007section 47
  • Employment Act, 2007section 49
  • Employment Act, 2007section 51
  • Constitution of Kenya, 2010Article 50(1)

Cases cited (6)

  • Thomas Ogunde Mboya v Grand Royal Swiss Hotel
    [2022] KEELRC 314 (KLR)
  • Elizabeth Wakanyi Kibe v. Telkom Kenya Ltd.
    [2014] eKLR
  • Transparency International - Kenya v Omondi
    (Civil Appeal 81 of 2018) [2023] KECA 174 (KLR)
  • Patrick Abuga v ICPAK
  • Ezekiel Nyangoya Okemwa v Kenya Marine & Fisheries Research Institute
    [2016] eKLR
  • Naqvi Syed Qmar v Paramount Bank Limited & another
    [2015] eKLR
Jurisdiction invoked
Employment and Labour Relations Court jurisdiction over unfair termination claims under the Employment Act, 2007

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, "Oyoo v Registered Trustees of the Sisters of Mercy (Kenya) t/a The Mater Misericodiae Hospital (Employment and Labour Relations Cause 717 of 2019) [2025] KEELRC 647 (KLR)", Case Analysis (2025). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/647/eng@2025-02-28

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