Skip to content
AI-generated case briefs sourced from Kenya Law · Not legal advice
Caselaw
AI-generated case brief
Case Brief · caselaw.co.ke
ELRCDismissedMemorandum of Appeal dated 18th December 2023· [2025] KEELRC 2697 (KLR)

Atola v Thika Cloth Mills Limited (Appeal E263 of 2023) [2025] KEELRC 2697 (KLR)

Employment and Labour Relations Court
3 October 2025
AJAbuodha Nelson Jorum
2,882 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~12 min to read original · ~4 min brief

The bottom line

#

Kenya's Employment Court confirmed that repeated one-month fixed term contracts do not make a worker permanent, and no terminal dues were owed.

What this practically means

#

Executive summary

#
This was a first appeal to the Employment and Labour Relations Court against the judgment of Honourable O. Wanyaga (SRM) delivered on 29th November 2023, which dismissed the Claimant's employment suit with half costs at lower scale to the Respondent. The Appellant, who had retired in 2013 and was recalled in 2014, served on one-month fixed term contracts renewed monthly until his services were terminated on 31st March 2020. He appealed on eighteen grounds, contending that six years of continuous service converted him into a permanent employee under section 37 of the Employment Act, that he was unlawfully declared redundant without compliance with section 40, that his termination due to old age and Covid-19 was unjustified, and that he was entitled to three months' notice pay, leave pay, overtime and service gratuity under the CBA. The Respondent filed no submissions. The court framed three issues: the nature of the employment, the fairness of the termination, and entitlement to terminal dues. Relying on Krystalline Salt Limited v Kwekwe Mwakele and East Africa Sea Food Limited v Mwazito, the court held that section 37 converts only casual employment, not fixed term contracts, into permanent employment; the Appellant's short fixed term contracts did not assume permanency. On fairness, the Appellant received 30 days' salary in lieu of notice against a contractual seven days, so the termination was legal and fair. Terminal dues failed because payslips showed leave and overtime were paid at the end of each independent contract, and dues had been paid on his 2013 retirement. The appeal was dismissed. In the interest of justice, the court overturned the trial court's half-costs order, directing each party to bear their own costs at the trial court and on appeal. It is so ordered.

Key legal issues

#
01

Whether successive one-month fixed term contracts converted into permanent employment under section 37 of the Employment Act

Holding

No. The Appellant was on fixed term contracts with start and end dates; section 37 conversion applies only to casual workers, so the contracts did not assume permanency.

Reasoning

The court found it undisputed that the Appellant served on one-month contracts renewed monthly, paid at the end of each contract including leave pay, house allowance and overtime. A termination letter stating service from 2014 to 2020 did not make him permanent. Section 37 conversion presupposes casual employment as the starting point; fixed term contracts with defined start and end dates cannot be converted into open-ended contracts, and renewal severally does not constitute regular open-ended employment.

p. 5
02

Whether the termination was fair

Holding

Yes. The Appellant was paid 30 days' salary in lieu of notice, exceeding the seven days' notice provided by the last contract.

Reasoning

The February 2020 contract stipulated termination by giving or paying in lieu of seven days' notice. The Appellant received one month's (30 days') pay in lieu of notice, which was more generous than the contractual term. The court therefore agreed with the trial magistrate that the termination was legal and fairly done, rejecting the redundancy and old-age discrimination arguments.

p. 6
03

Whether the Appellant was entitled to terminal dues (leave, overtime, service gratuity)

Holding

No. He was paid leave and overtime at the end of each contract and had received his dues on retirement in 2013; no service pay was payable.

Reasoning

The payslips showed that the Appellant's basic salary together with overtime and leave entitlements were paid monthly at the end of each contract. Since each contract was separate and independent, anything unpaid could only be claimed at the end of each contract. On service gratuity, the Appellant was employed on short contracts and had already been paid his dues when he retired from the Respondent, so no service pay accrued.

p. 6

Legal principles established

#
  • A fixed term contract employee does not acquire permanency merely because the term contracts are renewed severally; section 37 of the Employment Act converts casual employment, not fixed term contracts, into permanent employment
  • Under a fixed term contract, unpaid entitlements, if any, can only be claimed at the end of each separate contract

Court orders

#
  1. 1.The appeal is found without merit and is dismissed
  2. 2.The order on costs at the trial court that the Respondent be awarded half the costs at lower scale is overturned
  3. 3.Each party to bear their own costs at the trial court and of this appeal
On appeal from
Chief Magistrate's Court (trial before Honourable O. Wanyaga, SRM)
Jurisdiction invoked
First appellate jurisdiction over an appeal from a magistrate's court (Memorandum of Appeal dated 18th December 2023)

Key timeline

#

Practical implications

#

Frequently asked questions

#

Cite this brief

#

Cite this brief

Caselaw, "Atola v Thika Cloth Mills Limited (Appeal E263 of 2023) [2025] KEELRC 2697 (KLR)", Case Analysis (2025). Memorandum of Appeal dated 18th December 2023. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2697/eng@2025-10-03

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