Our case in point today is Muthee v Italiana (Cause 2244 of 2015) [2023] KEELRC 1825 (KLR) (28 July 2023). Our discourse is on fixed term employment contracts and the right to reasonably expect renewal upon expiry, if at all.
For the employment law enthusiasts, you probably have sang the legal chorus that fixed term employment contracts carry no inherent expectancy of renewal. Differently put, a fixed term employment contract carries no rights, obligations or expectations beyond the date of expiry. See for instance http://kenyalaw.org/caselaw/cases/view/143908 and http://kenyalaw.org/caselaw/cases/view/149129.
Once the contract expires, the employment terminates through effluxion of time. There is no automatic renewal and perhaps, there is good reason for that. Employment is not servitude. A party ought to be at liberty to terminate the employment in line with the terms of their contract.
That said, in our case in point, the court observed that parties my present evidence that may persuade the court to rule otherwise. Depending on the evidence availed, the court may discern an obligation on the employer to renew the employment contract. According to the court, the decision of an employer not to renew a fixed term contract is challengeable albeit on limited grounds. The court may ask itself questions such as, did the actions of the employer give rise to reasonable expectation of renewal on the part of the employee? Was the decision not to renew the contract based on improper motives? Are there are other countervailing circumstances that overwhelmingly created a legitimate and reasonable expectation of renewal?
The case concerned an employee who had worked for 9 fixed term contracts stretching over a 5 year period between 1st January 2011 and 30th June 2015 without any break in service. The employment was rosy. The employee served as a Cameraman/Editor/Producer in a media house. Trouble would later set in when there was no immediate renewal of the contract after 30th June 2015. The employee nonetheless continued working unperturbed. After all, he was discharging a function which is number one in the employer’s business. Any reasonable person would have expected that the employee would discharge his role in continuity. There were no signs at all that the employer was slowing down as a media house.
To the court, an employee develops a right to reasonably expect renewal where such renewal has been granted multiple times in the past. In the case at bar, the employee’s contract had been renewed on 9 occasions. What then was so different about the 10th occasion? The court pondered. Furthermore, the employee continued working post expiry of the last contract until he was later terminated on 29th July 2015. To the court’s mind, it was questionable where a contract is consistently renewed on 9 occasions and renewal declined on the 10th occasion for no other reason other than expiry.
To the court, the Employment Act, 2007 discourages temporary employment contracts in perpetuity. Such periodic contracts may somewhat amount to casualization of labour. It was not lost to the court that some of the contracts in the case at bar were as short as 1 month. Such type of contracts, the court opined, offer no security to employees. Such contracts do not guarantee pension and service pay based on creditable years of service. Hardly will such contracts offer the statutory protections available to regular employees upon termination of employment. The employer can always argue that the contract was term-limited. It expired as was intended by the parties. That is sanctity of contract.
The court felt that there was need for legislative intervention on the law relating to legitimate and reasonable expectation of renewal of fixed term contracts of employment. The court sampled the definition of dismissal in the South African Labour Relations Act, 1995 at Section 186 (1) (b) thus:
“an employee reasonably expected the employer to renew a fixed term contract of employment on the same or similar terms but the employer offered to renew it on less favourable terms, or did not renew it;
The court was persuaded that we should also go the South African way. The court propounded that the Employment Act, 2007 should be amended to capture the concept of legitimate and reasonable expectation of renewal of fixed term contracts in limited circumstances as was the case at bar. To the court’s mind, such legislative intervention will give succor to the constitutional guarantee of fair labour practices set out at Article 41 (1) of the Constitution of Kenya 2010. The court apprehended that an employee who works under 9 fixed term contracts over a period of 5 years and is refused renewal on the 10th occasion for no other reason other than expiry, is most likely a victim of unfair labour practice.
The court was of the view that even in the absence of a legislative equivalent to the South African Labour Relations Act, the Employment Act, 2007 at Section 45 (5) (d) mandates the court to consider the previous practice of the employer in dealing with the types of circumstances that led to the termination. Such circumstances would include: has the employer unfailingly renewed the fixed term contract in the past? Has the employer permitted the employee to continue working as if nothing had happened after any one contract expired?
To the court, such previous practice is an important factor in determining whether an employer acted justly and equitably in failing to renew a fixed term employment contract. It is this previous practice that the court will probe to determine whether an employee had developed reasonable expectation of renewal of the contract. The court however pointed out that each case must turn on its own peculiar facts and circumstances.
