Amatsi Water Services Company Limited v Francis Shire Chachi [2018] KECA 255 (KLR)
The bottom line
#Kenya's Court of Appeal confirmed that a fixed-term contract ends on its expiry date, so an employer whose employee's contract lapsed during unfinished disciplinary investigations was not liable for unfair termination.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the employment of the respondent was terminated unfairly and unlawfully, or whether the fixed term contract ended by effluxion of time
- 2.If the termination was unfair, what remedies the respondent was entitled to; and specifically whether the awards on remuneration and gratuity were justified
Key legal issues
#Whether a fixed term contract that expires while disciplinary investigations are pending is unfairly terminated
The contract was not prematurely terminated; it ended by effluxion of time before the disciplinary process envisaged in the show cause letter could take effect, so there was no unfair or wrongful termination
The Court held that a fixed term contract ends automatically on its sunset date unless extended per its terms. The show cause letter was issued only 15 days before expiry, the employee made no response, and the investigation and disciplinary process remained inchoate at expiry. The employer cannot be held responsible for the contract ending during investigations, and an oral hearing is not always required for procedural fairness.
Whether the compensation award of 10 months' gross salary for unfair termination could stand
Having found no unfair termination, the compensation of 10 months' gross salary was set aside
The compensation award rested entirely on the finding of unfair termination in procedure and substance. Once the appellate court reversed that finding on the first issue, the compensation order necessarily fell away; it followed logically from the determination of the first issue.
Whether gratuity was payable despite unresolved allegations of gross misconduct
The order for payment of gratuity was upheld because the disciplinary and investigative processes were never concluded before the contract expired
The appellant argued gratuity was payable only on successful completion of the contract and that non-response to the show cause letter admitted gross misconduct. The Court rejected this: since the investigation and disciplinary process were inchoate and no conclusive action was taken before expiry, the employer could not rely on that unresolved state of affairs to deny gratuity.
The correct salary figure for computing arrears and gratuity
The gross salary of Sh.118,350 (paid as at suspension) was the correct basis, being the reviewed salary admitted by the appellant's witness
The contract provided for yearly review of salary. Payment slips for November and December 2009 showed gross monthly pay of Sh.118,350, and the appellant's witness admitted the figure paid at suspension. The trial court's reliance on that figure was therefore supported by evidence and was upheld.
Legal principles established
#- A fixed term contract terminates on its sunset date unless extended in terms stated in the contract; an employer is not obliged to give reasons for non-renewal
- Fairness of a disciplinary hearing is not determined solely by its oral nature; a hearing may be conducted through an exchange of letters
- Post-Employment Act 2007 and the Constitution 2010, fairness in termination applies across all contracts of employment
Court orders
#- 1.The appeal is partly successful but is otherwise dismissed
- 2.The finding that the termination of the respondent's contract of employment was unfair in procedure and substance is set aside
- 3.The order of compensation of 10 months' gross salary at Sh.1,183,500 is set aside
- 4.The order for payment of gratuity at Sh.211,050 is upheld
- 5.The order for payment of leave allowance at Sh.25,000 is not disturbed
- 6.The order for payment of 57 un-utilized leave days at Sh.154,228 is not disturbed
- 7.The order for payment of salary arrears at Sh.710,100 is not disturbed
- 8.The order allowing the counterclaim at Sh.64,000 is not disturbed
- 9.The order for issuance of certificate of service is not disturbed
- 10.Each party shall bear its own costs of the appeal
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- On appeal from
- Employment and Labour Relations Court of Kenya at Nairobi
- ELR Cause No. 1548 of 2010
- Jurisdiction invoked
- First appeal under the Court of Appeal's appellate jurisdiction (Rule 29(1)(a) of the Court of Appeal Rules); no constitutional provision invoked
Relief refused
#Upholding the finding of unfair termination and the 10 months' salary compensation
The Court found the fixed term contract ended by effluxion of time, not premature termination; the disciplinary process was still inchoate when the contract expired
Costs
As the appellant has substantially succeeded in the appeal, each party shall bear its own costs of the appeal.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
The appeal is partly successful but is otherwise dismissed.
The finding that the termination of the respondent's contract of employment was unfair in procedure and substance is set aside.
The order of compensation of 10 months' gross salary at Sh.1,183,500, is hereby set aside.
It is our finding, in all the circumstances, that the contract was not terminated before its expiry. It ended by effluxion of time
As the appellant has substantially succeeded in the appeal, each party shall bear its own costs of the appeal.
Issues in the judgment
#The judgment gives inconsistent figures for the gross salary paid at suspension within the same passage
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (1)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Bukasu v Diakonia - Sweden - Africa (Cause E315 of 2023) [2025] KEELRC 2291 (KLR)[2025] KEELRC 2291 (KLR)31 Jul 2025applied
Cite this brief
#Cite this brief
Caselaw, "Amatsi Water Services Company Limited v Francis Shire Chachi [2018] KECA 255 (KLR)", Case Analysis (2018). Civil Appeal No. 278 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2018/255/eng@2018-10-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.