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ELRCPartially AllowedNot indicated in the judgment

John Nduba v Africa Medical and Research Foundation (AMREF Health Africa) [2020] KEELRC 1685 (KLR)

Employment and Labour Relations Court
7 February 2020
5,921 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~24 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that promising contract renewal if performance was satisfactory means employers cannot simply let the contract lapse.

What this practically means

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Executive summary

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The Claimant, employed by the Respondent since 6th May 1983 under consecutive fixed term contracts totalling 32 years and 2 months, sued over the Respondent's failure to renew his final two-year contract (1st July 2013 to 30th June 2015) for a further two years. He sought a declaration of unfair labour practice and unlawful redundancy, 12 months' maximum compensation, severance pay at 15 days per year of service, general damages for unfair labour practices, and costs. The Respondent maintained the contract lapsed by effluxion of time, that the Claimant was offered and accepted a three-month renewal by conduct, and that all dues were paid. The court framed three issues: legitimate expectation of renewal, unfair termination, and entitlement to reliefs. It held that although there is generally no legitimate expectation of renewal of fixed term contracts, the rule is subject to exceptions including an express contractual promise of renewal subject to conditions fulfilled by the employee and the employer's conduct. Clause 3.2 of the contract and clauses 1.5.1 and 9.2.4 of the HR Policy Manual, the satisfactory appraisal, the offer of only a three-month contract, the creation of a senior CPO post, the appointment of a replacement, and the breach of the end-of-contract notice clause satisfied the court that the Claimant had a legitimate expectation of renewal for two years. The failure to renew constituted unfair termination: the financial constraints reason was not genuine and the section 40 redundancy procedure was not followed. Judgment was entered for the Claimant for US$ 149,052 (12 months' gross salary) plus costs and interest, subject to statutory deductions. Severance pay and general damages claims were declined. Delivered at Nairobi on 7th February 2020 by Onesmus N. Makau, J.

Questions the Court framed

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The issues the Court set itself to decide, in its own words.

  1. 1.Whether the Claimant had a legitimate expectation of renewal of his contract of employment for a further period of two (2) years
  2. 2.Whether the failure to renew the contract for 2 years amounted to unfair termination of his employment contract
  3. 3.Whether the Claimant is entitled to the reliefs sought in his Claim

Key legal issues

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01

Legitimate expectation of renewal of a fixed term contract

Holding

The Claimant had a legitimate expectation of renewal for 2 years, based on clause 3.2 of the contract, clauses 1.5.1 and 9.2.4 of the HR Policy Manual, satisfactory appraisal, and verbal assurances; the financial constraints justification was not genuine.

Reasoning

The court found the general rule (no legitimate expectation of renewal of fixed term contracts) displaced by exceptions: an express promise in the contract that renewal would follow fulfilment of conditions, and the employer's conduct. The claimant's performance was appraised as satisfactory; funds were available (the employer offered a 3-month renewal); the employer created a senior CPO position and replaced the claimant; and the end-of-contract notice clause 9.2.4 was not complied with. The burden of proof on a balance of probability was discharged.

p. 5
02

Whether failure to renew amounted to unfair termination

Holding

Yes. The contract was never renewed but terminated on the ground of financial challenges, which was neither valid and fair nor accompanied by the mandatory section 40 redundancy procedure.

Reasoning

The employer's explanation (financial constraints) meant the termination was in substance a redundancy. The court found the reason not genuine because a replacement was appointed and a new senior CPO position was created. The employer therefore failed to discharge its burden under sections 43 and 45 of the Employment Act to prove a valid and fair reason. Even if the reason had been valid, the mandatory section 40 procedure was not followed, rendering the termination unfair.

p. 6
03

Admissibility of RW1's evidence based on records

Holding

Not decided against the claimant; the court received the evidence but the claimant's case prevailed on the documentary record, including the respondent's confirmation that all communication with employees was in writing and there was no written 2-year renewal.

Reasoning

The respondent had relied on section 33 and section 62 of the Evidence Act and precedents admitting hearsay evidence of witnesses testifying from employment records. The court did not expressly rule on admissibility, but RW1's concession that there was no written communication confirming a 2-year renewal featured in the court's assessment of the claimant's legitimate expectation.

p. 2

Legal principles established

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  • There is no legitimate expectation of renewal of a fixed term contract as a general rule, but the rule is subject to exceptions such as regular practice, previous renewals, an express promise of renewal subject to conditions which the employee fulfils, and the employer's conduct inducing the expectation.
  • Termination of employment is unfair unless the employer proves a valid and fair reason and that a fair procedure was followed (sections 43 and 45 of the Employment Act).
  • Where the stated reason for termination is financial inability to pay, the reason is redundancy and the mandatory procedure under section 40 of the Employment Act must be complied with.
  • A staff/HR manual is incorporated into the contract of employment where the contract adopts it.

Court orders

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  1. 1.A declaration that the Respondent's failure to renew the Claimant's employment for a period of 2 years constituted an unfair and unlawful termination of the Claimant's employment through unlawful redundancy
  2. 2.Compensation of 12 months' gross salary for unfair and unlawful termination (fixed monthly salary of US$ 10,851 plus house allowance of US$ 1,570)
  3. 3.Judgment entered for the Claimant against the Respondent in the sum of US$ 149,052
  4. 4.Costs of the suit to the Claimant
  5. 5.Interest on the award from the date of judgment
  6. 6.The award is subject to statutory deductions if any

The bench

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One judgment of the whole court — no separate or dissenting opinions.

majority

Wrote the judgment

Jurisdiction invoked
Original jurisdiction of the Employment and Labour Relations Court under the Employment Act, 2007 (unfair termination claim)

Relief refused

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Severance pay at 15 days' pay for each of 32 completed years of service

The separation was unfair termination disguised as redundancy, not genuine redundancy; the compensation awarded is a sufficient remedy

p. 6

General damages for unfair labour practices

The alleged violations amounted to breach of contract and section 45 of the Employment Act, adequately covered by the compensation award

p. 6

Costs

Judgment for the claimant in the sum of US$ 149,052 plus costs and interest from the date of the judgment, subject to statutory deductions if any.

Quotable passages

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Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.

Consequently, I enter judgment for the claimant against the respondent in the sum of US$ 149,052 plus costs and interest from the date hereof. The award is subject to statutory deductions if any.
p. 7Final orders and disposition
I make a declaration that the Respondent's failure to renew the Claimant's employment for a period of 2 years constituted an unfair and unlawful termination of the Claimant's employment through unlawful redundancy.
p. 6Declaration of unfair termination
I agree that the jurisprudence emerging from this court is that there is no legitimate expectation of renewal of fixed term contract. However, in my view, the foregoing is just but the general rule which is subject to exceptions
p. 5Legitimate expectation - general rule and exceptions
Flowing from the foregoing declaration I award the claimant 12 months' gross salary as compensation for the unfair and unlawful termination of his employment contract.
p. 6Compensation award
I dismiss the claim for severance pay because I have found that the separation was through unfair termination disguised as redundancy.
p. 6Severance pay claim dismissed
the claim for General damages for unfair labour practices is declined because the sum total of the alleged violation, in my view, amounted to a breach of contract and section 45 of the Employment Act.
p. 6General damages claim declined

Issues in the judgment

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minor

The judgment's case number and neutral citation are not stated in the text provided; the respondent is not named in full in the body of the judgment (identified only through its HR Policy Manual as AMREF).

minor

Internal inconsistency: the court found the reason for termination was redundancy yet dismissed the severance pay claim on that basis.

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, "John Nduba v Africa Medical and Research Foundation (AMREF Health Africa) [2020] KEELRC 1685 (KLR)", Case Analysis (2020). Not indicated in the judgment. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2020/1685/eng@2020-02-07

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