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ELRCPartially AllowedNot stated in judgment (appeal against judgment in Mombasa CMELRC No 1041 of 2021)

Ecocleaners Limited v Wandera (Appeal E027 of 2022) [2023] KEELRC 1258 (KLR)

Employment and Labour Relations Court
27 April 2023
1,696 words in judgment
View original judgmentRead on Kenya Law Watch case
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·~7 min to read original · ~4 min brief

The bottom line

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Kenya's Employment Court ruled that fixed-term contract workers aren't entitled to severance pay when their contracts simply expire, even after redundancy-related termination.

What this practically means

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Executive summary

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The respondent was employed by the appellant as a cleaner and his employment was terminated on January 25, 2019 by letter dated January 18, 2019 on account of reduced work after a client, Multiple ICD Kenya Limited, terminated its contract with the appellant. The trial court in Mombasa CMELRC No 1041 of 2021 found unfair termination contrary to Section 40 of the Employment Act, holding the notice too short, and awarded four months' compensation and severance pay for two years, alongside notice pay. On appeal, the ELRC at Mombasa (M. Mbaru, J) framed the issue as whether the magistrate erred in evaluating the evidence, and as a first appeal re-evaluated the record. The court held that the respondent was on an admitted fixed term contract which ended on its own terms with no expectation of renewal, so severance pay under Section 40(1)(g) could not be awarded by cumulatively treating fixed term contracts as continuous service. The reason for termination - redundancy due to operational requirements - was not contested, two meetings were held, and notice was copied to the Labour Officer as required. Citing Kenya Airways and Africa Nazarene University, the court held the termination was not unfair under Section 45(2)(b)(ii); the only lapse was the insufficient 30-day notice, already addressed by notice pay. The appeal was allowed: the trial judgment was set aside save for the award of notice pay of Ksh 8,000, with each party bearing their own costs.

Questions the Court framed

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

  1. 1.Whether the Honourable Magistrate erred in law in evaluating the evidence on record and hence made the awards outlined in the judgment delivered on December 2, 2021
  2. 2.Whether severance pay was payable in respect of a fixed term contract
  3. 3.Whether the termination on grounds of redundancy was lawful save for short notice

Key legal issues

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01

Severance pay on a fixed term contract

Holding

Severance pay under Section 40(1)(g) is only payable for each completed year of service and cannot be awarded by cumulatively treating fixed term contracts as continuous service without analysis

Reasoning

The respondent was on an admitted fixed term contract running from December 27, 2018. Such a contract ends on its own terms with no expectation of renewal. The last contract produced was not challenged, and any subsisting prior employment could not be surmised and impliedly applied to award severance pay without the trial court analysing it. The award of severance for 2 years was therefore without legal foundation.

p. 3
02

Whether termination on redundancy grounds was unfair

Holding

Termination based on the operational requirements of the employer is not unfair under Section 45(2)(b)(ii); short notice was correctly addressed by the trial court but did not render the whole termination unlawful

Reasoning

The fact of reduced work was not contested, the respondent attended two meetings on the intended termination, notice was issued and copied to the Labour Officer as required by Section 40. Following Kenya Airways and Africa Nazarene University, the redundancy was legitimate. The only lapse was the insufficient 30-day notice, which justified notice pay only.

p. 3
03

Duty of first appellate court

Holding

As a first appeal the court re-evaluates the evidence and reaches its own conclusions

Reasoning

The court framed the central issue as whether the magistrate erred in evaluating the evidence. Being a first appeal, it was required to look at the evidence afresh, evaluate it and reach its own conclusions rather than defer to the trial court's findings.

p. 2

Legal principles established

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  • A fixed-term employment contract does not create a legitimate expectation of renewal; it starts and ends on its own terms
  • Redundancy is a legitimate ground for terminating employment provided there is a valid and fair reason based on operational requirements and a fair procedure, including notification of the labour officer

Court orders

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  1. 1.Judgment in Mombasa CMELRC No 1041 of 2019 delivered on December 2, 2021 set aside save for the award of notice pay assessed at Ksh 8,000
  2. 2.Each party shall bear own costs

The bench

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

majority

Wrote the judgment

On appeal from
Magistrates' Court (CMELRC) Mombasa
Mombasa CMELRC No 1041 of 2021
Jurisdiction invoked
First appeal from the trial court in employment and labour relations matter

Relief refused

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Severance pay for 2 years worked

Fixed term contract ending on its own terms carries no expectation of renewal; severance pay under Section 40(1)(g) is for each completed year of service and prior employment could not be surmised without analysis

p. 2

Compensation for unfair termination (4 months)

Termination was on operational requirements of the employer and thus not unfair under Section 45(2)(b)(ii); the labour officer was notified as required

p. 4

Costs

Each party shall bear own costs

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.

Accordingly, judgment in Mombasa CMELRC No 1041 of 2019 delivered on December 2, 2021 is hereby set aside save for the award of notice pay assessed at Ksh 8,000. Each party shall bear own costs
p. 4Final orders - appeal allowed in part
a fixed-term employment contract does not create a legitimate expectation of renewal. It starts and ends on its own terms.
p. 2Fixed term contracts and renewal
redundancy is a legitimate ground for terminating a contract of employment provided there is a valid and fair reason based on operational requirements of the employer and the termination is in accordance with a fair procedure.
p. 3Redundancy as fair reason (quoting Kenya Airways)

Issues in the judgment

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minor

Trial case number given as CMELRC No 1041 of 2021 in opening paragraph but as CMELRC No 1041 of 2019 in the final orders

minor

Date of respondent's initial employment stated as April 10, 2016 in grounds of claim but August 10, 2016 in the evidence discussion

minor

Dates of the two meetings inconsistently rendered ('11th and January 18, 2019' and '11th and January 18, 2018')

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, "Ecocleaners Limited v Wandera (Appeal E027 of 2022) [2023] KEELRC 1258 (KLR)", Case Analysis (2023). Not stated in judgment (appeal against judgment in Mombasa CMELRC No 1041 of 2021). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1258/eng@2023-04-27

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