Avic International Holding Corporation v Mulwa & 19 others (Employment and Labour Relations Cause E080 of 2024 & Appeal E078, E079, E080, E081, E082, E083, E084, E085, E086, E087, E088, E089, E090, E091, E092, E093, E094, E095 & E96 of 2024 (Consolidated)) [2025] KEELRC 2770 (KLR)
The bottom line
#Kenya's Employment Court confirmed that continuing to work after a fixed-term contract expires converts the job to month-to-month employment, terminable only with proper notice.
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 trial magistrate erred in finding that the Respondents were unfairly and unlawfully terminated
- 2.Whether the trial court erred in awarding the Respondents the reliefs sought
Key legal issues
#Whether termination of an employee whose fixed term contract expired but who continued working was unfair
Yes - continued employment created legitimate expectation of renewal and converted the contract to month-to-month terminable by notice; suspension without notice was unfair
The Respondent's six-month fixed term contract expired in June 2022 but he continued working until May 2023 without a new contract. The court found the contract constructively renewed and legitimate expectation created by continued payment and non-objection to continued work. The Respondent could only be released upon notice under section 35(1)(c). Suspension due to bad weather without notice, and of no specific duration, fell short of substantive and procedural fairness under sections 43 and 41, hence unfair under section 45.
Whether the 'time specific project' defence relieved the employer of notice obligations
No - nothing in the contract indicated a time-specific engagement, and the project was not complete at termination
The court noted the contract did not mention a time-specific project and the only reason given was suspension due to bad weather, not completion of the project. The project ran 2017 to December 2023 but the Respondent was terminated in May 2023 when the project had not been completed, so the no-notice defence for project completion did not apply.
Which wage order applied to the underpayment claim
The 2018 and 2022 Legal Notices applied; the Labour Institutions (Building and Construction Industry) (Wages) Order 2012 was impliedly repealed
The court agreed with the trial court that applying 2012 rates to an employee who left work over ten years later would be impracticable and discriminatory, since the same employees did the same work as those governed by the general Labour Institutions order. The doctrine of implied repeal applied, with the 2018 and 2022 Legal Notices repealing the 2012 Wages Order.
Whether the awards of compensation and notice pay should be disturbed
No - awards of three to four months' salary were not maximum compensation, were reasonable, and the trial court's discretion would not be interfered with
The trial court observed the section 49(4) considerations and awarded four months' salary to the test Respondent and between three and four months to the rest. Applying the Darasa Investments standard, the appellate court would only interfere on misdirection or manifest wrong occasioning injustice, none of which was shown. Notice pay also stood as the Respondents were terminated without notice.
Legal principles established
#- Where an employee continues working after expiry of a fixed term contract on month-to-month pay, the employment converts to a month-to-month contract terminable only by notice under section 35(1)(c) of the Employment Act
- An appellate court will not interfere with the trial court's exercise of discretion on damages unless misdirection or clear wrong occasioning injustice is shown
Court orders
#- 1.The Appeal is found unmerited and is dismissed with costs to the Respondents
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- On appeal from
- Subordinate court (magistrates' court)
- Jurisdiction invoked
- First appellate jurisdiction over the subordinate court judgment (ELRC appeals from magistrates' courts)
- Consolidated with
- 19 other files in the series directed by this test suit judgment
Relief refused
#Appeal allowed with costs and dismissal of the Respondent's suit, or in the alternative review and reduction of compensation
The trial court correctly found unfair termination and exercised its discretion judiciously; awards were reasonable and justified
Costs
Appeal dismissed with costs to the Respondents
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.
In the upshot the Appeal is found unmerited and is hereby is dismissed with costs to the Respondents.
This court therefore upholds the trial court decision that the termination of the Respondent was unfair and unlawful.
where an employer and employee continue the employment relationship after expiry of fixed term contract such an employee who is paid month to month converts to an employee to be only released with notice as per section 35(1)(c) of the Employment Act
The conduct of the Appellant in this case where it continued paying the Respondent his salary, never notified its intention of not renewing the contract before it expired and never objected to the Respondent's continuation of work amounted to the Respondent's legitimate expectation.
It would be discriminatory to the Respondents to apply rates which applied a decade ago.
Issues in the judgment
#The judgment variously refers to the termination date as 18th May, 2023 (submissions) and 18th May, 2024 (Respondent's submissions)
The judgment alternates between referring to the Appellant as 'Respondent' in places
Case name printed with typographical errors ('Vegpro 9K) Ltd', 'ofiered', 'fiawed')
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Avic International Holding Corporation v Mulwa & 19 others (Employment and Labour Relations Cause E080 of 2024 & Appeal E078, E079, E080, E081, E082, E083, E084, E085, E086, E087, E088, E089, E090, E091, E092, E093, E094, E095 & E96 of 2024 (Consolidated)) [2025] KEELRC 2770 (KLR)", Case Analysis (2025). Memorandum of Appeal dated 25th March, 2024 (test suit for 20 consolidated files). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2025/2770/eng@2025-10-09
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.