Case Summary: Transparency International – Kenya V Omondi [2023] KECA 174 (KLR)
Factual Background
The appellant employed the respondent sometime in October 2010 on a two-year fixed-term contract. The contract contained a renewal clause stating that further extension of the contract would be subject to satisfactory performance and ongoing need of the respondent’s services. Upon expiry of the contract, sometime in September 2012, the appellant declined to renew the contract, prompting the respondent to sue for, inter alia, unfair termination, wrongful dismissal, general damages.
At the trial court, the respondent argued that she performed her duties diligently and exceptionally. According to her, owing to her competence and good performance, she reasonably expected that not only would her employment contract be extended but also on improved terms.
The trial court, agreeing with the respondent, found that the respondent had a legitimate expectation that her contract would be renewed and that non-renewal amounted to unfair termination. The learned judge awarded her general damages, notice pay among others.
Aggrieved, the appellant lodged an appeal arguing that the contract was a fixed-term contract that expired by effluxion of time, that no legitimate expectation of renewal existed and that the damages awarded by the trial court were excessive.
Issues for Determination
The Court of Appeal laid down the following issues for determination:
- Whether the respondent had a legitimate expectation to have the contract renewed, once its duration had lapsed;
- Whether the appellant was obligated to give the respondent reasons for non–renewal of the contract;
- Whether the respondent was entitled to the award of the reliefs sought in the trial court based on non-renewal of the contract of employment.
- Whether the Respondent Had a Legitimate Expectation to Have the Contract Renewed, Once Its Duration Had Lapsed
The appellate court found that the doctrine of legitimate expectation does not arise in the renewal of a fixed-term contract and that non-renewal of such a contract cannot constitute unfair termination or dismissal. Having noted that the respondent was employed under a fixed-term contract and that contract came to an end at the appointed time, the court held that any relief sought by her, based on her assertion to that employment, was not available to her.
The appellate court further observed that an automatically renewable fixed-term contract is a contradiction in terms, as it would subject the parties to an indeterminate employment contract. That, according to the appellate court, is not the intention of such contracts. The respondent’s contract terminated automatically by effluxion of time. Whether a contract with a renewable clause is to be extended or not is an issue at the discretion of the employer that cannot create a legal right under the doctrine of legitimate expectation.
The appellate court pointed out that had there been an indication, by act or omission from the appellant, that the renewal was forthcoming to whet the respondent’s appetite, that her contract would be renewed, she would have relied on the doctrine of legitimate expectation. In the instant case, there was no such promise given to the respondent to justify a claim based on legitimate expectation.
- Whether the Appellant Was Obligated to Give the Respondent Reasons for Non–Renewal of the Contract
Relying on numerous cited authorities, the appellate court held that employers are not under any obligation to give employees reasons for non-renewal of fixed-term contracts, unless there is such an obligation created in the expiring contract. Requiring an employer to give reasons for non-renewal, absent such obligation, would be, according to the court, tantamount to requiring an employer to give reasons why a potential employee is not employed. The respondent, having been employed on a fixed-term contract, was not entitled to any reason for non-renewal.
- Whether the Respondent Was Entitled to the Relief Sought in the Trial Court Based on Non-Renewal of the Contract of Employment.
The court declined invitation to fault the appellant for failing to renew the respondent’s contract, finding that the appellant merely exercised its option in the contract. The court held that non-renewal of a fixed-term contract does not attract payment of damages for unfair termination or dismissal. Once the respondent had entered into a fixed-term contract, she was bound to accept any eventualities that may have arisen from the contract, including non-renewal.
Parties are bound by the terms of their contracts. The respondent’s claim was dismissed with costs to the appellant.
Conclusion
This judgement reiterated, perhaps an obvious position, that once one has entered into a fixed-term contract with a specific start date and end date, the employer has the discretion on whether to renew the contract. The principle that one is bound by their contract estops a party to a fixed-term contract, from claiming protection under the Employment Act once the term of the contract has expired. The only available remedy, if any, would be premised on the contractual provision on non-renewal in the expiring contract.
