Patricks Law Associates (Plass Law) successfully acted for the Kenya Methodist University (Respondent) in a claim of unlawful termination for Kshs 30,000,000/=
The Employment and Labour Relations Court in ELRC No. 1887 of 2016 Prof. Alfred Mwongera Mutema Versus Kenya Methodist University has held that non-renewal of fixed term contract does not amount to unlawful termination and consequently such contracts do not create a legal right under the doctrine of Legitimate expectation.
At the heart of the dispute was a claim of unlawful termination and a claim of legitimate expectation by the Claimant that his contract will be renewed.
The Claimant argument was that he was employed as a Vice Chancellor by the Respondent on a five-year renewable contract with effect from 25th March 2010.
He relied on the wording of the contract that provided: ‘’Your employment will be on a five-year contract and you shall be eligible for re-appointment for a further five years’ final term’’.
He argued that he was eligible for automatic reappointment for a further one term of five years and such had legitimate expectation that his contract will be renewed. It was his argument that non-renewal of his contract amounted to unfair termination and a breach of his legal right under the doctrine of legitimate expectation.
On the other hand, the Respondent argument was that the contract of employment was a fixed contract and was not renewable automatically. Automatic renewal would undermine the very purpose of the fixed-term contract, and revert to indeterminate contracts of employment.
Additionally, the Respondent averred that non-renewal of fixed terms contracts does not amount to unlawful termination and such claim cannot stand. Consequently, there cannot be legitimate expectation of renewal of a fixed term employment contract. That once a fixed term contract is at an end, the employer has no obligation to justify termination on other grounds beyond the lapse of the fixed period.
The Court held that the Claimant was not terminated hence not entitled to compensation on account of unfair termination. Accordingly, the claim was dismissed in it entirety.
Highlights of the Judgement.
It was held that non-renewal of fixed term contracts does not amount to unfair termination as the contract of employment runs its course and terminates by effluxion of time.
The court reaffirmed the Court of Appeal decision in Transparency International vs Tesera Carlo Omondi (2023) that fixed terms contract carries no rights, obligations, or expectations beyond the date of expiry. Such a contract comes to an end by effluxion of time and any claim of unlawful/wrongful termination cannot be maintained.
An automatically renewable fixed term contract is a contradiction in terms as it would subject the parties to an indeterminate employment contract. The employer is under no obligation to give employees reasons for non-renewal of fixed term contracts unless there is such an obligation created in the expiring contract.
Consequently, there cannot be legitimate expectation of renewal of a fixed term employment contract. That once a fixed term contract is at an end, the employer has no obligation to justify termination on other grounds beyond the lapse of the fixed period.
Whether a contract with a renewal clause will be extended or not, is an issue that is at the discretion of the employer and it cannot create a legal right under the doctrine of legitimate expectation.
This decision reinforces the Court of Appeal sentiments in Transparency International vs Tesera Carlo Omondi (2023) and lifts the obligation of employers to give reasons as to termination of fixed term contracts.
The full Judgement can be accessed at Kenya Law Reports.