The legal framework on fixed-term contracts (FTCs) in Kenya seeks to balance two principles: preventing abuse of contract and preserving contractual autonomy.
Introduction
This balance is drawn from the Employment Act, 2007 and key decisions such as Kenyatta University v Esther Njeri Maina (2022) eKLR and Transparency International v Teresa Carlo Omondi (2023) eKLR.
These two cases capture how courts protect employees from exploitation while also ensuring that autonomy remains in commercial contracts.
I. The Prohibition of Abuse: When Fixed Term Contracts Cross Into Exploitation
The prohibition of abuse arises when a pattern of short-term contracts is used as a deliberate mechanism to deny employees their fundamental constitutional and statutory rights, the contract becomes an exploitative practice that allows employers to staff roles that are perpetual and necessary while denying benefits like severance pay, pension contributions, and job security protections.
Kenyatta University v Esther Njeri Maina (2022)
The Court of Appeal's judgment in Kenyatta University v Esther Njeri Maina (2022) is the leading authority on this issue. The Respondent in this Appeal had served the University for over ten years under a cycle of short, fixed term contracts without access to benefits such as sick leave or maternity leave.
The Court held that this arrangement violated the right to fair labour practices under the Constitution and the Employment Act. It ruled that the University had used repeated three-month contracts as a "roundabout way of avoiding the provisions of the law on casual employment."
Substance Over Form
This practice was a contractual guise meant to evade the duty under Section 37 to formalize continuous work. The Court declared that the employment relationship was permanent and pensionable, stating that the substance of the relationship must prevail over its form.
II. Preservation of Contractual Autonomy: When Time Simply Runs Out
The principle of Preservation of Contractual Autonomy confirms the inherent right of a fixed-term contract to run its course and serves as the exception to the rule of imposed permanency. This rule is applied when an individual FTC runs its course, confirming that no automatic expectation of renewal exists.
Transparency International-Kenya v Teresa Carlo Omondi (2023)
The Court of Appeal's decision in Transparency International-Kenya v Teresa Carlo Omondi (2023) reinforced this principle and clarified the limits of the doctrine of legitimate expectation in employment law.
It involved an employee whose two-year contract had a renewal clause stating that extension would depend on satisfactory performance and the organization's needs. When her contract ended, the employer chose not to renew it. The Employment Court had found this to be unfair termination, holding that her performance created an expectation of renewal.
Overturning this, the Court of Appeal clarified the following:
1. Expiry is Not Dismissal
The non-renewal of an FTC is not a termination; it is the automatic expiry by effluxion of time. Therefore, it "cannot constitute unfair termination or dismissal".
2. Rejection of Legitimate Expectation
The Court was categorical that an FTC, by its very nature, "does not create a legitimate expectation of renewal". A contract with a renewal clause is merely at the "discretion of the employer".
3. No Obligation for Reasons
The employer is under "no obligation... to give reasons" for non-renewal. The only reason required is that the term has ended.
Key Takeaway: An employee cannot rely on past performance or general hope for continuity. A claim for renewal requires evidence of a "clear, express and unambiguous promise" from the employer.
III. Conclusion: The Threshold for Deemed Permanency
These two judgments show that the question of permanency depends on motive and pattern, not just duration.
An Employee Will Be Deemed Permanent When:
- The contract is a guise. The work is continuous and essential, yet the employer repeatedly issues short contracts to avoid legal obligations.
- The employee continues working after expiry. If an employee keeps working and receiving pay after the contract ends, it may create an implied contract of indefinite duration.
Note: Repeated renewals alone do not create a right to permanency unless there is evidence of deliberate abuse.
Practical Implications
Employer's View
An employer faces the risk of a judicial conversion to permanent status if they use repetitive, short-duration FTCs to staff a role that is perpetual and necessary, thereby denying essential rights and benefits. This practice is seen as an abuse of the system.
Employee's View
An employee cannot successfully challenge the non-renewal of an FTC that has a clear start and end date, even after performing well, unless they can prove the employer made an explicit promise of renewal or if the pattern of contracts was deemed abusive.
Guidance for Employers
Best Practices to Avoid Abuse Claims
- Ensure FTCs are used for genuinely temporary or project-based work
- Provide statutory benefits even on short-term contracts where applicable
- Document the genuine business reasons for each FTC
- Avoid repetitive short contracts for permanent roles
- Consider converting long-term temporary staff to permanent positions
- Maintain clear policies on contract renewal criteria
Guidance for Employees
Understanding Your Rights
- Document your continuous employment and duties performed
- Keep records of all contract renewals and communications
- Note whether your role is permanent in nature despite contract terms
- Understand that good performance alone doesn't guarantee renewal
- Seek written confirmation of any renewal promises
- Consult legal advice if you believe you're being exploited through FTCs
Conclusion
The Kenyan legal framework on fixed-term contracts demonstrates a sophisticated balance: protecting workers from exploitation while respecting genuine contractual autonomy. Courts will look beyond the form of employment to its substance, converting abusive FTC patterns into permanent employment, while also respecting the natural expiry of legitimate fixed-term arrangements.
Final Takeaway: For employers, use FTCs legitimately and provide proper benefits. For employees, understand that contract expiry is not dismissal, but systematic abuse can be challenged. Both parties benefit from clarity, good faith, and compliance with employment law principles.
