https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2386

**REPUBLIC OF KENYA** **IN THE EMPLOYMENT AND LABOUR RELATIONS COURT** **APPEALS DIVISION** **APPEAL NO. E182 OF 2025** BETWEEN **DINLAS PHARMA EPZ LIMITED……………………….…...APPELLANT** **AND** **COLLINS JUMA NDAMWE…………….……..……………RESPONDENT** (Being an appeal from the Judgment and decree of the Chief Magistrate’s Court at Nairobi delivered by Hon. P. Olengo (Mr.) SPM, on 13th May, 2025 in ELRC Cause No. E568 of 2022) JUDGMENT *(Before Hon. Justice Abuodha Jorum Nelson)* 1. Through the Memorandum of Appeal dated 9th June, 2025, the Appellant appeals against the whole of the Judgment of Honourable P. Olengo (SPM) on the grounds that: 1. *The Learned Trial Magistrate erred in law and in fact in failing to find and hold that the Respondent’s employment was based on a fixed term contract which carried no expectancy of renewal.* 2. *The Learned Trial Magistrate erred in law and in fact by misapprehending and misapplying the doctrine of legitimate expectation to the extent of imposing a non-existent obligation upon the Appellant thereby arriving at a decision which was not legally sound.* 3. *The Learned Trial Magistrate erred in law and in fact in declaring that the Respondent’s termination was wrongful and unfair when in fact there was no termination from employment but a non-renewal of the Respondent’s Contract of Employment.* 4. *The Learned Trial Magistrate erred in law and in holding that the Respondent was entitled to compensation for unlawful termination of employment and other terminal benefits.* 5. *The Learned Trial Magistrate erred in law and in failing to consider the Appellant’s evidence on record as well as the Appellant’s submissions and authorities cited by the Appellant in his judgment without proper reasons to do so thereby arriving at an erroneous decision.* 6. *The Learned Trial Magistrate erred in law and in fact in reaching a finding that was contrary to the evidence on record and by relying on extraneous material and/or facts which did not form part of the proceedings without any reason or sufficient cause.* 2. The Appellant prayed that the appeal be allowed with costs and the Judgment and Decree of the Chief Magistrate’s Court at Nairobi delivered on the 13th day of May 2025 be set aside and instead, it be substituted with an order allowing the Appellant’s prayers as framed in its Statement of Response dated 12th May 2022. 3. The Appeal was disposed of by written submissions. **APPELLANT’S SUBMISSIONS** 1. The Appellant’s Advocates G. M Muchoki & Company Advocates filed written submissions dated 18th November, 2025 and Counsel submitted on the role of the first appellate court relying on the cases of **Mwanasokoni –vs – Kenya Bus Service Ltd. (1982-88) 1 KAR 278** and **Mbogua Kiruga –vs - Mugecha Kiruga & Another [1988] eKLR** on when the appellate court will interfere with the discretion of the trial court. 2. On Ground (a) and (c) of the Memorandum of Appeal counsel submitted thatin his pleadings, the Respondent acknowledged that he had been employed by the Appellant on 18th February 2020 as a Regulatory Affairs and Compliance Officer for a contractual period of 2 years and the contract would lapse on 17th February 2022. That during his testimony before the trial court, the Respondent stated during cross examination that he had been engaged on a two-year contract. This position was confirmed by the Appellant in their Statement of Response as well as the Appellant’s Witness Statement dated 4th February 2025 which was adopted by the Respondent’s witness as the evidence in chief. 3. Counsel submitted that it was an uncontested fact that the Respondent’s employment was based on a fixed-term contract with a clear commencement date to wit18th February 2020 and an expiry date to wit 17th February 2022.It was submitted that the Employment Act, recognized different types of contracts of employment, including fixed-term contracts. Counsel relied on Section 2 of the Employment Act on definition of a contract of service. 4. Counsel submitted that times without number, this court as well as the Court of Appeal have discussed the import of fixed-term contracts and acknowledged their terms and conditions. Counsel relied on the Court of Appeal decision in **Transparency International-Kenya v Omondi [2023] KECA 174 (KLR),** (a decision cited before the trial court) where the Court pronounced itself on fixed term contracts. 5. It was submitted that it was patently clear that the Learned Trial Magistrate failed to recognize the fundamental nature of a fixed term contract when he held that the Appellant was bound to consider the Respondent’s performance while considering whether to renew the contract of employment. The Respondent had a discretion in renewing the contract but the same was subject to the performance of the Claimant. It was not an open discretion. The Respondent was bound by the said contract to consider the performance in making the decision to renew the contract or not. 6. Counsel submitted that evidently, this finding was a gross misapprehension of the law. Despite having found that the contract had a start date and an expiry date, the Court fell into error by purporting to create a legal right based on a matter which was at the Appellant’s discretion, that is, whether the contract would be renewed. That the issue of whether a contract of employment was to be renewed was a matter of discretion and could not create a legal right unless and until that right crystallized 7. It was submitted that accordingly, it was patent that the trial court fell into error by holding that the Appellant was bound to renew the Respondent’s contract of employment simply because there was a clause therein that gave the Appellant discretion to renew the same. That was an erroneous interpretation of the contract which led to an erroneous finding of both fact and law which stemmed from a misapprehension of the evidence on record. Counsel relied on the Court of Appeal decision in **Registered Trustees of the Presbyterian Church of East Africa & another -vs- Ruth Gathoni Ngotho [2017] eKLR** on this assertion**.** 8. Counsel submitted that it was not open to the trial court to imply additional terms of the contract of employment merely because it felt reasonable to do so in the circumstances. The trial court had no such luxury. The contract terms were plain and unambiguous that the contract was set to expire on 17th February 2022.Therefore, it was a patent error of law for the trial court to elevate a matter which was discretionary to a level where it conferred rights upon the Respondent and thereby arrived at an erroneous decision. 9. Counsel further drew guidance from the persuasive decision in **Margaret A Ochieng v National Water Conservation & Pipeline Corporation [2014] eKLR** and submitted that it was truism from the cited decision which was adopted in **East Africa Sea Food Limited v Mwazito [2023] KEELRC 1257 (KLR)** where the Court further discussed about the terms of a fixed contract. That from the foregoing, it was trite that the general position on the consequences of expiry of a fixed term contract, was that once a fixed term contract is at an end, the employer had no obligation to justify termination on other grounds beyond the lapse of the fixed period. Counsel relied on among others the case of **Trocaire v Catherine Wambui Karuno [2018] eKLR**, where the Court of Appeal reaffirmed this position. 10. Counsel submitted that taking the above authorities into account, there was no gainsaying that fixed term contracts do not carry an automatic right of renewal. Therefore, since the contract of employment had already expressly provided for the expiry date of the contract, the Appellant’s decision not to renew the Respondent’s contract could not be faulted as the renewal thereof was a matter secondary to the expiration of the contract. In the premises, the non-renewal of the contract could not amount to unfair termination. It was further submitted that in the circumstances, the honourable Court ought to be influenced by the highlighted decisions and uphold the finding that the fixed term contract, such as the one before the trial court, automatically expired once its term lapsed on 17th February 2022. Hence the trial court erred both in fact and in law by holding that the Claimant’s termination of employment was unfair and unlawful on account of the non-renewal of the contract of employment. 11. On Grounds (b), (d), (e) and (f) of the Memorandum of Appeal counsel relied on the case of **Communications Commission of Kenya & 5 others v Royal Media Services Limited & 5 others [2014] eKLR,** where the Supreme Court highlighted the principles of the doctrine of legitimate expectation. That several courts had discussed the principles undergirding the doctrine of legitimate expectation in relation to employment matters. Counsel relied on the case of **Registered Trustees of the Presbyterian Church of East Africa & another v Ruth Gathoni Ngotho – Kariuki (supra)** and **Transparency International-Kenya V Omondi (Supra**) on this doctrine of legitimate expectation. 12. Counsel submitted that applying these principles to the present case, the Learned Trial Magistrate erred in finding that a legitimate expectation had been created. The evidence on record showed that Clause 3 of the contract of employment expressly stated that the Appellant had the sole discretion to renew the Respondent's employment and that any such renewal would be subject to the Respondent's performance. This clause demonstrated that renewal was neither automatic nor guaranteed, but rather discretionary on the part of the Appellant. There was no express, clear and unambiguous promise by the Appellant to renew the Respondent's contract. 13. It was submitted that furthermore, the Respondent was fully aware from the commencement of his employment that his contract was for a fixed term of two years. He signed the contract acknowledging these terms. The doctrine of legitimate expectation could not therefore be invoked to contradict the express written terms of a contract freely entered into by the parties. To hold otherwise would be to undermine the sanctity of contracts and introduce uncertainty in employment relationships governed by fixed-term contract. 14. Counsel submitted that in order to prove legitimate expectation of contract renewal, the Respondent ought to have proven that the Appellant made an express promise to renew his contract or that his repeated conduct inferred an intention to renew his contract. However, neither of these elements were proven by the Respondent yet the trial court proceeded to hold otherwise. Counsel relied on the case of **R v Devon County Council, ex parte Baker and Another; R v. Durham County, ex parte Curtis and Another** quoted with authority in **Republic v Kenya Revenue Authority; Proto Energy Limited (Ex parte) (Judicial Review Application E023 of 2021) [2022] eKLR** whichsupported the proposition that a claim of legitimate expectation can only be established when there is a clear representation, upon which it was reasonable for the claimant to rely; and if this condition is fulfilled, then the authority giving the promise will be bound by the representation. 15. Counsel submitted that the Respondent relied on the said clause 3 as a promise to renew his contract whereas this clause could not be interpreted as a promise to renew the Respondent’s employment. Rather, the said clause informed the Respondent what consideration would be made “IF” the Appellant decided to renew the Claimant’s contract. That clause 3 did not pass the test for a clear and express promise for it gave the Appellant the discretion to renew the contract. Renewal was not automatic. If the Appellant applied its discretion to renew the contract, it would have been otherwise had the same clause said that the claimant’s employment would be automatically renewed upon fulfilment of laid down performance guidelines. Thus, it goes that the Claimant did not pass the qualifying test for contract renewal, performance. 16. Counsel submitted that the second test for legitimate expectation as laid out in the case of **Teresa Carlo Omondi v Transparency International - Kenya [2017] eKLR,** (a decision which was upheld by the Court of Appeal in **Transparency International –Kenya -vs - Teresa Carlo Omondi** (supra) was regular practice. That the influence of regular practice in creating legitimate expectation could also be seen in the case of **Oshwal Academy Nairobi & Another v. Indu Vishwanath (supra)** where the Court of Appeal held that the claimant had legitimate expectation that the employer-employee relationship would continue, having been in employment for twenty-three years. 17. Counsel submitted that in this matter, there was want of practice regularly enough to create legitimate expectation of contract renewal in this instant. It is an undisputed fact that the Respondent worked for just two years and had only been engaged on one limited term contract. Thus, the foregoing does not suffice for practice regular enough to create legitimate expectation of contract renewal. Counsel relied on the case of **National Water Conservation & Pipeline Corporation v Mwanza (Civil Appeal 178 of 2014) [2017] KECA 797 (KLR) (26 May 2017) (Judgment**), the Court of Appeal expressed itself on the matter. 18. It was submitted that from the foregoing, it is quite clear that for an expectation to be actionable, it ought to be legitimate. The Learned trial magistrate erred in failing to find that there was no express, clear and unambiguous promise by the Appellant that the contract would be renewed. On the contrary, the Appellant made it clear that the employment would not be renewed when it issued the Respondent with the notice of non-renewal of contract dated 17th January 2022. The said notice of non-renewal of contract was an unambiguous expression of its discretion not to renew the contract. 19. Counsel submitted that in the circumstances, the subordinate court erred when it misinterpreted the said letter by inferring that the same was inconsequential for not being anchored on the contract. Essentially, the trial court fell into error by failing to appreciate that the Appellant’s discretion not to renew the Respondent’s contract was communicated vide the letter of non-renewal dated 17th January 2022. By finding that the there was no basis for issuance of the said letter, the court misdirected itself and reached an erroneous decision. 20. Counsel submitted that considering the foregoing, the Learned Trial Magistrate's finding that the Respondent was entitled to compensation for unlawful termination could not be sustained. There was no termination of the contract of employment but rather a non- renewal of a fixed-term contract that had expired. Since no legitimate expectation was created, it followed that the Respondent had no basis for claiming any compensation for unfair or unlawful termination. 21. Counsel submitted that as has been sufficiently demonstrated, the Appellant had fully discharged its obligations under the contract by paying the Respondent his terminal dues upon the expiry of the contract. In those circumstances, the award of compensation by the Trial Court was made in error and ought to be set aside. **RESPONDENT’S SUBMISSIONS** 1. The Respondent’s Advocates Gideon Nakhone & Associates Advocates filed written submissions dated 16th February, 2026 and on the issue of whether the Respondent’s bonding was a condition precedent for his fixed term contract if so, whether the contract could determine before the parties were discharged from the bond terms. Counsel relied on Sections 9 and 10 of the Employment Act which obligates the employer to prepare the employment contract with its terms and conditions. That these obligations bestow on the employer a responsibility which required that the employer acted in good faith. 2. It was submitted that it was trite that when an employer was preparing a contract of employment he does not formulate a contract that is laden with minefields and booby traps aimed at stealing a match against the employee. That the uniqueness and underlying obligations bestowed on an employer when preparing an employment contract were discussed by this court **Stephen Nyamweya & Anor v. Riley Services Limited [2013] KEELRC 301 (KLR)** where the court reinstated that the employer owes the employee a duty of care to ensure that every clause was capable of implementation without too much trouble. 3. It was submitted that in the instant case there was no doubt that the contract of the Respondent’s employment dated 13th February 2020 was prepared by the Appellant herein. The dispute that has manifested into what is the instant appeal swirls on whether the two terms in the said contract should be read together, read independently and or whether one takes precedence over the other. The said terms were in terms of the contract being for two years and the bond deduction which was mandatory on employees accepting the offer and would be refunded at the end of the contract. 4. Counsel submitted that this court defined its role in interpreting employment contracts in **Kenya Plantation & Agricultural Workers union versus Kenya Cuttings Ltd, Cause No. 282 of 2010**. That in the instant case the Chief Executive Officer of the Appellant and the Respondent herein executed the fixed term employment contract dated 13th February, 2020, which contract was to run for 2 years renewable subject to performance and at the discretion of the employer. The said letter further set out the conditions precedent requiring that an employee accepting the offer for employment must be bonded and would only be discharged from the bond upon the expiry of the contract. 5. It was submitted that the bonding condition was not an ordinary condition given that the employee's refusal to be bonded would mean that the employee had declined the fixed term contract of employment and the same would be rescinded. The drastic nature of the bonding term was confirmed by the Appellant’s own human resources manager who during cross examination testified that terms of the bond set out in the letter dated 13th February,2020 were so fundamental and in fact they signaled the claimants acceptance to be engaged by the Respondent and that refusal to be bonded would summarily end the employment contract. The far-reaching effects of this particular clause elevated it into a condition precedent that could either breathe life into or squeeze life out of the employment contract dated 13th February,2020. 6. Counsel submitted that it was settled law that when an offeror requires the offeree to meet certain condition before a valid engagement can commence then such condition was normally described as a condition precedent. Counsel relied on the Court of Appeal’s decision in **Centurion Engineers & Builders Limited v Kenya Bureau of Standards [2023] KECA 1289 (KLR)** which affirmed an earlier English position on a party being bound after signifying acceptance of that condition precedent. Counsel further submitted that it was trite from the evidence in court and testimony of the Appellant own witness that the Respondent’s bonding by the Appellant rationally breathed life into his term contract and in equal measure the Appellant’s voluntary release of the bond to the Respondent would stifle the life out of the aforesaid employment contract. 7. It would therefore follow that the two terms of the letter of offer of employment dated 13th February 2020 were interdependent and had to happen simultaneously for the purposes of onboarding the parties to the binding effect of the contract and in equal measure discharging the parties from their respective obligations under the employment contract. It was succinct that the contract of employment dated 13th February 2020 neither foresaw a situation where the employee would be in the Appellant’s employment without being bonded nor did it foresee a situation where an employee would be out of the employment contract yet still bonded to the Appellant. 8. It was submitted that these were the terms that the Appellant and the Respondent agreed to and the same could not be varied or ignored and or interpreted selectively. This court affirmed this position of the law in regards to term contracts in **Sheer Logic Management Consultants Limited v Mwagombero [20251 KEELRC 3600 (KLR)** and that the court of appeal affirmed the binding effect of agreed obligations arising out of duly executed contracts in **Centurion Engineers & Builders Limited v Kenya Bureau of Standards (supra**) while emphasizing that a court of law cannot rewrite a contract between parties. The parties were bound by the terms of their contract, unless coercion, fraud or undue influence are pleaded or proved. 9. Counsel submitted that in answering the first issue that the Respondents contract of employment dated 13th February 2020 could only determine upon both effluxion of time and refund of the bond money. It was immutable that if you read the clauses on the term limit of the contract and the bond terms separately then the Respondent’s contract of employment dated 13th February,2020 prepared by the Appellant will officiously be oppressive, unconscionable, unacceptable, illegal and against fair labor practices as envisioned by Article 41 of the constitution of Kenya. 10. Counsel submitted that in any event was settled in law and practice that in instances where contradictions or ambiguities arise in contracts then the contradictory terms ought to be interpreted against the party who drafted the contracts. This court was faced with a similar issue in **Kidero & 7 others v Shurie & 2 others (20241 KEELRC 539 (KLR)** where the court reiterated the position. 11. Counsel submitted that it would be unjust, unconscionable and contradictory for the court to declare that the Appellant’ s contract of the employment dated 13th February,2020 was determined by effluxion of the time on the 18th February ,2022 as per the Appellant’s letter of no renewal dated 17th January 2022 thus extinguishing the employer employee relationship while the evidence before the court clearly points to the fact that the Appellant had not refunded the Respondent the Kshs. 60,000 bond pursuant to the purportedly defunct contract dated 13th February,2020. 12. It was submitted that the contract of the Respondent’s employment was drafted by the Appellant herein, which meant that the Appellant was the author of the contradictions thus the said contradictions must be interpreted against it. Counsel urged the court to adopt the *contra proferentrum* rule of interpretation in interpreting this contradictory contract of employment. 13. On the issue of whether the employer's continued refusal to refund the Respondent’s/ employees bond money amounted to a breach/variation of the terms of the fixed term contract? If so whether the employer's persistent refusal to refund the bond money was a breach of the Respondent/ employee's rights to fair labour practices as espoused by article 41 thus entitling him to court reliefs, counsel submitted that it was common ground that the Appellant continued to hold the Respondent’s bond money. It was pertinent that the bond money in this case was in fact the employee hard earned salary. 14. It was submitted that pursuant to the employment contract the Appellant was only entitled to hold the said salary during the subsistence of the contract. It was therefore self-defeatist for the Appellant to on the one hand claim that the contract lapsed on the 17th February 2022 while the same Appellant was still holding onto the Respondent’s one month salary. This court has been very zealous in protecting employees against any employer’s arbitrary actions that deny the employees their salary entitlements. Counsel relied on the case of **Mohamed Nazir Ebrahim v Corner Garage & Spraying Works Limited [2016) KEELRC 558 (KLR**) on this assertion. Counsel further submitted that this position was adopted again in **Mokaya v Christ the King Parish & another (Cause 386 of 2015) (20241 KEELRC 28 (KLR) (25 January 2024) (Judgment**) wherein the court found that nonpayment of employee’s salary was a fundamental breach of. employment contract and unfair labour practices under Article 41 of the Constitution. That in conclusion the Appellant’s action of withholding the Appellant’s 1 month’s salary for more than 6 years (and they continue to do so to date) after the date when they claim before this court that the Respondent employment contract ended. This was not only unconscionable but also unconstitutional because it was the true definition of unfair labour practice. This fact on its own entitled the Respondent to the award granted in the lower court. 15. On the issue of whether the continued bonding created a legitimate expectation for renewal counsel submitted that it was settled in law that a fixed term contract could only be extended as per the terms set out within the contract itself. The Court of Appeal affirmed this position in **Amatsi Water Services Company Limited v Francis Shire Chachi [2018) eKLR.** 16. Counsel submitted that there was no doubt that the Appellant continued to bond the Respondent herein pursuant to the provisions of the fixed term contract dated 13th Februrary,2020. It was therefore contradictory and ambiguous for the Appellant to on the one hand argue that the contract of employment expired on the set date hence the Respondent’s employment status was extinguished by effluxion of time while the reality on the other hand is that the Respondent was currently still bonded to the Appellant herein pursuant to the same contract dated 13th February, 2020. 17. Counsel further submitted that the Respondent herein demonstrated that his performance was appraised, as a result of which he was awarded favorable results and further thereto to date he was still bonded to the Respondent herein. That the said intertwined actions gave him the legitimate expectation that the contract of employment would be automatically renewed thus the Appellant’s action of locking out him out of his work station and or of issuing him with the ambiguous non-renewal letter amounted to unfair and unlawful termination. 18. Counsel submitted that the Appellant had relied on a plethora of cases to support its position that the Respondent was on fixed term contract without expectation for renewal however it should be appreciated that in all those case laws cited by the Appellant none had similar facts as the instant one hence not applicable. The facts of this case were distinguishable. In the instant case the employer had bonded an employee pursuant to the employment contract and had refused to discharge the employee from the employment bond despite claiming that the employee’s contract had ended through effluxion of time. The authorities cited simply did not align with the instant case. 19. On the issue of whether the court considered the Appellant’s submissions and whether the court considered extraneous issues counsel submitted that the trial court consciously stated in its judgment that it had considered the written submissions filed by both parties. This ground of appeal was therefore unsustainable and should be dismissed. The Appellant had not narrowed down on any specific extraneous issue that the court either entertained or determined. This ground should also follow suit and be dismissed. **DETERMINATION** 1. The court has considered the grounds in the Memorandum of Appeal, the Record of Appeal and the submissions filed by the parties herein and observes that the judgment of the trial court was that the Claimant’s case was allowed in terms of compensation for termination at 10 months’ salary of Kshs 624, 000/= and leave pay of Kshs 47,080/= for 22 days. The Court dismissed the awards of service pay and notice pay stating that fixed term contract had no termination notice while finding that the Claimant had legitimate expectation that his contract would be renewed. The Appellant was aggrieved by the said judgment and fronted six grounds in its Memorandum of Appeal dated 9th June, 2025 which this court considers reducible to three issues for determination as follows: - 2. *Whether the trial court erred in finding that Respondent had a legitimate expectation that his fixed term contract would be renewed.* 3. *Whether the trial magistrate erred in finding that the Respondent was unlawfully terminated.* 4. *Whether the trial court erred in awarding the reliefs sought by the Respondent in his claim.* **Whether the trial court erred in finding that Respondent had a legitimate expectation that his fixed term contract would be renewed.** 1. It was not in dispute that the Respondent was engaged as Regulations and Compliance Officer on a 2-year fixed term contract from 18th February,2020 to 17th February, 2022. The Appellant also gave the Respondent the letter of offer dated 13th February, 2020 which provided for a bond of one-month salary which its acceptance would signify the acceptance of the contract. The bond was stated to be deductible in three installments from the second month and continue for two other months and be refunded at the end of the contract. 2. Whereas this court notes that the Respondent was appraised in 2020 and he scored 4.2 which was exceeding expectation and his salary increased by 7% to Kshs 64,200/= effective January, 2021. The Respondent alleged that since under clause 3 his renewal of the contract would be determined by his performance which he performed well he had legitimate expectation that his contract would be renewed. That the letter of non-renewal of the contract dated 17th January, 2022 was unlawful and illegal. The trial court found the said letter was unnecessary since the contract would expire at its expiry time. 3. Whereas the Respondent appreciates that fixed terms contracts carry no legitimate expectations of renewal the Respondent alleged that his performance, the increase in his salary and the Appellant’s continued bonding created a legitimate expectation that his fixed term contract would be renewed. 4. Whereas this court notes that fixed term contracts are allowed in the employment laws as was held in the case of **East Africa Sea Food Limited v Mwazito (Appeal E013 of 2020) [2023] KEELRC 1257 (KLR) (20 April 2023) (Judgment)** wherethe court had this to say:- *Whether to issue a fixed term contract or not is regulated under the provisions of Section 10(3) (c) of the Act. An employer is allowed the prerogative to employ an employee under a fixed term contract with a start and end date. the self-executing contract is lawful and valid in employment and labour relations. The Court of Appeal in Civil Appeal No. 18 of 2018*[*Transparency International Kenya v Teresa Carlo Omondi*](http://resolver.caselaw.kenyalaw.org/resolver/akn/ke/judgment/keca/2023/174)*[2023] eKLR held that a fixed-term employment contract does not create a legitimate expectation of renewal. Further, the non-renewal of fixed-term employment does not amount to unfair termination of employment warranting compensation. Section 10(3) (c) of the Act then lifts the obligation on an employer to explain reasons for termination of employment in fixed-term contract as the same lapse by effluxion of time without creating a right of legitimate expectation of renewal.* 1. This court appreciates that fixed term contracts are not renewable automatically as was held in the case of **Rajab Barasa & 4 Others v. Kenya Meat Commission (2016] eKLR***,*whereit was held that a fixed term contract will not be renewed automatically even when there exists a clause allowing for such renewal. This court also appreciates that fixed term contracts carry no legitimate expectation of renewal. In the case of **Osoti v Trees for the Future INC (Cause E002 of 2023) [2024] KEELRC 962 (KLR) (2 May 2024) (Judgment)** the court observed as follows: - *The general rule is that a fixed term contract carries no expectation for renewal. It is however settled that a fixed term contract with a renewal clause may create expectancy of renewal on the part of the employee based on previous contract renewals.* 1. This court notes that the Respondent was given only one fixed term contract for two years running from 18th February, 2020 to 17th February, 2022. At clause 3 it provided as follows*:* *You will be employed on contract basis and your contract will expire as per the set date i.e on 17/02/2022. At the discretion of the management and subject to performance, your contract may be or not renewed after the expiry of the stated period, however the same not limited ton termination on other grounds mentioned under gross misconduct, medical ill health, retrenchment redundancy etc*. 1. This court notes that in as much as performance was one of the factors to be considered for renewal of the Respondent’s contract it was not the only condition it would also go with the discretion of the Appellant. The Appellant in good faith communicated its discretion through the letter of non-renewal dated 17th January, 2022 that it would not be renewing the contract which courts have always found that the notice is not even necessary in fixed term contracts since they have an end date. The Respondent signed a fixed term contract which had a start and end date and he cannot now claim legitimate expectation when he knew the same had an end date. 2. In addition, in the case of [**Margaret A Ochieng v National Water Conservation& Pipeline Corporation [2014] eKLR**](http://resolver.caselaw.kenyalaw.org/resolver/akn/ke/judgment/keelrc/2014/328) the court while dealing with the question of whether there is automatic need for notice of renewal of a fixed-term contract held that; *Automatic renewal [of a fixed-term contract] would undermine the very purpose of the fixed-term contract, and then revert to indeterminate contracts of employment……. Courts have upheld the principle that fixed-term contracts carry no expectancy of renewal, in a catena of judicial authorities…… The Court is persuaded that the Claim has no merit. The fixed term contract had its own in-built termination notice, in that the date of termination was advised to the Claimant on execution of the three-year contract in December 2008. She knew termination would be upon the lapse of the three years in 2011 ...* 1. The Respondent’s allegations of the bond amount of one-month salary did3 not change the fact that he was on a fixed term contract and in any case he signed the letter of offer which provided for the bond amount which would signal acceptance of the contract. He signed the same letter of offer hence it became binding upon the parties. The fact that the bond amount was not refunded after the expiry of the contract did not mean that the Respondent would continue being the Appellant’s employee past the contract period. 2. To this court the bonding amount was managerial prerogative to ensure the employee remains in its employment during the contract period and nothing more like extending the contract as alleged by the Respondent. If the Respondent continued working past the contract expiry it would be a different issue all together where his contract would be constructively renewed but it was not the case in this case hence legitimate expectation based on performance and the bond amount could not stand. 3. Regarding the considerations to be made when considering whether a legitimate expectation for renewal of a fixed term contract was created, the sentiments of Rika J. in **Teresa Carlo Omondi v Transparency International-Kenya (2017) eKLR** guide this court as follows- “*The burden of proof, in legitimate expectation claims, is always on the Employee. It must be shown that the Employer, through regular practice, or through an express promise, leads the Employee to legitimately expect there would be renewal. The expectation becomes legally protected, and ought not to be ignored by the Employer, when managerial prerogative on the subject is exercised. Legitimate expectation is not the same thing as anticipation, desire or hope. It is a principle based on a right, grounded on the larger principles of reasonableness and fair dealing between Employers and Employees. The Employee must demonstrate some rational and objective reason, for her expectation. The representation underlying the expectation must be clear and unambiguous. The expectation must be induced by the decision maker. The decision maker must have the authority to renew. Repeated renewals, extended service beyond the period provided for in the fixed term contract, and promise of renewal, are some of the elements that would amount to objective reasons underlying expectation of renewal. The presence of these elements however, is not to be taken as conclusive proof of legitimate expectation.”* 1. There was no regular practice of the Appellant renewing the Respondent’s contract since he was given a single fixed term contract nor was there an express promise to renew his contract hence there was no legitimate expectation for renewal of the Respondent’s contract. The trial court therefore erred in finding there was legitimate expectation for the Respondent’s renewal of his contract. **Whether the trial magistrate erred in finding that the Respondent was unlawfully terminated.** 1. This court having overturned the trial court finding that the Respondent had a legitimate expectation for the renewal of his contract, also reaches the finding that he was not unfairly terminated. This court finds that the Respondent was on a fixed term contract which ended by effluxion of time at the expiry of the contract. The trial court found on notice pay that the same did not apply on fixed term contract but contradicted itself on damages for unfair termination. The Respondent was therefore not unfairly terminated as held by the trial court and the issue of non-refund of bond amount past the contract period could not be said to be unfair termination when the Respondent signed the letter signaling acceptance of the contract and deduction of the bond money. He was estopped from stating that the same was unfair termination since he was bound by the said contract. **Whether the trial court erred in awarding the reliefs sought by the Respondent in his claim.** 1. The Respondent was awarded damages for unfair termination and since this court has found that he was not unfairly terminated this award is set aside. The award for leave pay is upheld since the Appellant as the custodian of employment records under section 74 of the Employment Act never illustrated if the Respondent utilised his leave days by providing the leave application forms or otherwise. The Respondent is entitled to this claim since the Appellant’s witness during hearing was not sure if his bond money was refunded which the Respondent has maintained to date the amount has never been refunded the same should be refunded since it was his hard-earned money which was a commitment from the employee. The employment relationship has since ended and the Respondent is entitled to the same in the interest of justice. 2. **In the upshot the Appeal partially succeeds while overturning the trial court findings on compensation for unfair termination but upholding the leave pay as follows:** * 1. **Leave Pay Kshs 47,080/=** 2. **Refund of the bond money Kshs 60,000/=** **TOTAL KSHS 107,080/=** 1. **Since the Appeal is partially successful, each party shall bear their own costs of this appeal.** 2. **It is so ordered.** **Dated at Nairobi this 12th day of August 2026** **Delivered virtually this 12th day of August 2026** **Abuodha Nelson Jorum** **Presiding Judge-Appeals Division**