https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1765

Kang’ethe v Oriel Ltd (Cause E685 of 2023) [2026] KEELRC 1765 (KLR) (26 June 2026) (Judgment) Neutral citation: [2026] KEELRC 1765 (KLR) Republic of Kenya In the Employment and Labour Relations Court at Nairobi Cause E685 of 2023 BOM Manani, J June 26, 2026 Between Jane Anyango Margaret Kang’Ethe Claimant and Oriel Limited Respondent Judgment Background 1.The Claimant instituted this suit to challenge the Respondent’s decision to terminate her contract of service. She contends that the decision was unlawful and was triggered by her pregnancy. As such, she contends that the Respondent subjected her to discriminatory treatment. 2.The evidence on record shows that the parties entered into a fixed term contract of service dated 9th April 2021. According to the letter of offer, the contract was to run for two years from 19th April 2021 up to 31st May 2023. 3.The Claimant avers that the contract incorporated provisions of the Respondent’s Employee Handbook as part of her terms and conditions of employment. She further contends that clause 8.1.12 of the Handbook provides that if the Respondent decides not to renew a fixed term contract, it should notify the affected employee of this decision not less than one month before the date of expiry of the contract. 4.The Claimant avers that the Respondent did not notify her of non-renewal of her contract at least one month before the date her contract was to expire (31st May 2023). Instead, she avers that it (the Respondent) allowed her to continue working and further remunerated her for the services she rendered after this date. 5.The Claimant avers that on 31st July 2023, she notified the Respondent through her Line Manager that she was expectant and that her expected date of delivery fell in December 2023. She aver that she did so in compliance with clause 3.3 of the Employee Handbook which requires an employee who is expectant to inform the Respondent of this fact at least three months before the date of expected delivery for purposes of planning and processing her maternity leave. 6.The Claimant contends that on the same day she informed her Line Manager about her pregnancy, she received an email inviting her for a meeting the following day. It is her case that the invite did not disclose the agenda for the meeting. 7.The Claimant avers that whilst in the meeting, one of the Respondent’s officials issued her with a letter dated 31st July 2023 terminating her services with effect from 31st August 2023. She contends that the decision to terminate her services was discriminatory and unlawful as it was triggered by the fact that she was expectant. 8.The Claimant contends that because the Respondent did not notify her of the fact that it would not renew her contract as provided under the Employee Handbook but allowed her to continue working after 31st May 2023, her fixed term contract was renewed by conduct of the parties. As such, she avers that the Respondent could only terminate the renewed contract for legitimate reasons and in accordance with fair procedure. 9.The Claimant thus prays for the various reliefs set out in the Further Amended Statement of Claim to wit:-a.A declaration that her contract of service was unlawfully and unfairly terminated.b.Compensation for unfair termination of the contract.c.Damages of Ksh. 10,000,000.00 on account of discriminatory treatment.d.Costs of the suit.e.Interest. 10.The Respondent has opposed the claim. Whilst it admits that the parties had a fixed term contract of service, it denies that the contract was unlawfully terminated. 11.The Respondent contends that after the Claimant’s contract expired on 31st May 2023, it (the Respondent) commenced the process of evaluating her performance with a view to determining whether the contract could be renewed. It (the Respondent) contends that after the evaluation which was carried out in June and July 2023, a decision was made not to renew the contract. As such, it (the Respondent) contends that the contract lapsed due to effluxion of time. 12.The Respondent denies that the decision not to renew the Claimant’s contract was motivated by the fact of her pregnancy. It contends that the Claimant only raised the issue of the pregnancy on 31st July 2023 after the decision not to renew her contract had already been made on 28th July 2023. 13.The Respondent acknowledges that the process of evaluating the Claimant’s performance for purposes of renewal of her contract should have been done before her contract expired on 31st May 2023. However, it contends that this was rendered impossible because of exigencies of work. Issues for Determination 14.After evaluating the pleadings, evidence and submissions on record, the following issues arise for determination:-a.Whether the contract between the parties was renewed by implication.b.Whether the contract was unlawfully terminated.c.Whether the Respondent subjected the Claimant to discriminatory treatment.d.Whether the Claimant is entitled to the reliefs which she seeks through this action. Analysis 15.It is not in dispute that the parties to the action had a fixed term contract whose lifespan was two years from 19th April 2021 to 31st May 2023. Clause 18 of the contract provided that it (the contract) was governed by the Respondent’s Employee Handbook and that the regulations in the Handbook were deemed to have been incorporated in the contract. That clause was couched in mandatory terms. 16.The clause acknowledged that the Respondent could amend the regulations in the Handbook in order to meet the changing conditions at the workplace. However, it provided that if the Respondent introduced any such changes, it had to publicize them to the employees. 17.The parties were bound by the terms of their engagement as captured in the letter of employment and the Employee Handbook. As stated in the Handbook, any variations thereto were to be communicated to the employees. 18.Regulation 8.1.12 in the Handbook provides as follows:-‘’Notification of expiration and non-renewal of employment contracts shall be communicated to affected staff not less than 1 month prior to expiration date specified in the letter of appointment.’’ 19.The contract between the parties was to expire on 31st May 2023. Therefore and in terms of the aforesaid clause in the Handbook, if the Respondent was not going to renew it (the contract), it (the Respondent) ought to have notified the Claimant of this fact not less than one month before the aforesaid date, that is to say by 31st April 2023. 20.There is no evidence that the Respondent complied with this regulation in the Handbook. There is no evidence that it issued the Claimant with notice of non-renewal of her contract at least one month before 31st May 2023. 21.There is no evidence that the Respondent amended the clause in the Handbook which imposes an obligation to communicate intention not to renew a fixed term contract at least one month before the date the contract is to expire. No evidence of changes to the clause was brought to the attention of the Claimant as required under clause 18 of her contract of service. As such, the Respondent was bound to comply with the stipulation in the clause by giving the Claimant notice for non-renewal of her contract at least one month before 31st May 2023. 22.The record shows that the Respondent did not notify the Claimant of the intention not to renew her contract as required in the aforesaid instrument. It (the Respondent) contends that it did not do so because of exigencies of work. 23.The Respondent asserts that it could not renew the Claimant’s contract before it had evaluated her performance. It contends that it undertook this evaluation in June 2023 after her contract had expired. 24.The Respondent asserts that the Claimant was aware of the fact that renewal of her contract was dependent on the aforesaid evaluation. It refer to the evaluation form dated 9th June 2023 which she tendered in evidence to support its position. 25.The form reads thus ‘’Type of Evaluation: Renewal of Contract.’’ According to the Respondent, this points to the fact that the Claimant was aware that renewal of her contract was pegged on the results of the evaluation of her performance which was done after 31st May 2023. 26.Apart from this form, there is no evidence which the Respondent presented to demonstrate that it had notified the Claimant that renewal of her contract was to be pegged on the results of an evaluation which was to be undertaken after her contract had expired. Similarly, there is no evidence to demonstrate that the Respondent informed the Claimant that it had settled for temporary renewal of her contract after 31st May 2023 as it considered whether or not to renew her contract for another term. 27.It is evident that the email exchanges dated 30th June 2023 at page 19 of the Respondent’s trial bundle which speak to the issue of renewal of the Claimant’s contract were between members of the Respondent’s management. They were neither addressed nor copied to the Claimant. As such, the Respondent cannot rely on them to assert that the Claimant was made aware of the fact that the issue of renewal of her contract was still under consideration after 31st May 2023 and that her engagement was temporarily extended on monthly basis after this date to accommodate this process. 28.The Respondent was obligated by clause 8.1.12 of the Handbook to notify the Claimant of the decision not to renew her contract at least one month before her contract expired. If this was not possible for whatever reason and the Respondent desired to elongate the time within which it was to determine whether the contract was going to be renewed, it ought to have: notified the Claimant of this fact in writing; notified her that it was going to grant her temporary extensions of the contract pending the process; and sought her concurrence regarding the foregoing. There is no evidence that this was done. 29.The Claimant’s case is that when the Respondent did not notify her of the non-renewal of her contract in terms of clause 8.1.12 of the Handbook, she believed the contract had been renewed. She contends that her aforesaid belief was further fortified by the fact that the Respondent continued to pay her salary after 31st May 2023. 30.The evidence on record shows that the Respondent allowed the Claimant to continue in service after 31st May 2023. As a matter of fact, there is evidence that it remunerated her for the services she rendered in June and July 2023. This fact is self-evident from the pay slips for the two months appearing at pages 14 and 15 of the Claimant’s trial bundle. 31.The Respondent’s failure to expressly inform the Claimant that the decision to retain her in employment after 31st May 2023 was a temporary measure to enable it to consider whether to renew her contract raised a genuine belief in her that the contract had been renewed. As such, she was entitled to presume that her contract had been renewed. Consequently, the court finds that the contract between the parties was renewed by implication. 32.That a fixed term contract can be renewed through the conduct of the parties is not in dispute. This fact has been affirmed through various judicial pronouncements (see for example the case of Sandra M. Waswa v Article 19: Global Campaign for Free Expression [2022] KEELRC 625 (KLR)). 33.The court is alive to the principle which was laid down by the Court of Appeal in the case ofAmatsi Water Services Company Limited v Francis Shire Chachi [2018] KECA 255 (KLR) to the effect that a fixed term contract comes to a close on its sunset date and that it will be contrary to the very nature of such contract to hold that it is automatically renewed if it was not terminated. However, it is the court’s view that where parties to such contract persist in the employment relationship after the sunset date of the contract, it is reasonable to deduce that the contract has been renewed through their conduct. 34.The Claimant’s contract of service having been renewed by conduct, it could only have been terminated either through mutual agreement of the parties or unilaterally on the grounds and in accordance with the procedure which the law provides. It was not open to either party to close it (the contract) in any other manner. 35.There is no evidence that the parties closed the contract through mutual agreement. Similarly, there is no evidence that the contract was closed either on account of the operational requirements of the Respondent or misconduct or incapacity on the part of the Claimant and that the procedure which guides termination of a contract of service on the aforesaid grounds was followed. 36.As such, it is apparent that closure of the contract contravened provisions of the law which require that before an employer terminates an employee’s services, he must notify him of the reason for the decision and accord him an opportunity to be heard (see sections 40, 41, 43, 45 of the Employment Act and the case of Walter Ogal Anuro v Teachers Service Commission [2013] eKLR). It is so declared. 37.The Claimant contends that the only reason why the Respondent terminated her services is that she was expectant. She contends that she informed her line manager of her pregnancy on 31st July 2023 only to be summoned for a meeting through an email which was sent to her later that day. She avers that the Respondent then issued her with a letter purporting to terminate her services on account of expiry of her earlier contract. According to her, there was no other reasonable explanation for this development other than the fact that she was expectant.She contends that such termination was discriminatory. 38.On the other hand, the Respondent asserts that it terminated the Claimant’s services purely on account of the fact that her contract had expired. It contends that the decision not to renew the contract was made on 28th July 2023 before she disclosed the fact of her pregnancy on 31st July 2023. 39.The court has considered the evidence on record in respect of this issue. It is apparent that the Claimant wrote an email to the Respondent on 31st July 2023 at 18.29 in the following terms:-‘’Subject: Edd – Jane Anyango Kang’ethe December 2023Dear Ernesty,I trust you are well. I mentioned to my line manager Sandy concerning the same today morning and she will further discuss the same with you and other relevant managers. I was awaiting for month end before sending this email. As a standard rule, it’s important to share EDD for planning in good time. Probable maternity leave from December - 3 months plus 1 month annual leave.I believe this should be adequate notice to ensure any relevant material and processes are shared ahead of time to ensure seamless business continuity as you continue advancing on business process re-engineering for Oriel in terms of sales.I will meet you tomorrow as you have mentioned on way forward based on your discussions.’’ 40.The above email was in reaction to the Respondent’s emails to the Claimant on the same day at 5.21 PM and 5.23 PM through which it invited her for a meeting the following day at 10.40 AM. As the Claimant correctly points out, the Respondent’s emails did not disclose the agenda of the meeting. 41.Although the Respondent did not notify the Claimant in time that it was considering not to renew her contract resulting in her contract being renewed by implication, it is apparent from the evidence on record that the decision to terminate her contract was influenced by factors other than her pregnancy. This reality is apparent from the email exchanges between the Respondent’s officers around 30th June 2023. In the emails, the officers were concerned about the Claimant’s performance. They relied on this ground to purport not to renew her contract when it had already been renewed in fact and law as mentioned earlier in the judgment. 42.The fact that the Respondent’s decision to erroneously terminate the Claimant’s contract was not triggered by her pregnancy is also clear from the minutes of the meeting of 28th July 2023 at which the decision to terminate her services was discussed. In the meeting, nothing arose regarding her pregnancy. 43.The fact of the Claimant’s pregnancy first emerged on 31st July 2023 when she notified her line manager about it. This was after the Respondent had already taken the decision at its meeting of 28th July 2023 to terminate her services. 44.Having regard to the foregoing, the court is unable to come to the conclusion that the Respondent terminated the Claimant’s services on account of her pregnancy. Although her services were improperly terminated, this was certainly not because of her pregnancy. As such, the court declines to sustain her claim for discrimination on account of pregnancy. Conclusion 45.After considering the evidence on record, the court makes the following findings and attendant orders:-a.The court finds and declares that the Claimant’s contract of service was renewed by implication after it expired on 31st May 2023.b.The court finds that the Respondent improperly terminated the said contract of service.c.The Claimant’s contract of service having been improperly terminated, she is entitled to compensation for unfair termination of the contract. Taking into account the factors under section 49 of the Employment Act including whether the Claimant’s conduct contributed to the decision to terminate her services and the length of her service and considering that the renewed contract was for a fixed term of two years, the court awards her compensation for unfair termination of her contract which is equivalent to her gross monthly salary for four (4) months, that is to say, Ksh. 236,000.00 x 4 = Ksh. 944,000.00.d.The court declines the claim for discrimination on account of pregnancy.e.The court awards the Claimant interest on the amount awarded at court rates from the date of this decision.f.The court awards the Claimant costs of the case.g.The award is subject to the statutory deductions which were applicable at the time the contract between the parties was improperly terminated. DATED, SIGNED AND DELIVERED ON THE 26TH DAY OF JUNE, 2026B. O. M. MANANIJUDGEIn the presence of:…………….for the Claimant…………….for the RespondentOrderIn light of the directions issued on 12th July 2022 by her Ladyship, the Chief Justice with respect to online court proceedings, this decision has been delivered to the parties online with their consent, the parties having waived compliance with Rule 28 (3) of the ELRC Procedure Rules which requires that all judgments and rulings shall be dated, signed and delivered in the open court.