https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/1816

REPUBLIC OF KENYA IN THE EMPLOYMENT AND LABOUR RELATIONS COURT AT MALINDI APPEAL NO. E 025 OF 2025 MEGA COUTURE CLOTHING EPZ LIMITED…………APPELLANT. VERSUS REBECCA NYABOKE OTISO………………………………RESPONDENT *[ Being an appeal from the Judgment of the Chief Magistrate’s Court at Kilifi, Hon. James N. Mwaniki, dated 17th day of September, 2025 and delivered on 24th September, 2025, in Cmcc/ELRC Cause No. E027 of 2023].* **JUDGMENT** 1. The Respondent herein sued the Appellant in the above-stated suit, claiming that at all material times, she was an employee of the Appellant and that the latter had terminated her employment unfairly, and consequently sought compensatory remedies against it. 2. Upon being served with court process, the Appellant entered an appearance and filed a Memorandum of Appearance and a Response to the Statement of Claim, both dated 2nd February, 2021, denying the Respondent’s claim and entitlement to the reliefs she had sought. 3. The Respondent’s case before the trial Court was that, at all material times from 2nd February 2021 to 10th July 2023, she was a Mass Production Mechanist earning a monthly salary of KShs. 15, 604. On 10th July 2023, she reported for duty and worked the whole day as usual. At the end of the day, as she was about to leave, she was called by the Human Resource Officer, who asked her to surrender her uniform and job card, as her services were no longer required. 4. She contended that the termination was without justification and adherence to the dictates of procedural fairness. She was dismissed without notice and without being accorded a hearing. 5. On the other hand, it was the Appellant’s case that at all material times, the Respondent was employed under successive fixed-term contracts and that her last contract was from 11th April,2023 to 10th July, 2023. As such, her Claim for unfair termination was unfounded. 6. After hearing the parties’ respective cases and considering their evidence, the learned trial Magistrate entered judgment in favour of the Respondent, finding that her employment was terminated at the Appellant’s initiative. The learned trial Magistrate awarded her notice pay [KShs. 15,604] and compensation for unfair termination of three months’ gross salary [KShs. 46,818], and directed that she be issued a certificate of service. The learned trial Magistrate further found that the Respondent served under a fixed-term contract. 7. Aggrieved by the stated judgment, the Appellant filed the instant appeal, challenging the same on the following grounds; 8. The Learned trial Magistrate erred in law and fact by applying the doctrine of legitimate expectation to the fixed-term employment contract. 9. The trial Court erred in law and fact by acknowledging that the contract was fixed-term, yet proceeded to imply automatic renewal. 10. The trial Court erred in law and in fact in failing to appreciate that no verbal or written representation was made by the employer to induce reliance or expectation of renewal. 11. The single issue upon which the instant appeal turns is whether, having found that the Respondent was employed under a fixed-term contract, the trial Court had the justification to hold that her employment was unfairly terminated and to condemn the Appellant to pay compensation for unfair termination and notice pay. 12. Inarguably, the parties’ respective submissions agree on one critical point, as the learned trial Magistrate found, that at all material times, up until the separation from employment, the Respondent served under various fixed-term contracts, and that the separation occurred on the date appointed for the lapse of the last such contract under which she served the Appellant. In essence, there is no dispute that the Appellant’s contract ended by effluxion of time. 13. Despite finding that the contract had come to an end by effluxion of time, the learned trial Magistrate proceeded to hold that the contract contained a renewal option clause, and that, since the other fixed-term contracts had previously been renewed, the Appellant was obliged to give advance notice to the Respondent that the last contract under which she was serving would not be renewed. 14. In my view, the mere fact that a fixed-term contract contains a renewal clause, and the previous contracts between the parties were renewed pursuant to the clause, does not, without more, impose upon the employer a legal obligation to issue a notice prior to the agreed expiry date of the contract, or indeed any notice at all, indicating whether the contract shall or shall not be renewed. A fixed -term contract is, by its very nature, an agreement with a definite commencement and termination date known to both parties from the moment of its execution. Unless the contract expressly stipulates that prior notice of non-renewal is a condition precedent of its lapse, or such an obligation is imposed by statute, collective bargaining agreement and binding workplace practice, the contract terminates automatically upon the arrival of its agreed expiry date. See also **Transparency International Kenya v Teresa Carlo Omondi [2023] KECA 174 [KLR].** 15. A renewal option is no more than a contractual mechanism through which the parties may, upon the occurrence of the stipulated conditions or mutual agreement, extend the employment relationship. It does not transform the fixed-term contract into one of indefinite duration, nor does it create a legitimate expectation that every successive contract shall be renewed. Equally, the employer’s previous exercise of the renewal option cannot, standing alone, be construed as creating a continuing obligation to notify the employee of a decision not to renew. Past renewals demonstrate only that the parties previously agreed to extend the relationship; they do not rewrite the terms of the existing contract or import obligations that the parties themselves did not spell out. 16. Accordingly, absent an express contractual provision, statutory requirement, or compelling evidence of a binding and consistent practice giving rise to a legitimate expectation, as was in the case before the lower court, the employer is under no legal duty to issue a notice of non-renewal before the contract reaches its agreed expiry date. The fixed-term contract lapses by operation of the contract. 17. By reason of the premises, I find the learned trial Magistrate's conclusion that the Respondent’s employment was unfairly terminated unfounded in law. Consequently, the Appellant’s appeal is hereby allowed. The entire judgment of the trial Court is hereby set aside. 18. Each party to bear its own costs. **Read, signed, and delivered this 24th Day of June 2026.** **OCHARO KEBIRA** **JUDGE.**