Can non-renewal of a fixed term employment contract amount to unfair termination of employment?

The general rule is that fixed term contracts carry no rights and obligations beyond their date of expiry. The employer has the discretion to renew or not to renew.

However, the employer’s prerogative to renew or not renew can be challenged where  it is shown that the employee had a legitimate and reasonable expectation of renewal. Legitimate expectation can arise where;

1. Actions of the employer led employee to believe that the contract would be renewed e.g  where employee keeps on working and earning months after expiry of his fixed term contract.

2. Regular practice- repeated/previous renewals.

3. Express promise of renewal.

4. Where renewal is subject to preconditions e.g  satisfactory performance and employee meets conditions.

If the employee can prove the existence of a legitimate expectation of renewal and that the decision not to renew is based on improper motive e.g employee illness, it can be successfully argued that non-renewal amounts to unfair termination of employment.

Refer to, among others; Teresa Carlo Omondi v Transparency International- Kenya [2017] eKLR


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