Legitimate Expectation and the Evolving Nature of Fixed-Term Employment in Kenya: A Commentary on Changalwa v Unga Limited [2025] KEELRC 1389 (KLR)

1. Introduction

The judgment in Changalwa v Unga Limited represents a pivotal development in the jurisprudence of Kenyan employment law, particularly regarding the interface between fixed-term contracts and the constitutional guarantee of fair labour practices. The case interrogates whether an employee’s prolonged engagement on consecutive fixed-term contracts, coupled with treatment equivalent to that of permanent staff, can create a legitimate expectation of renewal or prior notice of non-renewal.

Through this decision, the Employment and Labour Relations Court (ELRC) reaffirmed its commitment to constitutionalising employment relations and ensuring that formal contractual arrangements do not undermine substantive fairness. The court’s reasoning reflects an increasingly purposive interpretation of Article 41 of the Constitution of Kenya, 2010, and a recognition that the doctrine of legitimate expectation—traditionally confined to public and administrative law—has a central role in promoting equity in the workplace.

2. Factual Matrix

The claimant had served Unga Limited for thirteen consecutive years under a series of fixed-term contracts. Despite the ostensibly temporary character of these arrangements, the claimant was enrolled in a gratuity scheme reserved exclusively for permanent employees.

Upon expiry of the final contract, the respondent neither renewed the agreement nor gave advance notice of non-renewal. The claimant contended that the employer’s conduct over the years—especially the inclusion in permanent staff benefits—had generated a legitimate expectation of continued employment or, at minimum, of notice prior to disengagement.

Conversely, the employer maintained that the contract had lapsed by effluxion of time and that the doctrine of legitimate expectation was inapplicable to fixed-term contracts, which, by definition, are self-terminating.

3. Issue for Determination

The court was invited to determine whether continuous employment under successive fixed-term contracts, combined with treatment indistinguishable from that of permanent employees, could give rise to a legitimate expectation of renewal or reasonable notice of non-renewal, and whether failure to meet such expectation amounted to unfair labour practice.

4. Judicial Determination

The ELRC held that the claimant’s long-term service, coupled with participation in a gratuity scheme reserved for permanent employees, created a legitimate expectation of renewal or, at the very least, advance notice of non-renewal. The respondent’s abrupt cessation of the employment relationship was found to contravene the claimant’s rights under Article 41 of the Constitution and Section 45 of the Employment Act (2007).

The court therefore declared the non-renewal procedurally and substantively unfair, awarding appropriate remedies by way of compensation and/or payment in lieu of notice.

5. Analytical Discussion

5.1 The Nature of Fixed-Term Contracts

A fixed-term contract is one whose duration is defined at the outset and which ordinarily terminates automatically upon expiry. Kenyan courts have consistently recognised that, absent express agreement, no expectation of renewal arises from such contracts. This principle was reaffirmed in Registered Trustees of the Presbyterian Church of East Africa & Another v Ruth Gathoni Ngotho-Kariuki.

Nevertheless, the practical realities of modern employment often complicate this strict contractual position. Many employers engage workers on rolling fixed-term contracts spanning several years, effectively creating indefinite employment relationships in substance, though not in form. Changalwa exposes the tension between contractual orthodoxy and equitable fairness, emphasising that adherence to formal expiry clauses cannot legitimise practices that amount to disguised permanency.

5.2 The Doctrine of Legitimate Expectation in Employment Relations

The doctrine of legitimate expectation, a construct of administrative law, traditionally protects individuals from arbitrary deviation from established policies or representations by public authorities. In employment law, its adaptation serves a similar purpose—shielding employees from abrupt, unjustified, or inconsistent conduct by employers who have fostered an expectation of continuity.

In Changalwa, the court applied this doctrine to the employment context, holding that legitimate expectation arises where:

1. There is a consistent pattern of contract renewals;
2. The employer’s conduct conveys an assurance of continued engagement; and
3. The employee reasonably relies on that assurance to expect renewal or at least notice of cessation.

The decision echoes earlier jurisprudence such as Elizabeth Washeke & Others v Airtel Networks (K) Ltd and Transparency International Kenya v Sheila M. M’Mbijjewe & Others, both of which recognised that legitimate expectation may arise where an employer’s actions undermine the predictability and fairness of employment relationships.

5.3 Constitutionalisation of Employment Fairness

The court’s reasoning reflects the ongoing constitutionalisation of employment law in Kenya. Article 41(1) of the Constitution guarantees every worker the right to fair labour practices, while Section 45(2) of the Employment Act prohibits unfair termination. Although non-renewal of a fixed-term contract does not technically amount to termination, the court adopted a substantive approach—holding that the spirit of the Constitution demands fairness in all employment decisions, including decisions not to renew.

By invoking Article 41, the court moved beyond the confines of contractual formalism and infused the employment relationship with constitutional morality—a recognition that fairness, good faith, and transparency are not mere aspirations but binding obligations on employers. This interpretation situates Changalwa within a transformative constitutional framework where the substance of justice supersedes the form of contract.

5.4 Fair Labour Practice and the Rule of Good Faith

The decision reinforces the principle that employers must act in good faith and with procedural transparency when deciding not to renew fixed-term contracts. Even where renewal is not guaranteed, fairness demands that employees be given adequate notice to plan for transition.

The court implicitly recognised that prolonged reliance on short-term contracts may constitute an abuse of managerial discretion, especially where the nature of work is permanent and ongoing. The case therefore contributes to the development of an equitable jurisprudence preventing employers from using fixed-term labels to circumvent obligations associated with permanent employment—such as job security, redundancy procedures, and long-term benefits.

5.5 Policy and Institutional Implications

From a policy perspective, Changalwa invites employers to re-examine the structure and administration of fixed-term engagements. The following practices emerge as essential for compliance with fair labour standards:

1. Transparency: Communicate renewal or non-renewal decisions in advance and record the reasons for discontinuation.
2. Role Segregation: Avoid conflating permanent and fixed-term benefit schemes unless justified by clear operational rationale.
3. Continuity Assessment: Where employment is continuous and the position permanent in nature, consider conversion to an indefinite contract to reflect reality.
4. Procedural Safeguards: Ensure that decisions regarding non-renewal are accompanied by consultation and fair notice to the employee.

Adherence to these principles not only mitigates legal exposure but also enhances institutional reputation and employee morale.

6. Ratio Decidendi

Where an employee serves for an extended period under successive fixed-term contracts and receives treatment equivalent to that of permanent staff, the employer’s conduct may give rise to a legitimate expectation of renewal or prior notice of non-renewal. Failure to meet that expectation constitutes a breach of fair labour practice, contrary to Article 41 of the Constitution and Section 45 of the Employment Act (2007).

7. Significance of the Decision

Changalwa is emblematic of a broader judicial trend in which Kenyan courts seek to reconcile contractual certainty with social justice. It affirms that employment relationships are not merely commercial but are constitutional and relational, grounded in mutual trust and fairness.

By extending the doctrine of legitimate expectation into private employment, the court fortifies the normative foundation of Kenyan labour law, aligning it with global best practices and ILO standards that emphasise security of tenure and fair treatment.

The decision thus marks a continued evolution from formalist contract enforcement to transformative adjudication—an approach that evaluates employment relations through the lens of equality, good faith, and constitutional justice.

8. Conclusion

The ruling in Changalwa v Unga Limited underscores the judiciary’s insistence that fairness and good faith are the cornerstones of modern employment relations. Employers who perpetuate long-term fixed-term arrangements while extending permanent benefits must now recognise that such conduct may give rise to enforceable legitimate expectations.

The case stands as a cautionary precedent: the form of a contract cannot defeat the substance of fairness. As Kenyan employment law continues to evolve under the Constitution’s transformative ethos, Changalwa will likely serve as a reference point in defining the contours of legitimate expectation and fair labour practice in the era of flexible work arrangements.

References

1. Changalwa v Unga Limited [2025] KEELRC 1389 (KLR).
2. Registered Trustees of the Presbyterian Church of East Africa & Another v Ruth Gathoni Ngotho-Kariuki [2017] eKLR.
3. Elizabeth Washeke & Others v Airtel Networks (K) Ltd [2013] eKLR.
4. Transparency International Kenya v Sheila M. M’Mbijjewe & 2 Others [2022] eKLR.

 

Disclaimer: This article is for informational purposes only and does not constitute legal advice.