Fixed-Term Contracts in Kenya: What Happens When They Expire but Work Continues?

Introduction

In Kenya, fixed-term employment contracts have become increasingly common across both the public and private sectors. They provide certainty to employees while giving employers flexibility to manage staffing needs. However, disputes often arise when such a contract expires, yet the employee continues to work without a new contract. The key legal question is whether the employment relationship ends automatically upon expiry or whether continued engagement creates new rights. This article examines the legal position under the Employment Act, 2007, relevant court decisions, and their implications for both employees and employers in Nairobi, Mombasa, and beyond.

The General Rule: Expiry by Effluxion of Time

The law is clear that a fixed-term contract ends automatically once its term lapses. Section 10(3)(c) of the Employment Act, 2007 requires that the duration of employment be specified where it is not indefinite. Upon expiry, the contract terminates by effluxion of time, and no notice is required.

The Court of Appeal in Registered Trustees of the Presbyterian Church of East Africa & Another v Ruth Gathoni Ngotho-Kariuki [2017] eKLR reaffirmed this principle, holding that an employer is under no obligation to renew a contract once it ends unless the contract expressly provides otherwise. Similarly, in Transparency International Kenya v Daniel Ndung’u [2019] eKLR, the Employment and Labour Relations Court ruled that the mere non-renewal of a fixed-term contract does not constitute unfair termination.

This means that, ordinarily, when a fixed-term contract expires and the employer does not engage the employee further, the employment relationship lawfully ends.

Continued Engagement After Expiry: Creation of an Implied Contract

Despite the general rule, Kenyan courts have recognized that where an employer continues to engage an employee after the expiry of a fixed-term contract, a new employment relationship may be implied. If the employer assigns duties, continues to pay a salary, or otherwise treats the employee as part of the workforce, the law may interpret this as a renewal.

In Lumutu v Kenya Civil Aviation Authority [2024] KEELRC 13242, the Employment and Labour Relations Court held that the continued engagement of the claimant beyond the expiry of his fixed-term contract effectively created an indefinite employment relationship. The court found that the employer could not rely on the expired contract to deny the employee his labour rights. Thus, where work continues with the employer’s knowledge, the employee may be deemed an ongoing employee entitled to full protections under the Employment Act.

Legitimate Expectation of Renewal

A third scenario arises where an employee claims that the employer’s conduct created a legitimate expectation of renewal. This principle applies where the employer, through repeated renewals, written communication, or consistent past practice, has led the employee to reasonably believe that the contract would continue.

In Teresa Carlo Omondi v Transparency International Kenya [2017] eKLR, the Employment and Labour Relations Court acknowledged that repeated renewals can give rise to a legitimate expectation of further renewal. However, the Court of Appeal in the Presbyterian Church case clarified that legitimate expectation must be grounded in clear and unambiguous promises or conduct, not mere hope or desire for continued employment.

Where legitimate expectation is established, the non-renewal of a fixed-term contract may amount to unfair termination under Section 45 of the Employment Act, entitling the employee to remedies such as compensation and benefits as provided under Sections 49 and 50.

Practical Guidance for Employees and Employers

For employees in Nairobi, Mombasa and beyond, the legal position is that if your fixed-term contract expires and you continue to work with the employer’s knowledge, or if you can prove legitimate expectation, you may be entitled to recognition as a continuing employee with full rights. Evidence such as payslips, work schedules, and emails/SMSs/WhatsApp Messages assigning duties can strengthen your case.

For employers, it is essential to manage fixed-term contracts carefully. If you do not intend to renew a contract, clearly communicate the expiry in writing and ensure no further duties are assigned. Where renewal is intended, a fresh written contract should be issued promptly to avoid disputes and litigation.

Conclusion

The law on fixed-term contracts in Kenya strikes a balance between contractual certainty and the protection of employees from unfair labour practices. While contracts ordinarily terminate upon expiry, continued engagement without a new contract or the creation of legitimate expectation can transform the relationship into one that entitles the employee to full employment rights.

Recent decisions such as Lumutu v KCAA and the Presbyterian Church of East Africa case illustrate that conduct matters as much as written terms. Employers must handle expiries with clarity, and employees should seek legal advice promptly when disputes arise.

At F.M. Muteti & Co. Advocates, with offices in Nairobi and Mombasa, we provide expert legal services in employment and labour law, including disputes involving fixed-term contracts, redeployment, unfair termination, and workplace restructuring. If you are seeking a professional employment lawyer in Kenya, we are here to safeguard your rights and interests.