Legitimate Expectation and Fairness in Successive Fixed-Term Contracts: The Case of Changalwa v Unga Limited [2025] KEELRC 1389 (KLR)

Legitimate Expectation and Fairness in Successive Fixed-Term Contracts: The Case of Changalwa v Unga Limited [2025] KEELRC 1389 (KLR)

Factual Summary

In Changalwa v Unga Limited, the Employment and Labour Relations Court (ELRC) considered whether an employee engaged on consecutive fixed-term contracts over a long period could claim a legitimate expectation of renewal or prior notice of non-renewal.

The claimant had worked for Unga Limited for thirteen consecutive years under successive fixed-term contracts. Despite being formally a fixed-term employee, he was included in a gratuity scheme available only to permanent staff. When the employer allowed the last contract to lapse without renewal or advance notice, the employee contended that this violated his legitimate expectation and amounted to an unfair labour practice.

The employer countered that the contract had expired by effluxion of time, and that fixed-term employment does not create an automatic right or expectation of renewal.

The court disagreed with the employer. It found that the claimant’s continuous service, combined with treatment identical to permanent employees, created a legitimate expectation that the contract would either be renewed or that he would receive prior notice of non-renewal. The court held that the respondent’s conduct violated the constitutional right to fair labour practices under Article 41 of the Constitution of Kenya, 2010 and Section 45 of the Employment Act, 2007.

Accordingly, the non-renewal was declared unfair, and the court awarded appropriate compensation.

Analytical Legal Commentary

1. Introduction

The Changalwa decision marks an important addition to Kenyan jurisprudence on the treatment of long-serving employees under fixed-term arrangements. It underscores the judiciary’s continued expansion of the doctrine of legitimate expectation into the employment law sphere, ensuring that the letter of contractual terms does not override the spirit of fairness guaranteed by the Constitution.

The case reflects the delicate balance courts must strike between contractual autonomy—allowing parties to define the duration of employment—and equitable fairness—ensuring employers do not exploit fixed-term contracts to deny employees rights normally associated with permanent employment.

2. Legal Issue

The central issue before the court was whether prolonged employment through successive fixed-term contracts, coupled with benefits afforded to permanent staff, can generate a legitimate expectation of continued employment or notice of termination.

3. The Court’s Findings

The ELRC held that the combination of the claimant’s 13 years of uninterrupted service and his participation in a permanent employee gratuity scheme created a legitimate expectation of renewal or prior notice. The employer’s failure to provide either amounted to procedural and substantive unfairness.

The court drew on the doctrine of legitimate expectation—traditionally rooted in administrative law—and affirmed its applicability in employment relations. By doing so, the court extended constitutional protection to employees facing abrupt or arbitrary non-renewals of fixed-term contracts.

4. Analytical Discussion

(a) Fixed-Term Contracts and Their Legal Nature

Under general employment law, fixed-term contracts terminate automatically upon expiry, without the need for notice, unless renewal is explicitly agreed upon. This principle was reiterated in several prior decisions, including Registered Trustees of the PCEA & Another v Ruth Gathoni Ngotho-Kariuki [2017] eKLR.

However, Kenyan courts have increasingly recognised that strict adherence to this principle may produce inequitable outcomes, particularly where employers repeatedly renew fixed-term contracts for extended periods—effectively creating permanent relationships in substance, though not in form.

(b) Legitimate Expectation in Employment Law

The doctrine of legitimate expectation, borrowed from administrative law, protects individuals from arbitrary deviation from an established pattern of conduct by an authority or employer. In employment relations, it prevents employers from using fixed-term contracts to disguise ongoing employment relationships.

In Changalwa, the court reaffirmed that legitimate expectation may arise where:

1. There is consistent renewal of contracts over time;
2. The employer’s conduct suggests continuity (e.g., inclusion in permanent staff benefits); and
3. The employee reasonably relies on such conduct to expect renewal or advance notice.

This reasoning aligns with Elizabeth Washeke & Others v Airtel Networks (K) Ltd [2013] eKLR and Transparency International Kenya v Sheila M. M’Mbijjewe & Others [2022] eKLR, where the ELRC held that fairness and good faith must guide decisions regarding non-renewal.

(c) Fair Labour Practices under Article 41

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 is not, strictly speaking, a “termination,” courts have interpreted these provisions purposively to protect employees from arbitrary discontinuation of employment.

In Changalwa, the court emphasised that employers who maintain employees on long, rolling fixed-term contracts cannot rely solely on the technical expiry of time to defeat constitutional obligations of fairness and transparency. This constitutionalisation of employment fairness represents a progressive reading of Article 41, ensuring that employment relationships are governed not only by contractual form but also by substantive justice.

(d) Practical Implications for Employers

The judgment sends a clear warning to employers who habitually engage employees under consecutive fixed-term contracts. Where such arrangements extend for several years and mirror the conditions of permanent employment, employers risk creating implied legitimate expectations.

To mitigate liability, employers should:

• Clearly define the temporary nature of fixed-term engagements;
• Communicate renewal or non-renewal decisions in advance;
• Avoid extending permanent benefits (such as pension or gratuity) to fixed-term employees unless expressly warranted; and
• Consider converting long-serving fixed-term employees to indefinite contracts where the employment need is continuous.

5. Ratio Decidendi

Where an employee serves under successive fixed-term contracts for an extended period and is treated similarly to permanent staff, a legitimate expectation of renewal or prior notice arises. Failure to meet that expectation amounts to unfair labour practice, contrary to Article 41 of the Constitution and Section 45 of the Employment Act.

6. Significance of the Decision

Mabonga (typo: Changalwa) contributes to the growing jurisprudential shift from formal contractualism to substantive fairness in Kenyan labour law. It builds upon earlier rulings recognising legitimate expectation as a shield against arbitrary employment decisions.

The case underscores the courts’ willingness to scrutinise the substance of employment relationships—not merely their contractual labels—and to enforce fairness consistent with the Constitution’s transformative ethos.

By extending administrative law principles into employment relations, the court affirms that employment, as a social and constitutional relationship, cannot be governed solely by rigid contract law doctrines.

7. Conclusion

Changalwa v Unga Limited reaffirms that fairness in employment extends beyond the written contract to the conduct and expectations arising from a long-standing employment relationship. It represents a commitment to equity, good faith, and respect for employees’ constitutional rights to fair labour practices.

For employers, it serves as a cautionary precedent: repeated renewals and inclusion of fixed-term employees in permanent benefit schemes may blur the line between fixed and permanent employment—creating enforceable legitimate expectations and potential liability for unfair labour practices.

Key Authorities:

• Registered Trustees of the Presbyterian Church of East Africa & Another v Ruth Gathoni Ngotho-Kariuki [2017] eKLR
• Transparency International Kenya v Sheila M. M’Mbijjewe & 2 Others [2022] eKLR
• Elizabeth Washeke & Others v Airtel Networks (K) Ltd [2013] eKLR

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