Failure To Give Notice Of Termination Connotes Constructive Renewal Of A Contract Of Employment.

Failure To Give Notice Of Termination Connotes Constructive Renewal Of A Contract Of Employment.

By Victor L. Andande and Njeri Githang’a Kamau-Advocate

Ruth Gathoni Ngotho Kariuki v. Presbyterian Church of East Africa & Another. Cause No. 509 of 2010 Industrial Court of Kenya at Nairobi Byram Ongaya J. December 11, 2012.

The Claimant was employed by the Respondents as a nursing officer in charge at the Respondents’ Presbyterian Church of East Africa Kikuyu Hospital.  She was employed on 29.03.2004 on a fixed term contract of three years and was subject to renewal. Clause 2 on terms of appointment provided, “The Hospital’s Board shall renew your contract and you shall serve the Hospital as Nursing Officer in charge of the Kikuyu Hospital for 3 – year renewable contract commencing April 2, 2007”.  Further, clause 6 on renewal of the employment arrangement provided, “Not less than three months before the date of this expiration of this contract, the Hospital Board shall inform the officer as to whether or not it wishes to renew the contract”. The Claimant served successfully her initial three years term and the contract of employment was renewed by the letter dated March 7, 2007 with effect from April 1, 2007 for three years.  In January 2009 the Respondents sponsored the Claimant for a training course in Masters of Science in Health Systems Management.  The Hospital Management committee bonded the Claimant with conditions of training as follows:
“(a) The Hospital Sponsorship is given on condition that on completion of the training the participant will work for P.C.E.A Kikuyu Hospital, for a period of 5 (five) years before being released from the bond. (b) The P.C.E.A Kikuyu Hospital will meet the 50% full tuition and other fees to the college…” In 2010, the Finance and Administration office was vacant and by the letter dated 5.03.2010, the Hospital Chief Executive Officer addressed the Claimant, thus, “In the absence of the Finance & Administration Manager the following reporting systems will apply until the position is filled …  Nursing Officer in Charge will be responsible for the service departments which include: 1. House Keeping/Cleaning 2. Catering 3. Security 4. Maintenance 5. Funeral Home”
The Claimant testified that she undertook the extra duties as assigned and she was not paid. On 5.05.2010 she was served with the letter of termination dated 5.05.2010 the letter stated as follows:-…This is to confirm to you that the Hospital will not renew your contract which ended on 31st March 2010. Kindly clear with the Hospital Administration and vacate the premises immediately…the claimant hence prayed for judgment against the Respondent jointly and severally for special damages of Kshs.9,940,101.64/=.

Issues:

  1. Whether an employer’s failure to give notice of termination as provided for in a contract of employment amounted to constructive renewal of an employment contract.
  2. Whether a bonding contract for training was a contract of service within the meaning of Section 2 of the Employment Act.
  3. Whether an employee is entitled to be paid for services outside the contractual obligation.
  4. Whether the claimant was unlawfully and unfairly terminated from employment.

Employment law-renewal of an employment contract-constructive renewal- effluxion of time not a basis for non-renewal of contract- whether employer’s failure to give notice of termination as provided for in the employment contract amounts to constructive renewal of the contract Employment law-contract of employment-bonding contract-whether a bonding contract for education loan amounts to a contract of service  Employment law-contract of service – where an employee performs extra duties not provided for in the contract of service-whether an employee entitled to be paid for services rendered outside the contractual obligation.

Held:

  1. The renewal of the employment contract was to be mandatory, thus, “The Hospital Board shall renew your contract…” was such an imperative provision of the contract that entitled the Claimant to unwavering legitimate expectation to the renewal of her contract of service.  The only intervening contractual provision was that if renewal was to be refused, then the Claimant was to be informed the refusal three months before the expiry of the contract. The Respondents having failed to comply with the three months conveyance of refusal to renew, the three years fixed term contract intended to lapse on 31.03.2010 did not so lapse.
  2. The contract had been constructively renewed for failure to comply with the contractual provision on termination which required a three months’ notice. The effluxion of time was not a genuine reason for non renewal. The termination thus proceeded outside the contractual provision and therefore in breach of the contract.
  3. The bonding contract amounted to a contract of service within the definition of Section 2 of the Employment Act 2007. However, the commencement of the contract of employment flowing from the bonding contract was the effective date of completion of the training.
  4. The existence of the three year fixed contract and its renewal was a fundamental implied term that was a foundational precondition for the contract of service flowing from the bonding contract.
  5. The bonding contract being a contract of employment, the respondents breached and unfairly terminated it.
  6. It is an implied and an invariable condition in contracts of service that wherever the employer imposes duties beyond the contractual duties, the employer must pay reasonable wage for such imposed duties. Article 41 of the Constitution entitles every person to fair labour practice and thus it is unfair labour practice for an employer to impose duties beyond the contractual duties and, after the employee has delivered on the duties, the employer alleges that there is no contractual obligation to pay.
  7. The claimant was unlawfully and unfairly terminated from employment because he was not given a hearing and notification as envisaged under Section 41 of the Employment Act 2007.

Judgment entered for the claimant in the sum of Ksh.5,141,148.34/=

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