This can occur through the following ways: –

  1. Expiry of term;
  2. Resignation;
  3. Retirement;
  4. Death; and
  5. Termination (as a result of poor performance, misconduct, illness or redundancy)

Let’s start the discussion…

fixed term contract

Expiry of term

Fixed term contracts automatically end on expiry of their term.

I frequently get asked whether a notice of termination should be given, the answer is “No” because the end date is known to both parties right from the start. It’s, however, good practice to communicate to the employee, a month or so to the end date, on whether or not the contract will be renewed.

All rights and benefits end on expiry of the term. If for example, an employee goes on maternity leave two (2) months prior to the end of the term, her employer is only bound to pay her for the two (2) months left to the end of the contract.

The payouts on termination are: –

  • Salary up to last day worked;
  • Payment in respect of accrued leave; and
  • Any other contractual payments.

What happens where there is no communication from the employer on renewal of the contract and the employee continues to work after expiry of the term?

The contract becomes an open-ended contract which can only be terminated if there is a valid reason and subject to compliance with the termination procedure.

Is an employer bound to keep renewing the contract simply because renewal has almost been automatic in the past?

Our Courts have held that a fixed term contract carries with it no expectation of renewal, irrespective of the number of times that the contract has been renewed in the past. Update: The Court of Appeal has recently held that an employee on a fixed term contract should have no legitimate expectation of its renewal unless the employer has given an express and unequivocal intention to renew the contract.

steve-jobs-s-resignation-letter-c5a8ed958a

Resignation

An employee is at liberty to resign at any time without assigning reasons by giving notice as per the contract or by paying the employer salary in lieu of notice.

Payouts: –

  • Salary up to last day worked;
  • Payment in respect of accrued leave; and
  • Any other contractual payments.

Can an employer terminate an employee for misconduct during the notice period? Yes.

Can an employer refuse to accept a resignation letter?

No, in the recent past, our Courts have disregarded the fact that the employee was the subject of disciplinary proceedings at the time of tendering their resignation letter.

One or two judges have held that once an employee has tendered their resignation letter, all actions by the employer against the employee, such as show cause letters and disciplinary proceedings, are invalid. I do not support this position. As long as the person is an employee, the employer should be able to discipline them.

In David K Cheruiyot v Barclays Bank of Kenya Limited [2015] eKLR, it was held that:-

The question then is whether an employer once it has received a resignation letter can reject it.  The employment contract just like any other contract has its own terms and conditions. Under the contract between the Claimant and Respondent, either party could terminate the contract by giving ample notice, in this case, the period provided in the Collective Bargaining Agreement was 1 month.  The Claimant exercised this option and it did not matter that there were ongoing investigations against him.  An employee cannot be forced to remain in the employment of the employer if he does not wish to otherwise this would be tantamount to breaching his freedom under Article 36 of the Constitution [Freedom of Association].

Having found that the Claimant resigned, any action taken against him including a purported dismissal is null and void.

couple on the beach

Retirement

The labour laws do not provide a mandatory retirement age for the private sector. Most employers apply the retirement age applicable to those in public service, which is sixty (60) years. The contract automatically terminates on attainment of the retirement age.

If the contract does not fix a retirement age, the employee will continue working as long as he is able and competent to perform.

Payout: –

  1. Salary up to last day worked;
  2. Payment in respect of accrued leave; and
  3. Any other contractual payments.

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About Anne Babu

Anne is an Advocate of the High Court of Kenya and the Founding Partner of Anne Babu & Co. She has practised employment law for over 12 years and her employment law practice has been recognized by the prestigious Chambers & Partners. Anne cares about employers and their labour issues.


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Comments

  1. D.O.ONGOYA says:

    Anne,
    The information on the invalidation of any process that was underway,eg disciplinary actions, when the employee resigns is very useful.
    Thank you very much.
    BUT now, how does the process continue after the receipt of the resignation? Say an employee was being investigated for serious issues like being drunk at work, which is a ground for summary dismissal, he has resigned add gone, do we still pay the terminal benefits?

    1. Anne Babu says:

      Thank you for your question, he is entitled to be paid up to the last day he worked.

    2. Anonymous says:

      He is entitled to be paid up to the last day worked and any accrued leave days and if his contract specifies notice period in which he may have not serve then you less from the calculation.

  2. Anonymous says:

    Hi Anne, let me ask D.O. Ongonya’s question in another way: the case at hand is a summary dismissal and the employee has been called for hearing. A day before the hearing s/he hands in a resignation letter that allows her/him to serve notice of 1 month. Should the company cease seeing through the disciplinary action because a resignation notice has been served taking in to accounnt the stipulations of Article 36 of the Constitution [Freedom of Association]?

    1. Anne Babu says:

      The Industrial Court has held that any disciplinary action taken after a resignation letter is null and void. I’m not sure how Article 36 is relevant in such a case.

  3. Carol says:

    Hi Anne, if a staff resigns and it had been verbally communicated to all staff mid year that they shall entitled to backdated salary increments come end of year. Does the staff who has resigned have a claim to the increment?

    1. Anne Babu says:

      Yes I believe he has – for the duration that he has worked, even if the payment is to be made at the end of the year. As long as the
      communication did not exclude those who leave before the end of the year.

  4. James says:

    Hi Anne wanted to know if I don’t have a contact with a employer only a employment latter which does not say about resignation notice and once I resign the employer does not give me that pay for one month which I have worked for is it just or they should pay me

    1. Anne Babu says:

      If you resign, you either serve one month’s notice or you pay your employer one month’s salary in lieu of notice.

  5. Susan says:

    Hi Anne,

    How can employee appeal if the employer declines to accept a resignation letter and goes ahead with disciplinary procedure culminating in a dismissal.

    Regards,
    Susan.

    1. Anne Babu says:

      An appeal can only be raised if it is provided for in the contract or HR Manual/Policies. Otherwise the employee can only contest the dismissal.

  6. karanja joseph says:

    Should your employer insist to have your persnal pension plan certificate and more so when you have resigned and serving notice.

    1. Anne Babu says:

      There is no legal justification for such a request. I’d be interested to know the reason for which this is demanded.

  7. mercy says:

    Anne, if i have never been confirmed or my probation period extended where i have worked for 8 months and i wish to resign do i have to give 1 month notice or 2 weeks notice?

    1. Anne Babu says:

      You should go by your contract.

  8. Clement Ndunga says:

    show cause and termination what should come first

    1. Anne Babu says:

      Show cause

  9. Jack says:

    Hi Anne, I was working with a certain firm then resigned, I had accrued leave days which I used to serve as my 30 days notice. Until now my employer has not paid me for the 30 days I was on leave, can I sue him.

    1. Anne Babu says:

      I confirm that you have a cause of action against your employer. Before moving to court, consider consulting either a labour officer or a lawyer to issue a demand to your former employer.

  10. TM says:

    Hi Ann I was given a show cause…but I resigned…do I have to reply to the show cause? Is it valid…or its null & void?

    1. Anne Babu says:

      Your resignation does not take immediate effect unless you have paid your employer in lieu of serving the notice period. You, therefore, need to respond. Note that our courts are very much divided on this matter.

      1. TM says:

        Thank you…I did reply. I gave a one month notice…can the employer terminate or sack me?

        1. Anne Babu says:

          Yes they can as long as you are still serving notice.

  11. CYRUS says:

    Hi Ann
    What happen when the employee give u verbal notice of resignation and she also request for service pay for the days worked.
    later she give u a back dated Notice of resignation.

    Thanks

    1. Anne Babu says:

      Service pay is only paid if the employee is not on NSSF. There is nothing wrong with a verbal notice unless the contract specifically provides for a written one.
      Please take a minute to vote for the blog, we have been nominated in the Best Topical Blog category https://vote.bakeawards.co.ke/vote. Thank you

  12. jane says:

    Ann, this is amazing, very educative. Kindly address grievance handling mechanism at workplace.

    1. Anne Babu says:

      Thank you! Good idea. We will work on a post.

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