For years, employers across Kenya have relied on rolling short-term contracts to fill permanent roles while avoiding the costs and obligations that come with permanent employment. A Court of Appeal ruling now threatens that practice, holding that workers who perform continuous, long-term duties cannot be kept indefinitely on renewable contracts simply because employers choose to label them temporary.
In a decision with potentially wide implications for private employers, county governments, and State corporations that rely on rolling fixed-term contracts, the three-judge bench also said prolonged insecure employment breaches the constitutional right to fair labour practices. Employees who perform permanent work for years under repeatedly renewed short-term contracts may be entitled to permanent and pensionable employment,
The judges held that repeatedly renewed short-term contracts can be deemed fixed-term service contracts and that employers cannot keep workers on endless temporary contracts. They said such employees are not casual workers.
They said labour courts must examine the substance of an employment relationship rather than the label attached to successive contracts when determining a worker’s legal status.
“Where an employee works continuously and performs work of a permanent nature, and where the label attached by the employer is not decisive, the court must look at the substance of the relationship,” Justices Sankale Ole Kantai, Jessie Lesiit and Abida Ali-Aroni said.
The findings emerged as the court ordered Embu County Government to regularise the employment of about 256 long-serving health workers by placing them on permanent and pensionable terms.
The judges said employers cannot circumvent statutory labour protections by repeatedly renewing short-term contracts for workers who continuously perform permanent duties.
They, however, rejected claims that the health workers had suffered unlawful pay discrimination because their union -Kenya County Government Workers’ Union- did not produce sufficient evidence.
The decision overturns a 2020 Employment and Labour Relations Court judgment that dismissed the workers’ constitutional petition and described it as “was a complete waste of judicial resources.”
Instead, the Court of Appeal found that the lower court failed to examine the true nature of the employment relationship and overlooked constitutional labour rights guaranteed under Article 41 of the Constitution and protections provided by Section 37 of the Employment Act.
The dispute was filed in 2019 by the Kenya County Government Workers’ Union on behalf of health workers employed in Embu’s public health facilities.
The union said many members had initially been engaged by hospital management boards before the 2010 Constitution transferred health functions to county governments.
After devolution, Embu County inherited the workers but continued engaging them through contracts lasting three months, six months or one year despite many performing permanent duties continuously for years. Some had worked for more than two decades.
The union argued that workers remained in employment long after their contracts expired without clarity about their status.
It said they lacked pension, annual leave and other benefits enjoyed by permanent staff and lived under constant uncertainty because their contracts depended on periodic renewal.
The union also complained that workers recruited later through the national government’s Economic Stimulus Programme were absorbed into permanent and pensionable employment while the older workers remained on temporary terms.
In defence, Embu County denied employing the workers as casual labourers. It argued they served under valid fixed-term contracts that complied with the Employment Act and were regularly renewed.
The county maintained that courts could not rewrite employment contracts freely entered into by both parties or convert them into permanent appointments. It also denied discriminating against the workers and said all county employees served on renewable contracts based on performance.
The appellate judges rejected that argument after reviewing the evidence. They found some appointment letters described employees as casual workers even though they earned monthly salaries and performed continuous work that could not reasonably be regarded as casual employment.
Others served under successive fixed-term contracts that were renewed repeatedly for years while they continued performing permanent functions.
“The union’s members were not casual employees, nor were they on fixed contract as assumed by the respondent, who engaged them for a long period of time and extended the contracts at its whim. The long and continuous service entitled the appellant’s members to statutory protection,” the judges said.
They added that the Employment Act “was precisely put in place to protect employees who often have no voice against the ‘big brother’ from unfair and poor labour practices.”
“The employment relationship between the union’s members and respondents (Embu County Government and the county public service board) is not casual/temporary or based on any contract of service but is permanent and pensionable,” stated the judges.
The court also criticised the county government for retaining workers in prolonged insecure employment despite their years of service.
“The respondent’s action cannot but be condemned in the strongest terms, particularly because the appellant’s members were in the employ of the government, which is expected to protect its citizens and to work within the law,” the judges said.
The judges nevertheless declined to uphold allegations of unequal pay. They ruled that although the union alleged workers performing similar duties received lower salaries and fewer benefits than permanent colleagues, it failed to present documentary evidence proving discriminatory treatment.
The judgment could attract attention from employers across the public and private sectors because it reinforces that repeated renewal of short-term contracts cannot be used to defeat statutory employment protections where workers continuously perform permanent work.
For county governments and other public institutions, regularisation of such employees carries financial consequences because permanent and pensionable terms attract retirement benefits and other employment entitlements.
The court ordered Embu County to immediately regularise the workers’ terms.
