Employers in Kenya routinely use fixed-term contracts to manage workforce flexibility. However, two recent decisions have sharpened the legal risk of retaining employees on successive short-term arrangements where the underlying work is permanent in nature. This article examines the Court of Appeal’s judgment in Kenya County Government Workers’ Union v Embu County Government and Another, Civil Appeal 178 of 2020 [2026] KECA 1481 (KLR) (the Kenya County Government Workers’ Union Case) delivered on 24 July 2026, read alongside the earlier Employment and Labour Relations Court (ELRC) decision in Gichuki v Kenya Power & Lighting Company PLC (Petition E021 of 2024) [2025] KEELRC 2578 (KLR) (the Gichuki Case), and sets out the practical implications for employers across both the public and private sectors.
At a glance
- The Court of Appeal clarifies the limits of successive short-term contracts in Kenya
- Kenya County Government Workers’ Union v Embu County Government and Another, Civil Appeal 178 of 2020 [2026] KECA 1481 (KLR), judgment delivered on 24 July 2026.
- The decision does not outlaw fixed-term employment and does not establish an automatic conversion rule after a specified number of renewals.
- It does, however, draw a clear line between a genuinely temporary engagement and a succession of short contracts used to sustain work that is permanent in substance.
Successive short-term contracts have come under judicial scrutiny, with both the Employment and Labour Relations Court and the Court of Appeal emphasising that the true nature of an employment relationship is determined by how it operates in practice, not simply by the label placed on the contract. In the Gichuki Case, the ELRC held that repeated three-month temporary contracts over a period of eight years and two months, for work that was continuous and integral to the employer’s operations, violated the employee’s right to fair labour practices under Article 41 of the Constitution. The court awarded KES 450,000 in general damages for that violation. The Court of Appeal has since reinforced the same substance-over-form approach in the Kenya County Government Workers’ Union Case, where it considered health-sector employees who had been engaged through successive three-month, six-month and one-year arrangements, in some cases for approximately 20 years, while continuing to perform permanent and essential public-health duties.
The decisions do not outlaw fixed-term employment and do not establish an automatic conversion rule after a specified number of renewals. They do, however, draw a clear line between a genuinely temporary engagement and a succession of short contracts used to sustain work that is permanent in substance. In the Gichuki Case, the consequence was a constitutional declaration and damages; in the Court of Appeal decision, the remedy went further, with the respondents directed to regularise the affected employees’ terms and conditions of service.
Background
The Kenya County Government Workers’ Union (Union) brought proceedings on behalf of employees whose obligations had passed into the county government structure. The employees were retained on short-duration arrangements but continued performing duties integral to public health services over extended periods. The Union alleged discrimination, unequal pay and unfair labour practices, and sought conversion to permanent and pensionable terms.
The court adopted a substance-over-form approach. It considered the employees’ continuity and length of service, repeated renewals, the nature of their duties, whether the work was permanent and integral to ordinary operations, and the overall effect of the arrangements on employment status. A contractual expiry date was relevant but not conclusive.
The earlier ELRC decision in the Gichuki Case illustrates the same risk in a private employment context. Although the court found that the employee’s summary dismissal was procedurally and substantively fair, it separately held that maintaining her on rolling three-month contracts for more than eight years, while she performed core meter-reading functions, amounted to impermissible casualisation and breached Article 41. This distinction is important: an employer may have a valid reason to end employment yet still face exposure for the manner in which the employment relationship was structured over time.
The law looks beyond the expiry date
The court’s reasoning is anchored in the Constitution and the Employment Act. Article 41 of the Constitution guarantees fair labour practices, while Article 27 protects equality and freedom from discrimination. Section 5 of the Employment Act requires equality of opportunity and prohibits direct and indirect discrimination in employment terms. Sections 2 and 37 distinguish casual employment and permit statutory conversion where the nature or duration of the work no longer fits a casual arrangement. Section 10 further requires written particulars, including the form and duration of employment.
In the Gichuki Case, the ELRC also drew attention to the policy concern behind section 37 where employers should not use short-term contracting patterns to deprive employees performing continuing work of job security and benefits associated with more secure employment. These provisions require employers to ensure that contractual form reflects operational reality.
Risk grows where temporary work becomes permanent in practice
There is no fixed numerical threshold at which every renewed contract becomes permanent. The enquiry is fact-specific and focuses on the overall relationship. Risk increases where an employee serves continuously for a prolonged period, receives repeated short renewals without meaningful review, performs the same ordinary duties from one contract to the next, or occupies a role integral to the employer’s permanent operations.
Other warning signs include the absence of an identifiable project or temporary event linked to expiry, integration into the employer’s permanent establishment, substantially similar work being performed by permanent employees, regular monthly pay and ordinary working hours, artificial breaks inserted between contracts, continued work after expiry with the employer’s knowledge, and a lack of contemporaneous records showing why the position remained temporary.
Casual and fixed-term employment must also be distinguished. A casual employee is defined by the statutory nature of the engagement and daily payment arrangement. A fixed-term employee is engaged for a specified period. Describing a long-serving employee who is paid monthly as “casual”, or inserting an expiry date into a contract, will not necessarily determine the relationship in law.
Fixed-term contracts remain a lawful business tool
Employers may continue using fixed-term contracts for genuinely temporary needs, including defined projects, seasonal operations, temporary replacements, time-bound donor-funded programmes, transitional assignments and specific contracts or temporary workload increases. The duration should have a rational connection to a demonstrable business need and, where appropriate, the contract should identify that reason and the event expected to end the need.
Practical test:
Employers should ask not only whether the contract has an expiry date, but whether the employment need is genuinely temporary and what objective event will bring it to an end.
What the ruling means for employers
Renewals now demand active scrutiny
A fixed-term renewal should not be treated as a routine administrative exercise. Before approving another term, an employer should consider whether the temporary need still exists, whether the role or funding has changed, whether the duties have become permanent in substance, and whether the reason for renewal can be supported by records created at the time. The Gichuki Case demonstrates that repeated short renewals may attract liability even before a court orders regularisation, particularly where the employee has been retained for years in a role that is integral to the employer’s ordinary business.
Differences in treatment must be defensible
Where fixed-term employees perform work comparable to that of permanent employees but receive less favourable terms, the employer should be able to show a lawful and objective basis for the distinction. Job descriptions, grading structures, approved establishments, funding documents, payroll records and written policies may become central evidence in any dispute.
Informal continuity creates legal uncertainty
Artificial gaps are unlikely to defeat continuity where an employee immediately returns to the same work. Similarly, permitting work to continue after expiry, while services and wages carry on, may support the existence of a continuing employment relationship. Contract expiry should prompt a documented decision to renew, regularise, lawfully terminate or discontinue the engagement.
Public bodies face an additional implementation challenge
County governments and other public institutions must reconcile fair-labour obligations with approved establishments, schemes of service, grades, budgets and statutory approvals. A proper regularisation process should address employment category, remuneration, leave, pension eligibility, statutory contributions, continuity of service and all necessary approvals. Pension consequences must be assessed against the applicable scheme rules rather than assumed.
Reviewing existing workforce arrangements
Employers should now audit their casual, temporary and fixed-term workforce as a single compliance exercise. The review should trace commencement dates, renewal history, actual duties, funding and operational reasons for each engagement. Attention should be given to long-serving employees, roles embedded in ordinary operations, work continuing after expiry and material differences between temporary and permanent employees performing comparable functions.
High-risk arrangements should be reviewed jointly by legal and human resources teams. Employers should verify whether the asserted temporary reason remains genuine, identify roles that may require regularisation, evaluate possible pay, benefit, equality and pension consequences, and correct any expired or inaccurate documentation. Contract templates and internal policies should also explain when fixed-term engagement is appropriate, who may approve renewals and what evidence must be retained.
Key takeaway
A fixed-term contract should be temporary because the underlying employment need is genuinely temporary, not merely because the document contains an expiry date. Employers should treat every renewal as a decision point, supported by a current assessment of whether the role remains genuinely temporary and documented with contemporaneous records that explain the business reason for the continued arrangement. Where long service, repeated renewals and the nature of the duties point to a permanent relationship in substance, the prudent course is to regularise rather than renew. Proactive compliance, through workforce audits, updated templates and clear internal policies on when fixed-term engagement is appropriate, is now the most effective way to manage the legal, financial and reputational risk that these decisions have brought into sharper focus.
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Read the original publication at Cliffe Dekker Hofmeyr
