The Labour Court has ruled in favour of the United Nations Sacco (UN Sacco) after the financial institution declined to renew the contract of its former CEO, Nebart Avutswa. The ruling, handed down by the Employment and Labour Relations Court, upholds the Sacco’s right to discretion in fixed-term employment contracts and dismisses claims of unfair dismissal.
Fixed-Term Contracts and Employer Discretion
Avutswa, who led the Sacco until November 2024, had filed a lawsuit claiming unfair dismissal, defamation, and violations of constitutional rights. His case hinged on the belief that his high performance, as evidenced by a self-evaluation score of 83%, gave him a “legitimate expectation” that his contract would be extended. He also pointed to the growth the organization experienced under his leadership as further justification for the renewal.
However, the court found that the nature of Avutswa’s employment was governed by a fixed-term contract, which expired naturally, and that employers are not obligated to extend such contracts unless a specific promise was made, something Avutswa failed to demonstrate. The court noted that while Avutswa had rated himself highly, the Sacco’s Board was not compelled to accept his self-assessment and had used a “balanced scorecard” framework in evaluating his performance. The decision to part ways was deemed procedurally correct.
Defamation Claims Rejected
Avutswa also accused the Sacco of defamation after the organization reported his departure to the regulator, the Sacco Societies Regulatory Authority (SASRA). The court dismissed this claim, stating that the reporting was a statutory requirement rather than an act of malice.
This ruling sets a significant precedent for corporate Kenya, clarifying that executives who perform satisfactorily are not guaranteed a contract renewal. It emphasizes that the renewal of a fixed-term contract is ultimately at the employer’s discretion, even when performance is deemed strong.
For UN Sacco, one of the wealthiest and most influential financial institutions in the region, the decision marks a clean break as it looks to move forward with its strategic goals. For executives, however, it serves as a sobering reminder that in the corporate world, the only sure thing is the expiration date on the employment contract.
Avutswa, who had sought millions in compensation for what he deemed an unfair departure, will walk away with nothing, aside from court costs, closing a chapter in his leadership of the Sacco.
