The Contract Is Ending — So Why Send the Employee on Leave? | StratWise Africa

An employee’s fixed-term contract is about to expire. He has 15 days of unused annual leave. The employer decides not to renew the contract — but instead sends the employee on the 15 days’ leave. When the employee returns, he is told: “Your contract ended while you were away.”

Is that good HR practice?

The answer is: not necessarily — and it can create an avoidable employment dispute.

A Fixed-Term Contract Can End Without Renewal

Under Kenyan employment law, a genuine fixed-term contract normally comes to an end on the date stated in the contract. An employer is generally not required to renew it simply because the employee performed well or because the contract has been renewed before. Courts have repeatedly held that a fixed-term contract ordinarily ends by effluxion of time and does not automatically create a right to another contract.

So an employer may lawfully decide: “We will not renew the contract when it expires.” That, by itself, is not necessarily unfair termination.

But how the employer handles the final days of employment matters.

The Leave Question

Consider this scenario: An employee’s one-year contract expires on 12 September. He has 15 days of accrued annual leave. Instead of formally informing him that the contract won’t be renewed and settling the final entitlements, the employer simply says: ” Take your 15 days’ leave.”

The employee goes home. The contract quietly expires while he’s away. He returns to be told: “Your contract ended on 12 September. There’s nothing to renew.”

This may technically rely on the expiry date — but from an HR standpoint, it’s poor practice. The employer already knew the contract was ending. The employee should never be left thinking his leave signals continued employment beyond the contract’s actual end.

The Four-Contract Problem

The situation gets more sensitive when an employee has worked four consecutive one-year contracts, each renewed — until now.

Does four years of renewals create an automatic right to another contract? No. Kenyan courts are clear that repeated fixed-term contracts don’t, by themselves, create a legal right to renewal.

However, repeated renewals can become relevant where the employer’s conduct, promises, or continued employment beyond expiry create a legitimate expectation of renewal. An employer who has renewed someone year after year shouldn’t treat the final non-renewal casually.

Good HR Is Not Just About What’s Legal

The real question isn’t just “Can we refuse to renew?” It’s:

• Have we communicated the non-renewal clearly?
• Has accrued leave been properly accounted for?
• Are we creating confusion by sending the employee on leave right before expiry?
• Have we honoured all contractual and statutory entitlements?
• Have our past actions created a reasonable expectation of continued employment?
• Is there a clear record of when employment actually ends?

What Should the Employer Do?

Where a fixed-term contract won’t be renewed, communicate the decision clearly before the expiry date. Then:

1. Confirm the contractual expiry date.
2. Communicate the non-renewal professionally.
3. Review the employee’s accrued leave.
4. Decide whether leave can appropriately be taken before expiry.
5. If leave remains unused, account for it in the final dues.
6. Prepare final documentation and a certificate of service where applicable.
7. Keep proper records of the whole process.

The goal: no surprises, no ambiguity, no unnecessary dispute.

If the Employee Has Already Been Sent on Leave

Before simply announcing “your contract has expired,” HR should review the contract, leave records, prior communication, and the history of renewals. Repeated renewals don’t automatically mean the employer must renew again — but the circumstances deserve careful review before the final call.

The HR Lesson

Contract expiry should be treated as an employment transition, not just a date on paper. An employer may have every right not to renew a fixed-term contract — but good HR practice demands clarity, fairness, transparency, and proper attention to accrued entitlements. After four years of continuous renewal, communication and documentation matter even more.

The Bottom Line

• Non-renewal is not automatically unfair.
• Repeated renewal does not automatically guarantee another contract.
• But sending an employee on leave right before a known expiry — and only informing them afterward that employment had already ended — is not the best way to manage a separation.

Good HR isn’t just about avoiding legal liability. It’s about doing the right thing, documenting it properly, and leaving both employer and employee clear about where they stand.

StratWise Africa Practical HR. Sound Management. Better Workplaces.

This article is for general HR information and should not be treated as legal advice. Assess specific employment disputes based on the employee’s contract, circumstances, and applicable Kenyan law.