A recent decision by the Court of Appeal in Asimwe Mukoyogo v. Alistair James Company Limited [2026] TZCA 521 provides critical guidance on the distinction between the expiry of a fixed-term contract and unfair termination, particularly regarding the doctrine of reasonable expectation of renewal.
Case Background
- The appellant was employed by the respondent on successive one-year fixed-term contracts from August 11, 2016, eventually being promoted to Senior Finance Manager.
- Her last contract was set to expire on December 31, 2020.
- While on maternity leave, the respondent informed her that her contract would not be renewed.
- The appellant filed a complaint before the Commission for Mediation and Arbitration (CMA), claiming unfair termination and discrimination.
- The CMA ruled in her favour, finding the termination both substantively and procedurally unfair, and awarded her TZS 87,257,854 in compensation.
- The respondent successfully challenged the award before the High Court (Labour Division) via revision, which quashed the CMA decision, Aggrieved, the appellant appealed to the Court of Appeal.
Issues
The Court of Appeal was called upon to determine the following key issues:
- Whether the non-renewal of a fixed-term contract constitutes “termination of employment” under Tanzanian labour law.
- Whether the appellant had a reasonable expectation that her fixed-term contract would be renewed.
The Court of Appeal held that:
“A fixed-term contract terminates automatically upon the expiration of the agreed period, unless the contract provides otherwise. The failure to renew such a contract can only be considered unfair termination if the employee demonstrates an objective basis for a reasonable expectation of renewal, such as prior renewals or an express undertaking from the employer.”
The Court heavily relied on the Employment and Labour Relations Act (ELRA), Cap. 366, specifically Section 37(a)(iii), which explicitly includes “a failure to renew a fixed term contract on the same or similar terms if there was a reasonable expectation of renewal” within the definition of “termination of employment.”
This provision was read together with Rules 3(1)(c) and 4 of the Code of Good Practice Rules, 2007. The Court emphasized that Rule 4(2) confirms the automatic expiry of a fixed-term contract, while Rule 4(4) and (5) create the exception for unfair termination based on a reasonable expectation of renewal, placing the burden of proof squarely on the employee.
The Court rejected the appellant’s arguments for the following reasons:
- A letter from the respondent to a bank indicating readiness to guarantee the appellant’s loan for 2021 was not evidence of a contract renewal. The employment contract and the staff loan arrangement were separate matters.
- The fact that her maternity leave extended beyond the contract period was a private matter and did not create an expectation of contract renewal.
- The existence of previous contract renewals alone is insufficient. Citing Ibrahim s/o Mgunga and Three Others v. African Muslim Agency [2022] TZCA 345, the Court held that it is not reasonable to expect another renewal based solely on one or two prior renewals.
- The employment contract (Exhibit P6) contained no clause providing for renewal.
The Court ultimately held that the appellant failed to adduce any objective evidence of a reasonable expectation of renewal. As there was no renewal, there was no breach of contract. The appeal was dismissed in its entirety.
Key Takeaways
- A fixed-term contract ends automatically on its expiry date. To claim unfair termination based on non-renewal, you must provide objective evidence of a reasonable expectation of renewal (e.g., a written promise from the employer, a pattern of automatic renewals combined with other assurances).
- While fixed-term contracts generally expire without recourse, you must be cautious. If your conduct (e.g., repeatedly renewing a contract over many years, making verbal promises of permanency, or linking employment to an event like a loan guarantee) creates a reasonable expectation of renewal, a decision not to renew could be deemed an unfair termination.
- The burden is on the employee to prove the “reasonable expectation.” The mere hope or assumption of renewal is not sufficient. The expectation must have an objective, demonstrable basis.
