Probationary employment in Kenya raises important questions about the duration of probation, employee consent to extensions and the circumstances in which an employer may terminate a probationary contract. Imagine you engage a promising banker on a six-month probation. The six months pass without a word. Some weeks later, you send a letter extending probation by a further three months, effective from an earlier date. The employee signs it without protest. Two months on, you let him go for underperformance, paying well above the statutory minimum. The employment court declares the extension illegal, holds that he was a confirmed employee all along, and awards eight months’ compensation. Does the late extension collapse and with it your defence?
On 30th October 2026, the Court of Appeal at Mombasa answered that question in ABSA Bank (K) PLC v Lennox Hodari Mwilo (Civil Appeal E152 of 2023) [2026] KECA 2398 (KLR). The answer was no. The Court set aside the ELRC judgment in its entirety, wiping out an award of KSh 1,740,750. In doing so, it held that a signature on an extension letter can do what the calendar cannot: keep an employee on probation, and keep an employer on the right side of section 42 of the Employment Act.
The Story Behind the Dispute
Absa Bank (K) PLC, formerly Barclays Bank of Kenya, engaged Mr Lennox Hodari Mwilo as an SME Banker under an offer dated 22nd May 2019, with employment commencing on 12th June 2019. His Term Sheet fixed a six-month probationary period ending on 12th December 2019. Clause 23.1 of the Employment Agreement made confirmation subject to a satisfactory probationary period and provided that probation “may be extended at Barclay’s discretion, in compliance with local law.”
No confirmation followed. By a letter dated 27th January 2020, the bank extended probation by three months, effective 9th January 2020 and ending 8th April 2020. Mr Mwilo acknowledged and signed it. A month later, the bank’s Head of Employment Relations wrote to him flagging an ‘Improvement Needed’ rating for 2019. On 27th March 2020, the bank terminated his employment for underperformance, paying one month’s salary in lieu of notice and his accrued leave.
Mr Mwilo sued for unfair termination and unpaid house allowance. In the ELRC, Nzei, J. held that the extension letter was of no effect because it extended a lapsed probation in retrospect, rejected the bank’s plea of a prior oral agreement because a written contract cannot be varied orally, and found that he was no longer on probation. Finding also that the bank had denied him a hearing under section 41, she awarded eight months’ compensation (KSh 1,518,000) and house allowance (KSh 222,750). The bank appealed.
The Court of Appeal’s Reasoning in Three Parts
Part 1: The Signature Is the Agreement
Section 42(2) of the Employment Act limits a probationary period to six months, extendable by a further period of not more than six months with the agreement of the employee. Section 2 caps a probationary contract at twelve months in all. The provision says nothing about the form that agreement must take. The Court found it in the one place the record showed it clearly: Mr Mwilo had acknowledged and signed the extension letter, and never alleged coercion, fraud or intimidation in doing so.
The Court noted: “It is a cardinal principle that the function of a court is to enforce and give effect to the intention of the parties as expressed in the agreement.” The ELRC’s finding that the extension was arbitrary and illegal was therefore erroneous, and Mr Mwilo remained on probation for the whole of the extended period.
Part 2: Confirmation by Operation of Law Did Not Apply
The ELRC had treated the lapse of the initial period, without immediate renewal, as converting Mr Mwilo to permanent terms. Two authorities pointed the other way: Olaleye v Polaris Bank (Nigeria’s National Industrial Court), which treats probation running past its agreed period without formal extension as confirmed employment, and the Court’s own decision in Technical University of Kenya v Odeck [2024] KECA 525 (KLR), which estops an employer that fails to communicate the status of employment before probation ends. Neither saved the employee. The Court acknowledged a lapse of 39 days, but stressed that the bank had communicated the extension and that Mr Mwilo had signed it.
Part 3: Termination Under Section 42(4)
The Court then tested the dismissal against section 42(4), which allows either party to end a probationary contract on not less than seven days’ notice, or on payment by the employer of seven days’ wages in lieu. It found that the bank had done more than the statute demands:
- Documented Performance Trend: The scorecard recorded ‘needs improvement’ in January 2020 and ‘underperformance’ in February 2020.
- Prior Written Feedback: The letter of 25th February 2020 flagged the ‘Improvement Needed’ rating and urged better performance.
- Reasons Given: Underperformance was stated as the reason for termination.
- Generous Payment: One month’s salary in lieu against a statutory seven days’ wages, with accrued leave paid.
Mr Mwilo’s assertion that he was an excellent performer fell to the bank’s documents, because he produced no parameters of his own against which to test the scorecard. The Court held that he was fairly treated and could not be heard to say that he was unfairly or unlawfully terminated. The section 41 hearing requirement that had underpinned the ELRC’s finding of procedural unfairness did not feature in its analysis. On costs, the Court ordered each party to bear its own, in the ELRC and on appeal, noting how briefly Mr Mwilo had worked.
The Limits of the Decision
Three cautions follow. First, the Court did not declare late extensions safe. It decided on a record containing a signed letter and no allegation of coercion, fraud or intimidation, and an unsigned or disputed extension would present a harder case for the employer. Second, communication rescued the bank, so silence at expiry remains dangerous. Third, the Court assessed the termination under section 42(4) alone and did not engage the constitutional challenges that have been mounted against section 42(1), the provision that disapplies section 41 to probationary terminations.
PRACTICAL IMPLICATIONS
- Extend before probation expires, not after. The bank survived a lapse of 39 days on the strength of a signed letter. Do not build a process on that margin; diarise every probation end date.
- Make the employee’s agreement visible. Section 42(2) requires it, and the twelve-month ceiling is absolute. A countersigned letter stating the new end date was the decisive fact.
- Communicate status before the period ends. Odeck estops the silent employer, and the bank’s communication carried the day.
- Paper the performance case as you go. Scorecards and written feedback defeated the employee’s bare assertion of excellence.
- Give reasons and pay above the minimum on exit. Section 42(4) demands seven days’ notice or wages in lieu; reasons, a month’s pay and cleared leave weighed heavily on fairness.
- Employees should read before signing. Absent coercion, fraud or intimidation, the signature binds. Dispute the terms at the point of signing, and plead any vitiating circumstances.
- Do not treat section 42(1) as a free pass. While challenges to that provision persist, giving the employee a chance to respond remains prudent.
- Audit live probation files and pending claims. Regularise any extension that is late or unsigned, and reassess pending disputes against this decision.
ABSA Bank v Mwilo will be remembered for the KSh 1.74 million it set aside. Its lasting value is the discipline it imposes: probation is a short, signed and documented bargain, and the party who keeps the paperwork keeps the outcome.
This article is provided free of charge for information purposes only; it does not constitute legal advice and should not be relied on as such. No responsibility for the accuracy and/or correctness of the information and commentary as set out in the article should be held without seeking specific legal advice on the subject matter. If you have any query regarding the same, please do not hesitate to contact the Litigation Department at Wamae & Allen LLP: Litigation@wamaeallen.com.
About the author
Caxstone specializes in civil, employment and labour disputes, constitutional law, family law and succession, and environment and land matters. He has amassed a wealth of knowledge and experience in litigation which is evident in the successes obtained for clients. He is an active member of the Employment and Labour Relations Court Bar-Bench committee.
Denis Mutugi specializes in Commercial Litigation and Alternative Dispute Resolution.
Denis graduated with a Bachelor of Laws, LLB (Hons) from The University of Nairobi in 2021 and was admitted to the Roll of Advocates of the High Court of Kenya in the year 2023.
Denis has amassed a considerable wealth of experience in conducting legal research on various complex legal matters touching on Commercial, Insurance, Employment and Insolvency law and bankruptcy.
Frankline M. Otieno is a dispute resolution associate, recommended professional and committed to offering sustainable client-centred solutions to legal issues.Frankline is astute in commercial litigation, securities law, banking law, intellectual property litigation, public procurement, land law litigation, Judicial Review and Administrative law litigation, sports law, tax litigation, administrative law, consumer protection law, competition law and constitutional litigation.
