By Godfrey Kenneth Beni:
When a fixed-term contract expires by “effluxion of time” — meaning it simply runs out — the law does not consider that a dismissal. But there is a catch. If the contract fills a permanent role, the courts may treat it as indefinite. The distinction can cost employers millions of Kwacha or leave workers with nothing.
Mr. Banda, a project officer on a two-year donor-funded contract, was not renewed when the project was completed. He filed an unfair dismissal complaint, claiming a legitimate expectation of renewal.
On November 28, 2025, the Industrial Relations Court ruled that non-renewal of a fixed-term contract with a discretionary renewal clause does not constitute unjust dismissal. His contract merely expired, and there was no dismissal.
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However, in the Electricity Supply Corporation of Malawi (Escom) case, meter readers who worked for six years on consecutive fixed-term contracts won: the High Court held that their contracts had become indefinite under Section 28(3). One person lost. The other won. The distinction was in the law.
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Section 28(2) states that fixed-term contracts automatically terminate on their expiry date— termination by “effluxion of time”. It is not a dismissal.
But Section 28(3) is the trap: if a fixed-term contract fills a permanent, core role, the law treats it as indefinite. Employers cannot avoid severance, notice and unfair dismissal protections simply by labeling a permanent job “fixed-term”.
In Escom v. Kaphamtengo, meter readers worked for six years on successive fixed-term contracts. Escom argued that they were independent contractors.
The Industrial Relations Court disagreed—they were employees, economically dependent and under Escom’s control.
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Crucially, their six years of continuous service transformed their fixed-term contracts into indefinite contracts under Section 28(3).
Escom’s appeal to the High Court was dismissed.
In a November 2025 ruling, the court clarified that termination by effluxion of time is not dismissal. Non-renewal of a fixed-term contract with a discretionary renewal clause and project-linked funding is not unfair dismissal. The court distinguished core functions (likely indefinite under Section 28(3)) from support functions (project-linked, likely to expire).
The distinction is critical. Core roles— permanent accountants, managers and engineers on repeated fixed-term contracts—are likely deemed indefinite under Section 28(3). Project-linked, seasonal or temporary roles—donor-funded officers, seasonal workers and maternity cover—expire without triggering unfair dismissal claims.
The International Labour Organisation (ILO) has repeatedly raised concerns about Malawi’s fixed-term contracts. In 2014, it noted that Section 28(3) protects against abusive recourse to fixed-term contracts— but requested court decisions interpreting it. The concern is that employers may abuse fixed-term contracts by repeatedly renewing them. Malawi has not amended the law. The ILO repeated its request in 2021.
Employers: Do not use fixed-term contracts for core, permanent roles — repeated renewals may trigger Section 28(3) conversion, as in the Escom case. Ensure contracts genuinely expire. State clearly if renewal is discretionary—a “discretionary renewal” clause protects you. Distinguish core from project-based roles. Do not use fixed-term contracts to avoid disciplinary procedures. Pay terminal benefits promptly, including accrued leave— it cannot be forfeited.
Employees: Know your contract. If it has a clear expiry and no legitimate expectation of renewal, you have no claim. But if you have been on fixed-term contracts for years in a core role, you may be deemed indefinite under Section 28(3) — like the Escom meter readers. Seek legal advice if not renewed. Document everything. You have three months to file a complaint under Section 62.
To Parliament: Amend the Act to limit fixed-term contract duration and renewals. To the Ministry: Publish guidance on fixed-term contracts. To employers: Audit contracts — convert core roles to indefinite employment. To Employees: Know your rights — repeated renewals may entitle you to indefinite status. To the Courts: Continue to apply Section 28(3) robustly, protecting workers who are, in substance, permanent employees.
Mr. Banda lost—his contract was genuinely project-linked. The Escom meter readers won—their roles were core and repeatedly renewed. The difference is Section 28(3). Know your contract. Know your role. A genuine fixed-term contract expires. A disguised permanent role may become indefinite. Know your rights.
*The author is a Human Resource Practitioner
