Termination and Redundancy in Kenya: The Rules

In Kenya, an employer can end employment lawfully only with a valid and fair reason - related to the employee's conduct, capacity or compatibility, or the employer's operational requirements - following a fair procedure, and with the notice and final pay the law requires. Redundancy has its own process and severance pay of at least 15 days' pay for every completed year of service.

The rules below come from the Employment Act 2007, with the section for each. Courts apply them strictly, so follow every step and keep records.

Notice periods (section 35)

Unless the contract gives longer notice:

If the employee cannot understand the written notice, the employer must explain it orally in a language they understand.

Termination for misconduct, performance or incapacity (sections 41, 43 and 45)

A termination is unfair unless the employer can prove that the reason was valid, that it was a fair reason related to the employee's conduct, capacity or compatibility, or to the employer's operational requirements, and that the termination followed a fair procedure.

The procedure the Act requires (section 41):

1. Explain the reason to the employee - in a language they understand - before deciding to terminate on grounds of misconduct, poor performance or physical incapacity.
2. Allow a companion: the employee may have another employee or a shop-floor union representative of their choice present.
3. Hear and consider the employee's representations, and those of their companion, before deciding.
4. Give written notice of the decision and the reason, and pay what is due.

In practice this means a written invitation to a disciplinary hearing setting out the allegations, time to prepare, a hearing, a written decision, and a record of each step.

Summary dismissal (section 44)

Summary dismissal - ending employment without notice - is allowed only where the employee has fundamentally breached their obligations, for example gross misconduct such as theft or serious negligence. Even then, the employer must still hear the employee first under section 41.

Probationary employees

The Act limits probation to six months, extendable by up to six more with the employee's agreement, and says the section 41 procedure does not apply to probationary contracts. Kenyan courts have since held that probationers are still entitled to be told the reason and given a fair hearing, so treat probationers the same way.

Length of service

Section 45(3) once limited unfair termination claims to employees with thirteen months of continuous service. Kenyan courts have declared that provision unconstitutional, so assume every employee can bring a claim.

Redundancy (section 40)

Redundancy - ending jobs for operational reasons, such as restructuring or closure - is lawful only if the employer meets all of these conditions:

1. Notice of the intended redundancy, at least one month before the termination date, stating the reasons and extent:
   • to the trade union and the local labour officer, where the employee is a union member;
   • to the employee personally in writing and the labour officer, where they are not.
2. Fair selection: in choosing who is redundant, give due regard to seniority and to the skill, ability and reliability of each employee in the affected group.
3. No union-based disadvantage where a collective agreement sets redundancy benefits.
4. Leave paid in cash for any leave due.
5. One month's notice or one month's wages in lieu.
6. Severance pay of at least 15 days' pay for each completed year of service.

Statutory deductions such as PAYE apply to termination payments in the usual way.

Service pay (section 35(5))

Service pay is a separate entitlement for long service on termination with notice. It does not apply where the employee is a member of NSSF, a registered pension or provident fund, a collective-agreement gratuity scheme, or a more favourable employer scheme. Because almost every formal employee contributes to NSSF, statutory service pay rarely applies - but redundancy severance always does.

What to pay and give on any termination

• Salary up to the last day worked.
• Notice pay if you do not let the employee work the notice period.
• Untaken annual leave.
• Severance pay in a redundancy.
• A certificate of service (section 51) for any employee who worked four consecutive weeks or more, stating the employer, the employee, the dates of employment and the nature of the work.

If a termination is challenged (section 49)

Employees can complain to a labour officer or file a claim in the Employment and Labour Relations Court. If a termination is found unjustified, remedies include the wages for the notice period, wages due for work done, and compensation of up to twelve months' gross wages - and the court can order reinstatement. Payments are subject to statutory deductions.

How Cazini helps

Cazini keeps each employee's contract, documents, leave balance and payroll history on one record, so final pay - leave due, notice and severance - is calculated from accurate data, and your records are complete if a termination is ever reviewed. See employee management and payroll.

Sources

• Employment Act, 2007 (Ministry of Labour copy, PDF)
• CMS: Court of Appeal declares section 45(3) of the Employment Act unconstitutional
• Kenya Law: Momanyi v Attorney General & another (2012)
• Nation: court bars employers from sacking staff on probation without explanation

Frequently asked questions

How much is redundancy pay in Kenya?+

Severance pay of not less than fifteen days' pay for each completed year of service, plus at least one month's notice or one month's wages in lieu, and payment in cash for any leave due. A collective agreement or contract may give more.

What is the notice period in Kenya?+

For employees paid monthly, at least 28 days' written notice, unless the contract gives longer. Employees paid daily can be given no notice beyond the day, and those paid at intervals of less than a month get notice of one pay period. Either side can instead pay wages in lieu of notice.

Can I dismiss an employee without a hearing in Kenya?+

No. Before terminating for misconduct, poor performance or physical incapacity, the employer must explain the reason to the employee in a language they understand and hear their representations, with a colleague or union representative present if the employee chooses.

What happens if a termination is found unfair?+

A labour officer or the Employment and Labour Relations Court can order remedies including notice pay, and compensation of up to twelve months' gross wages, as well as reinstatement in some cases.

Do probationary employees have protection against termination?+

Yes, in practice. The Employment Act limits probation to twelve months in total, and Kenyan courts have held that employers must still explain the reason and give probationers a fair hearing before terminating them.