Wamae & Allen Advocates

1

GENERAL PRINCIPLES

Forums For Adjudicating Employment Disputes

There are various forms of adjudicating disputes in Kenya. They can be classified into court based and out of court employment adjudicating forums.

  • Court based Adjudicating Forums (Employment and Labour Relations Court):
    • The Employment and Labour Relations Court is established under Article 162 of the Constitution of Kenya and the Employment and Labour Relations Court Act. It is a specialised court with the status of the High Court that has the power to hear employment disputes and appeals from the Magistrates Court. The Magistrates Court can hear employment disputes where the monthly gross pay does not exceed Kshs. 80,000.00.
    • Parties aggrieved by the decision of this Employment and Labour Relations Court are at liberty to appeal to the Court of Appeal and the Supreme Court.
  • Out of Court Adjudicating Forums (Alternative Dispute Resolution Mechanisms): Out of Court adjudicating forums are the alternative dispute resolution mechanisms such as conciliation, mediation, and traditional dispute mechanisms.
  • The Constitution of Kenya under Article 159 calls upon courts to promote alternative forms of dispute resolutions. The Employment and Labour Relations Court Act states that the Employment Court may adopt and implement alternative dispute resolution mechanisms.
  • The Cabinet Secretary’s in Charge of Labour Appointed Conciliator;
  • Under the Labour Relations Act, a trade dispute may be reported to the Cabinet Secretary by or on behalf of a trade union, an employer, or an employee. Under the Labour Relations Act, the Cabinet Secretary appoints a Conciliator or Labour Officer to attempt to solve a dispute failing which, the matter is referred to the Employment and Labour Relations Court.

The Main Sources Of Employment Law

The main sources of law for employment and labour relation matters in Kenya include statute and the employment contracts. Some of the statutes governing employment matters include:

  • The Constitution of Kenya, 2010.
  • Employment Act, 2007.
  • Employment and Labour Relations Court Act, 2011.
  • Employment and Labour Relations (Procedure) Rules, 2016.
  • Labour Institutions Act, 2007.
  • Labour Relations Act, 2007.
  • Occupational Safety and Health Act, 2007.
  • Work Injuries Benefits Act, 2007.
  • Industrial Training Act, Cap 237
  • Pension Act, Cap 189
  • Retirement Benefits Act, 1997 and Regulations made thereunder
  • National Employment Authority Act, 2016
  • National Social Security Fund Act, 2013
  • Social Health Insurance Fund Act, 2023

The above Acts are easily available on the Kenya Law Reports website.

In addition to the statutes listed above, Kenya has ratified various international instruments which form part of the Kenyan Law.


National Law And Employees Working For Foreign Companies

All the aforementioned statutes and international instruments apply to all employees, employers, trade unions and employers’ organisations in Kenya subject to conditions stated in the various statutes. All employees working in foreign companies and their employers are subject to the national law.


National Law And Employees Of National Companies Working In Another Jurisdiction

Employees of national companies working in another jurisdiction are governed by the law indicated in their employment contract.

Note: The Law regulating employment of foreign employees has been further discussed in detail under the item; Hiring Non-Nationals.


Data privacy

The Constitution of Kenya under Article 31 secures the right to privacy of every Kenyan. It includes the right not to have information relating to the employee’s family, gender, financial information, health information, sensitive information or any private affairs or their private conversations revealed.

The Data Protection Act, 2019 (DPA), Data Protection (General) Regulations, 2021, Data Protection (Registration of Data Controllers and Data Processors) Regulations, 2021, Data Protection (Civil Registration) Regulations, 2020, and Data Protection (Complaints Handling Procedure and Enforcement) Regulations, 2021 further protects the processing of personal information entered in a record or made available to an employer. The Act provides for principles and obligations of personal data protection that every Data Collector must follow. This includes employers.

Under the DPA, The Employer as a data controller has certain obligations namely; to respect the right of privacy of employees, lawfulness, transparency and fairness in collection of data, seeking consent when obtaining data, purpose limitation of the data, data minimization, accuracy of the data collected, compliance with conditions of transfer of data out of Kenya and compliance with commensurate Data Protection Laws.

The employees’ rights include right to be informed, right to access their data, right to rectification and erasure of data, right to restrict the processing of the data, right to data portability, right to object and right in relation to automated decision making and profiling.

The DPA also extend to protection of sensitive personal data e.g information regarding race, health status, ethnic origin, conscience, belief, property, marital status, family, gender, sexual orientation and bio data.

Owing to data protection law and regulations in place, Employers are legally obligated to adhere to these regulations, and failure to do so can result in severe penalties and fines. Compliance is not merely a best practice; it is a legal requirement.

2

HIRING THE EMPLOYEE

Legal Requirements As To The Form Of Agreement

Every Employment contract has its unique form. This depends on the nature of activities and the relationship between the employer and employee. An employer may seek to employ under various categories and arrangements, whether regular, fixed term, seasonal, project, indefinite (“evergreen/ permanent’’ or casual terms.

The Employment Act recognises oral and written contracts. However, a contract of service for a period of three (3) months or more must be in writing and must state the particulars of the employment and lastly state that the contract is consented to by the employee.

The employee signifies acceptance of the written contract by either signing his/her name or affixing of their thumb print. The same must be witnessed by one (1) person who must not be the employer. The law requires the contract to be explained to an employee who is illiterate or cannot understand the language of the contract.

The fundamental legal requirements for the existence of a contract of service include existence of an oral or written contract of service; provision of a service to real or legal person and provision of wages or salary for the services rendered.


Mandatory Requirements
  • Trial Period

    • The Employment Act provides for a probationary period of not more than six (6) months. The same can only be extended for a further period not exceeding six (6) months. The Employment Act requires probation contracts to be in writing.

  • Hours Of Work

    • The Employment Act provides that an employer shall regulate the working hours of each employee. An employee is entitled to at least one (1) rest day for every seven (7) day period. The normal working hours under Regulation 5 of the Regulation of Wages (General) Order consist of 52 hours spread over six (6) days of the week.

  • Special Rules For Part-time Work

    • For part time employees, the contract must specify that the same is a part-time contract and thereafter provide for the number of working hours and the remuneration payable.

  • Earnings

    • Under Article 41 of Constitution of Kenya 2010, every worker has the right to fair remuneration. There is no requirement that wages, or salaries are to be paid at any particular intervals. The same can be paid daily, periodically at intervals of not less than one (1) month; or paid at intervals of exceeding one (1) month.

    The Employment Act protects the wages of the employee by recognising the same as a superior right owed to the employee. Wages must be paid in the Kenyan currency to the employee, or a person appointed by the employee. Wages must be paid to an employee on a working day, during working hours, at or near to the place of employment or at a place agreed in the contract. The payment should not be done at a place where intoxicating liquor is sold or readily available for supply.

    Minimum Wages: Pursuant to the Regulation of Wages (General) Order, no person shall be employed at a basic minimum wage less favourable than what is applicable to them under the schedules. The Regulation of Wages (General) (Amendment) Order, 2022 sets out the basic minimum monthly wages exclusive of housing allowance and the basic minimum daily and hourly rates inclusive of housing allowance. As per the amendment of the Order, the basic minimum monthly salary for a general labourer is Kshs. 15,201.65 (USD 100.04) for persons employed within Cities and Kshs. 14,025.40 (USD 91.91) for persons employed in the municipalities and Kshs. 8109.90 (USD 53.14) for persons employed in all other areas. It is however important that we point out that an upper scale applies to specific professionals under the Order.

    It is a fundamental right for every employee to receive equal pay for the same work. The Employment Act provides that an employer shall pay his employees equal remuneration for work of equal value. An employer who remunerates employees differently in respect of work of equal value risks perpetuating discrimination in the work place.

  • Holidays/Rest Periods

    • The Employment Act provides for various types of leave such as annual leave, sick leave, maternity, paternity leave and compassionate leave. The Act provides that for every seven (7) days of work, an employee is entitled to one (1) rest day. An employee is entitled to not less than 21 working days leave with full pay after every 12 consecutive months of service. Annual leave is voluntary and unlike compulsory leave the same cannot be imposed on an employee. Annual leave can be apportioned if the employee is terminated before completion of leave earning year. The Employment Act provides that where an employee is terminated after the completion of two (2) or more consecutive months of service during any 12-months’ leave-earning period, the employee is entitled to not less than one (1) and three (3) quarters days of leave with full pay, in respect of each completed month of service in that period, to be taken consecutively. An employee’s annual leave is protected and can only be converted into cash.

  • Minimum/Maximum Age

    • A child in Kenya is a person below the age of 18 years. The Employment Act prohibits the employment of a child below 13 years. However, it allows employment of children from the ages of 13 to 16 years for light work and defines those of 16 to 18 as employable. However, the Act does not define light work and does not provide protection for children in such employment but leaves it at the discretion of the Cabinet Secretary in charge of Labour. The Employment Act entitles a person that considers any child to be employed in any activity which constitutes child labour to file a complaint of such an incident to the labour officer or the police.

  • Illness/Disability

    • Under the Employment Act, after two (2) consecutive months of service, an employee is entitled to sick leave of not less than seven (7) days with full pay and thereafter to sick leave of seven (7) days with half pay in each period of the 12 consecutive months of service. Under the Regulation of Wages (General) Order, an employee is entitled to a maximum of 30 days of sick leave and thereafter to a maximum of 15 days sick leave with half pay in each period of 12-months of continuous service. An employee shall however not be entitled to such payment unless they produce to the employer a medical certificate of incapacity covering the period of sick leave claimed. However, in line with the Employment Act, if the contract of employment or a collective bargaining agreement provides for better terms on sick leave then the same ought to apply. The Persons with Disabilities Act, 2003, provides that no person shall deny access to, or discriminate against a person with a disability in suitable employment.

  • Location Of Work/Mobility

    • The Employment Act provides that an employment contract must state the place for work. An employer may offer transport allowance to the employee.

  • Pension Plans

    • Under the Retirement Benefits Act No. 3 of 1997, an employer may, with the approval of his/her employees, make statutory contributions in respect of such employees into a retirement benefits scheme. Pursuant to the Retirement Benefits Act, upon the death of a member of a scheme, the benefits payable from the scheme shall not form part of the estate of the member for the purpose of administration and shall be paid out by the trustees in accordance with the scheme rules. The other pension being National Social Security Fund (NSSF) has been discussed below.

  • Parental Rights (Pregnancy/ Maternity/ Paternity/ Adoption)

    • Under the Employment Act a female employee is entitled to three months maternity leave with full pay. However, the employee must give written notice of not less than seven (7) days to the employer. If for whatever reason, the maternity leave is extended with the consent of the employer the three (3) months maternity leave shall be deemed to expire on the last day of such extended leave. A male employee is entitled to two (2) weeks paternity leave with full pay. A female employee’s pregnancy does not constitute fair reasons for dismissal or for the imposition of a disciplinary penalty. The Employment (Amendment Act), 2021 introduced pre-adoptive leave, under section 29A of the Employment Act, 2007. Pursuant to the amendment, an applicant who is an employee is entitled to one (1) month’s pre-adoptive leave with full pay from the date of the placement of the child.

    A written contract of service must state particulars of employment which may be given in instalments and shall be given not later than two (2) months after the beginning of the employment. The written contract of service must contain legally required information.

  • Compulsory Terms

    • The Employment Act only provides for the minimum terms of employment. Just like any contract the parties may enter into contracts that offer better terms.

    Under the Labour Institutions Act, an employee has a right to join a Union of his/her own based on the type of work employed. A Union with majority of the employees will enter into a Recognition Agreement with the Employer and after signing such an Agreement, such a Union can negotiate with the employer with the view of executing a binding Collective Bargaining Agreement.

  • Non-Compulsory Terms

    • Under the NSSF Act, 2023, the law provides for two tier contributions. Its mandatory for an employer and employee to contribute tier-I contributions to NSSF while as regards to Tier-II Contributions, an employer can opt out the said contributions from NSSF to its individual pension scheme in place.


Types Of Agreement

Fixed Term Contracts: The Employment Act provides for fixed term contracts. A fixed term contract of more than three (3) months has to be in writing and specify the date on which the contract is to lapse.

Casual/Seasonal Employment Agreements:

  • A casual employee is to be paid at the end of each day and should not be engaged for a period longer than 24 hours at a time. The contract may be made orally or in writing.
  • However, where a casual employee works for a period of days amounting to not less than one (1) month, the contract of service shall be deemed to be one where wages are paid monthly, and a termination notice has to be given in writing.

Foreign Contracts of Service: Foreign contacts of service apply where the employment of a person is intended to be outside Kenya. A foreign contract of service has to be in the prescribed form and has to be attested by a labour officer. The labour officer may require the employer to give security by bond in the prescribed Form 5 under the Employment (Foreign Contracts of Service) Rules, with one (1) or more sureties resident in Kenya for the due performance of the contract in such sums as the labour officer considers reasonable.


Secrecy/Confidentiality

An employer may include a confidentiality clause in the employment contract restraining the employee from sharing and disclosing commercial secrets without authorisation.


Ownership of Inventions/Other Intellectual Property (IP) Rights

In Kenya, the laws that protect intellectual property are:

  • The Trade Marks Act (Chapter 506, Laws of Kenya) which regulates, that all registered trademarks by the employer belongs to the employer and therefore any use of the same by the employee outside the employer’s business amounts to infringement.
  • The Copyright Act protects the original expression of an idea in tangible form. However, it offers no protection for concepts or ideas that have not been so expressed. Where the author of the work makes the work in the course of his employment, the Copyright Act adopts an employer friendly position and provides that the copyright shall, in that case, be deemed to be transferred to the employer upon the creation of the work. This automatic transfer of copyright can be excluded or limited by contractual agreement between the employer and the employee.
  • The Industrial Property Act which regulates the employer’s right to a patent for any invention made by their employees in execution of their employment contracts.

Pre-Employment Considerations

An employer may, before hiring, consider the skills of the proposed employee, educational background, and work experience in relation to the position to be filled.

An employer may request the relevant Clearance or Compliance Certificates from prospective employees but only upon granting them an offer of employment. An employer is however at liberty to rescind an offer of employment where the prospective employee is unable provide the necessary Clearance or Compliance Certificates. An employer is also at liberty to withdraw an offer of employment if the candidate does not satisfy the requirements set out in Chapter Six of the Constitution of Kenya 2020, on Leadership and Integrity.


Hiring Non-Nationals

In the event an employer intends to hire foreign employees; the employees will be required to have work permits. Issuance of work permits is governed by the Kenya Citizenship and Immigration Act No. 12 of 2011 (the “Immigration Act”) and the Kenya Citizenship and Immigration Regulations, 2012 (the “Immigration Regulations”).

The various types of permits under the Schedule of the Act depend on the engagement the applicant intends to do in the Country.


Hiring Specified Categories Of Individuals

The Constitution of Kenya, under Article 27 and the Employment Act provide for non-discrimination in all aspects of employment. The constitution, however, allows affirmative action policies and programmes aimed at redressing any disadvantaged groups of persons in Kenya. Recognised refugees and members of their families are also subject to all laws in Kenya and are therefore subject to employment pursuant to the Refugee Act, No. 13 of 2006.

That notwithstanding, employers are not prohibited from selecting potential employees with the appropriate skills and attitudes in exercise of their managerial discretion.


Outsourcing And/Or Sub-Contracting/Temporary Agency Work

Independent Contracts for Service are not subject to the provisions of the Employment Act. An independent contractor is not subject to the usual employment matters such as statutory deductions, income tax, annual leave, sick leave, or overtime pay.

3

MAINTAINING THE EMPLOYEE RELATIONSHIP

Changes To The Contract

The employer has to obtain consent from the employee before changing the terms of employment.

A contract of service may allow for proposed changes of specific terms of employment through ‘flexibility clauses’ or ‘variation terms’.


Change In Ownership Of The Business

Kenya does not have a law that specifically protects employment rights in the event a business is transferred from one employer to another as a going concern.

However, under section 3 the Transfer of Businesses Act, Cap 500, the transferee of a business shall, notwithstanding any agreement to the contrary, become liable for all the liabilities incurred in the business by the transferor, unless due notice has been given. The liabilities therefore can be construed to include any employment contracts to employees.

In most instances, business contracts include sections dealing with what happens if there is a change in the business. Two (2) contract principles that might affect the need to make a change in the contract are novation and assignment.

In practice, on a transfer of a business, there are two (2) options available to deal with employees:

  • Termination of their employment and thereafter the transferee (new employer) offers fresh employment; or
  • The transferor (old employer), the new employer and each employee enter into a tripartite agreement.

Affected employees in a transfer must give their individual consent or, where unionised, with the representation of their union.


Social Security Contributions

The NSSF Act 2013 under section 18(3), established a provident fund (covers self- employed) and pension fund. The Pension fund is mandatory and covers all workers in the formal economy.

Section 18(3) requires members of the provident fund to migrate to pension fund subject to meeting the eligibility criteria for membership except voluntary members.

Section 18(4) makes it mandatory for all persons including employers to be pension fund members.

Section 20(1) provides the rate of contribution to the new pension fund to be 12 percent of the pensionable earnings (gross earnings) split between the employer (6 percent) and employee (6 percent).

The self- employed who are members of the provident fund will pay Kshs. 200 (USD 1.31) as the minimum amount of voluntary contribution.

The Act also introduced two tier contribution. Tier 1 contributors are in the low earning limit bracket of Kshs. 6,000 (USD 39.33) and below per month and Tier II are in the higher earning bracket of Kshs. 18,000 (USD 117.99) and above.

The Social Health Insurance Act, 2023 was enacted to replace the current National Health Insurance Fund (NHIF) which is expected to be fully wound up by October 19, 2024, and it will transfer all the cash balances to the Social Health Insurance Fund. Should Parliament approve the regulations that will anchor the new law, formal workers are expected to contribute 2.75 percent of their gross monthly pay while those in the informal sector will contribute Ksh500 (USD 3.28) to a Social Health Insurance Fund to finance the new Universal Healthcare Plan.


Accidents At Work

In Kenya, employees’ safety and accidents at the workplace are governed by two (2) acts, namely:

  • The Occupational Safety and Health Act (OSHA), 2007 which provides for the health, safety and welfare of persons employed and all persons lawfully present at workplaces; and
  • The Work Injury Benefits Act, 2007 which determines the remuneration available to an employee who gets injured in the workplace or during the course of carrying out their duties. Work injuries under this act are divided into three categories: (i) permanent incapacity; (ii) temporary incapacity; and (iii) fatal injury leading to death of a worker. The type of work injury will determine the form of relief/compensation available to the aggrieved party.

Discipline And Grievance

The Employment Act, 2007 addresses how discipline and grievance should be approached by the employer.

A statement in the contract of service should specify the disciplinary rules applicable to the employee or refer the employee to the provisions of a document for example an office manual which specifies the rules.

Overall, before an employer terminates the services of an employee, the employer has to issue the employee with a Show Cause letter detailing the allegations against the employee. After the employee has responded and the response is unsatisfactory, the employer has to invite the employee to disciplinary hearing. In such a meeting, the employee has a right to be accompanied by an employee of his/her own choice or a labour official, if such an employee is unionisable.


Harassment/Discrimination/Equal pay

Harassment:

  • The Employment Act defines and outlaws sexual harassment in the workplace.
  • An employer who employs 20 or more employees shall, after consulting with the employees or their representatives if any, issue a policy statement on sexual harassment that complies with Section 6 of the Act.

Discrimination: The Employment Act outlaws discrimination of any kind against any employee in respect of recruitment, training, promotion, terms and conditions of employment, termination of employment or other matters arising out of the employment. The grounds under which discrimination is prohibited include race, colour, sex, language, religion, political or other opinion, nationality, ethnic or social origin, disability, pregnancy, mental or HIV status.

Equal Pay: An employer is required to pay his employees equal remuneration for work of equal value. Failure to observe this constitutes unfair discrimination. In order to prove pay discrimination, an employee has to demonstrate that two (2) or more persons doing the same work were being paid differently without justification for the difference.


Compulsory Training Obligations

The Occupational and Safety Health Act, provides that no person shall be employed at a machine or in any process liable to cause ill health or bodily injury, unless he has been fully instructed as to the dangers likely to arise. In other fields where there is no imminent risk involved while the employee undertakes their duties, the general practice is that the employer trains the employee during recruitment to ensure efficiency.

The Industrial Training Act further provides that employees should have continuous training in their fields. Indeed, employer currently contributes Kshs.50.00 monthly to the National Industrial Training Authority (NITA) for the said purposes which an employer can claim from NITA as reimbursement for meeting such costs.


Offsetting Earnings

An employer is entitled to make deductions from an employee’s salary provided that the employee takes home not less than one-third of his salary. What is not recovered from the employee’s salary as a result of the one-third rule may be recovered from the employee’s future salary, or if the employee is leaving employment, through court proceedings.

The mandatory statutory deductions of an employee’s salary are Pay as You Earn (PAYE) which is tax, National Hospital Insurance Fund (NHIF) contribution (now Social Health Insurance Fund which is compulsory medical insurance and National Social Security Fund (NSSF) contribution which is a retirement fund for employees.

The Finance Act, 2023 introduced a mandatory Housing Levy. The Levy amounts to 1.5% of the gross monthly salary matched by 1.5% by the employer.

Other permitted deductions are regulated by law – e.g. loans granted by the employer or shortage of money arising from the employee’s negligence or dishonesty where the employee is entrusted with receipt, custody, and payment of money.


Payments For Maternity And Disability Leave

The Employment Act provides that a female employee shall be entitled to three (3) months maternity leave with full pay. There is no statutory provision on disability leave.

The Employment Act further provides that male employees are entitled to 14 days paternity leave.

The Employment Act merely provides for bare minimum and the Employer may provide for better terms.


Compulsory Insurance

Every Kenyan household, whose income is derived from salaried employment is subject to a statutory monthly deduction from the wages or salary by the employer and the same shall serve as a contribution to the Social Health Insurance Fund (to replace NHIF) and such person shall only access healthcare services under the Social Health Insurance Act where their contributions to the Social Health Insurance Fund are up to date and active


Absence For Military Or Public Service Duties

Military leave is not applicable in the Kenyan Jurisdiction. One cannot apply for paid or unpaid leave to serve in the military or any other public service for a given period and thereafter return to work. Military personnel are not allowed to serve in any other form of employment.


Works Councils or Trade Unions

The Labour Relations Act is the primary law on Trade Unions. The right to join and form a Trade Union is enshrined in the Constitution under Article 41. The Constitution gives every worker the right to form, join or participate in the activities and programmes of a Trade Union. The right is not absolute and may be limited so long as the limitation is reasonable and justifiable in an open and democratic society


Employees’ Right To Strike

The Labour Relations Act and the Kenyan Constitution under Article 41 acknowledge the right to strike as being fundamental to effective collective bargaining. Strike actions undertaken by unionised workers without union’s leadership authorisation, support or approval are outlawed in Kenya.

An employee who refuses to turn up for work or for whatever reason engages in wildcat strike action is culpable for an act of desertion or absenteeism.

Prior to engaging in a strike action, employees are required to follow procedures set out in the Labour Relations Act as failure to do so may result in the strike being declared unprotected. Participation in unprotected strikes amounts to misconduct and the employee may be dismissed.

The Labour Relations Act prohibits strikes if the employee(s) is engaged in essential services. There is a pending bill in Parliament that seeks to allow employees in essential services to strike only for five (5) days.


Employees On Strike

The Labour Relations Act provides that an employer is not obliged to remunerate an employee for services not rendered during a protected strike. The Act also provides that an employer may not dismiss or take any disciplinary action against an employee for participating in the protected strike.


Employers’ Responsibility For Actions Of Their Employees

N/A.

4

FIRING THE EMPLOYEE

Procedures For Terminating the Agreement

The procedure for terminating an employment agreement differs depending on the grounds of such termination.


Instant Dismissal

The Employment Act allows termination of an employee’s employment without notice or with less notice than that prescribed in the employment contract or statute, also known as summary dismissal. The grounds justifying summary dismissal are regulated by law; for example: if an employee without leave or other lawful cause absents himself from the place of work or if the employee is arrested for a cognisable offence punishable by imprisonment and is not within 14 days either released on bail, bond or otherwise set at liberty.

The employee’s right to be heard during summary dismissal is unassailable and absolute as per the Employment Act. Gathering from most of the judicial decisions in Kenya, the following can be said to be the proper procedure to summarily dismiss an employee:

  • The employer must carry out a full investigation regarding the alleged behaviour or conduct;
  • The employee ought to be informed of the exact nature of the allegations of gross misconduct;
  • The employee is granted an opportunity to be heard in a properly constituted disciplinary machinery as per the employment policies in the workplace;
  • The employee must be given an option of having another employee or a trade union official to be present during the hearing; and
  • If the outcome of the hearing is a decision to summarily dismiss an employee, the employee should be notified of the dismissal in writing citing reasons for the dismissal.

The Employment Act requires employers to pay employees who are summarily dismissed all monies, allowances, and benefits due to them up to the date of dismissal.


Employee's Resignation

Employee’s resignation is a unilateral act where the employee basically issues a notice of termination of employment to the Employer.

An employee may withdraw a notice of resignation, where special circumstances exist and such withdrawal must be communicated to the employer, as soon as possible.

Kenyan Courts have held that an employer ceases to have jurisdiction to discipline an employee when they resign before a verdict on the disciplinary process.


Termination On Notice

The Employment Act provides that where the contract is to pay wages daily, the contract is terminable by either party at the close of any day without any notice.

Where the contract is to pay wages periodically at intervals of less than a month, the contract is terminable by either party at the end of the period next following the giving of a notice in writing.

Where the contract is to pay wages or salary periodically at intervals of or exceeding one (1) month, the contract is terminable by either party at the end of the period of 28 days next following the giving of a notice in writing.

If an employee who receives a notice of termination of employment is not able to understand the notice, the employer shall ensure that the notice is explained orally in a language the employee understands.

The parties to a contract may terminate the employment without notice upon payment to the other party. The same is also known as payment in lieu of notice.

An employee whose services have been terminated on notice is entitled to service pay for every year worked, the terms which shall be fixed. This only applies in certain cases regulated by law.


Termination By Reason Of The Employee's Age

Terminating the employee’s employment on account of age amounts to discrimination and the employee would be entitled to damages for discrimination.

Retirement of the employee does not amount to discrimination.

Kenyan courts have held that in the absence of a general constitutional or statutory mandatory retirement age in public or private sectors or any other employment, the age of mandatory retirement is a term of the contract of employment to be agreed between the parties or varied by the employer in consultation with the employee.


Automatic Termination In Cases Of Force Majeure

For a party to rely on force majeure, it must be expressly stated in the employment contract. Under the law of contract, a contract can be terminated by frustration due to no fault of either party. This includes employment contracts.


Collective Dismissals

The Employment Act requires the employer to prove the reasons for the decision to undertake redundancy. The Act also sets out a 7-step procedure that is couched in mandatory terms


Termination By Parties’ Agreement

The Employment Act allows termination of an employment by parties’ agreement. Parties are at liberty to enter into a contract and agree on various terms and conditions therein. Such agreement must be in line with the statutory provisions


Directors Or Other Senior Officers

Directors are appointed by a resolution of the Shareholders of a Company under Companies Act. Ordinarily, a director is not an employee of a company but acts as an agent of the Company. A director’s removal is also done by way of a resolution as per the Companies Act, No. 17 of 2015. However, nothing precludes a Company from entering into an employment relationship with a director or other senior officers.

In determining whether a director is an employee, Courts will apply multiple tests such as the control test to determine whether the relationship between parties amounts to a contract of service or contract for service.


Special Rules For Categories Of Employee

The Employment Act applies to all employees under a contract for service.

Under the Employment Act, the minister may by order exclude from the application of all or part of this Act categories of employed persons whose terms and conditions of employment are governed by special arrangements, provided those arrangements afford better protection than the Act.

Special rules are applicable to certain fields of employment for example disciplined forces like the Kenya Defence Forces, Kenya Navy, or Kenya Police.


Specific Rules For Companies in Financial Difficulties

The Company as an employer, even when experiencing financial difficulties, is under an obligation to pay the entire amount of the wages earned by or payable to an employee in respect of work done by the employee in pursuance of a contract of service.


Restricting Future Activities

An employer may enter into an agreement with the employees placing limitations on the employee’s freedom of employment on exit in order to protect unique trade secrets. Contracts in restraint of trade are legal in Kenya and guided by the Restraint of Trade Act.

However, the Act gives powers to the High Court to declare the provisions void if it is satisfied that the restraint is not reasonable either in the interest of the parties or the same is injurious to public interests.


Whistleblower Laws

The Law on whistle-blowers in Kenya is still developing. The Anti-corruption and Economic Crimes Act provides for protection of assistants, informers, witnesses, and investigators. The Witness Protection Act also provides for protection of witnesses in criminal cases and other proceedings.

There is a whistle-blower protection bill which is aimed at providing for the procedure for the disclosure of information relating to improper conduct in the public and private sectors and to provide for the protection of persons who make such disclosure against victimisation. The Bill has not been passed into law yet.

Employers may have internal whistle-blower policies with a view to foster a culture of openness, accountability, and integrity.


Special Rules For Garden Leave

The Employment Act does not have any provision on garden leave. This does not bar parties from providing for garden leave in an employment contract.


Severance Payments

The amount of redundancy payment is fixed in law. The Employment Act provides that the employer shall pay to an employee declared redundant severance pay at the rate of not less than 15 days’ pay for each completed year of service.

In addition to the Severance pay, an employer must settle the following statutory or contractual obligations:

  • If leave is due to an employee declared redundant, pay the outstanding leave;
  • Pay any outstanding contractual entitlement – e.g. unpaid salary only subject to contractual liabilities properly incurred by the employee; and

Pay the employee declared redundant a months wages or wages for the month on lieu of notice


Special Tax Provisions And Severance Payments

There are no special tax provisions with regard to severance payments. All terminal benefits are subject to the statutory deductions including PAYE; NSSF and NHIF (now SHIF)


Allowances Payable To Employees After Termination

The Employment Act stipulates that an employee shall be entitled to the following terminal benefits upon termination of their employment:

  • Any remuneration for work done by an employee before termination;
  • Any annual leave pay due to an employee;
  • Any notice pay due to an employee;
  • Any severance pay due if an employee qualifies for this; and
  • A certificate of service – Section 51 of the Employment Act.

As noted earlier, the terminal benefits are subject to the statutory deductions including PAYE; NSSF and NHIF (now SHIF)


Time Limits For Claims Following Termination

There are no legal proceedings arising out of the Act, or a contract of service shall lie or be instituted unless it is commenced within three (3) years after the act, neglect or default complained or in the case of continuing injury or damage within 12-months after the cessation thereof.

5

GENERAL

Specific Matters Which Are Important Or Unique To This Jurisdiction

N/A.



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Miss Virginiah Nduta
Wamae & Allen Advocates.
Kenya

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© 2024, Wamae & Allen Advocates.  All rights reserved by Wamae & Allen Advocates as authors and the owners of the copyright in this chapter. Wamae & Allen Advocates have granted to Multilaw non-exclusive worldwide license to use and include this chapter in this guide and to sublicense Lexis Nexis, a division of RELX Inc. and its affiliates certain rights to use and distribute this Guide.

The information in the How to Hire and Fire Guide provides a general overview at the time of publication and is not intended to be a comprehensive review of all legal developments nor should it be taken as opinion or legal advice on the matters covered. It is for general information purposes only and readers should take legal advice from a Multilaw member firm.

Publication Date: February 2024