Procedures For Terminating the Agreement
The procedure for terminating an employment agreement differs depending on the grounds of such termination.
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 cognizable offence punishable by imprisonment and is not within 14 days either released on bail, bond or otherwise set at liberty.
- (i) 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 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 tender their resignation 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 month, the contract is terminable by either party at the end of the period of twenty-eight 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.
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
Special Rules For Categories Of Employee
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.
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.
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 victimization. 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.
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 fifteen 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;
- Pay the employee declared redundant not less than one month’s wages in lieu of notice.
Special Tax Provisions And Severance Payments
There are no special tax provisions with regard to severance payments.
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
Time Limits For Claims Following Termination
The No legal proceedings arising out of the Act or a contract of service shall lie or be instituted unless it is commenced within three years after the act, neglect or default complained or in the case of continuing injury or damage within twelve months after the cessation thereof.