Managing employment relationships in Kenya requires a clear understanding of the legal framework governing termination. Both employers and employees have rights and obligations that must be respected throughout the employment lifecycle, particularly when considering the end of the relationship. Adhering to the correct procedures is crucial to ensure compliance and avoid potential disputes.
The process for terminating employment in Kenya is primarily governed by the Employment Act, 2007. This legislation outlines the requirements for notice periods, valid grounds for dismissal, fair procedure, and entitlements such as severance pay. Employers operating in Kenya must navigate these regulations carefully to ensure all terminations are conducted lawfully and ethically.
Notice Period Requirements
The required notice period for terminating an employment contract in Kenya depends on the payment frequency of wages or salary. The law specifies minimum notice periods, but individual employment contracts or collective bargaining agreements may stipulate longer periods.
| Payment Frequency | Minimum Notice Period |
|---|---|
| Daily | End of the day |
| Weekly | One week |
| Fortnightly | Two weeks |
| Monthly | One month |
Notice must be given in writing. An employer can pay an employee in lieu of notice, meaning the employee receives payment equivalent to the wages they would have earned during the notice period and their employment ends immediately.
Severance Pay Calculations and Entitlements
Severance pay is typically applicable in cases of redundancy, which is defined as the loss of employment through no fault of the employee. Redundancy occurs when an employer is reducing their workforce.
The statutory minimum severance pay entitlement in Kenya is 15 days' pay for each completed year of service. This calculation is based on the employee's basic wage.
- Eligibility: Severance pay is generally payable to employees declared redundant.
- Calculation: (Basic wage / 30 days) * 15 days * Number of completed years of service.
- Process: The employer must notify the employee and the labour officer of the intended redundancy, providing reasons and details of the employees affected. Consultation with employees or their representatives is also required.
It is important to note that severance pay is distinct from other terminal benefits such as accrued leave pay, payment in lieu of notice (if applicable), and contributions to pension or provident funds.
Grounds for Termination
Employment contracts in Kenya can be terminated on various grounds, broadly categorized as termination with cause (summary dismissal) and termination without cause (requiring notice or payment in lieu).
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Termination with Cause (Summary Dismissal): This occurs when an employee commits gross misconduct. The Employment Act lists specific acts that constitute gross misconduct, including but not limited to:
- Willful neglect of duty.
- Drunkenness during working hours.
- Absence from work without permission or reasonable excuse.
- Disobedience of lawful and reasonable orders.
- Using abusive or insulting language towards the employer or a person in authority.
- Committing a criminal offence against the employer or employer's property.
- Absence from work for more than three consecutive days without permission or reasonable excuse.
- Striking illegally. Summary dismissal does not require a notice period, but it must follow a fair procedure.
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Termination without Cause: This refers to termination for reasons other than gross misconduct, such as:
- Poor performance (after documented warnings and attempts at improvement).
- Incapacity (due to illness or injury, after following due process).
- Redundancy (as discussed above).
- Mutual agreement.
- Expiry of a fixed-term contract. Termination without cause requires the employer to provide the statutory notice period or payment in lieu of notice.
Procedural Requirements for Lawful Termination
Regardless of the grounds for termination, Kenyan law mandates a fair procedure. Failure to follow the correct process can render an otherwise valid termination unfair or unlawful.
The key procedural steps typically include:
- Notification of Allegations/Reasons: The employee must be informed in writing of the specific reasons for the intended termination or the allegations against them.
- Opportunity to be Heard: The employee must be given an opportunity to respond to the allegations or reasons. This usually involves a disciplinary hearing or a meeting to discuss the performance or incapacity issues. The employee has the right to be accompanied by a colleague or a shop floor union representative.
- Consideration of Response: The employer must genuinely consider the employee's response before making a final decision.
- Written Decision: The final decision must be communicated to the employee in writing, stating the reasons for termination and the effective date.
- Payment of Terminal Benefits: All terminal benefits due to the employee must be calculated and paid promptly upon termination.
Common Termination Pitfalls:
- Failing to provide written notice or payment in lieu (for termination without cause).
- Failing to provide a valid reason for termination.
- Failing to give the employee an opportunity to be heard.
- Not properly documenting the disciplinary process, performance management, or redundancy process.
- Incorrectly calculating or failing to pay terminal benefits.
- Terminating based on discriminatory grounds (e.g., gender, religion, pregnancy, union membership).
Employee Protections Against Wrongful Dismissal
Kenyan law provides significant protection to employees against unfair termination and wrongful dismissal. An employee who believes their termination was unfair or unlawful can file a complaint with the Labour Officer or the Employment and Labour Relations Court.
A termination is considered unfair if it is not based on a valid reason or if the correct procedure was not followed.
Remedies available to an employee who successfully proves unfair termination or wrongful dismissal may include:
- Reinstatement: Being returned to their job without loss of benefits. This is a primary remedy but is often granted only in specific circumstances.
- Compensation: Payment of up to a maximum of twelve months' gross salary. The court considers various factors when determining the amount of compensation, including the employee's length of service, the circumstances of the termination, and the employee's prospects of finding new employment.
- Payment of terminal benefits: Ensuring all legally mandated benefits are paid.
Employers must maintain thorough documentation and ensure strict adherence to both substantive grounds and procedural fairness to mitigate the risk of wrongful dismissal claims.
