Navigating employment termination in Kenya requires a thorough understanding of the country's labor laws and established procedures. Kenyan law aims to protect both employers and employees by outlining specific requirements for fair and lawful termination. Failing to adhere to these regulations can lead to costly disputes and legal challenges. This guide provides a comprehensive overview of the key aspects of termination and severance in Kenya as of 2025, covering notice periods, severance pay, grounds for termination, procedural requirements, and employee protections.
Understanding these guidelines is crucial for ensuring compliance and maintaining positive employer-employee relations during the termination process. Whether you are an employer seeking to restructure your workforce or an employee facing potential termination, this information will help you navigate the process with confidence and clarity.
Notice Period Requirements
The Employment Act of Kenya stipulates minimum notice periods that employers must provide to employees before terminating their employment. The required notice period depends on the terms of the employment contract and the frequency of wage payments.
| Wage Payment Frequency | Minimum Notice Period |
|---|---|
| Daily | 1 day |
| Weekly | 1 week |
| Bi-weekly | 2 weeks |
| Monthly | 1 month |
It's important to note that an employment contract can specify longer notice periods than the statutory minimums. However, it cannot specify shorter periods. Employers can also choose to pay an employee in lieu of notice, meaning they can terminate the employment immediately by paying the employee the wages they would have earned during the notice period.
Severance Pay Calculations and Entitlements
Severance pay, also known as redundancy pay, is compensation paid to an employee whose employment is terminated due to redundancy. Redundancy occurs when an employer eliminates a position or reduces its workforce due to economic reasons, technological changes, or restructuring.
An employee is entitled to severance pay if they meet the following conditions:
- The termination is due to redundancy.
- The employee is not terminated for misconduct or other disciplinary reasons.
The Employment Act specifies the minimum severance pay as 15 days' pay for each completed year of service. The calculation is based on the employee's gross monthly salary at the time of termination.
For example, if an employee has worked for a company for 5 years and their gross monthly salary is KES 50,000, their severance pay would be calculated as follows:
(KES 50,000 / 30) * 15 * 5 = KES 125,000
Grounds for Termination
Termination of employment can occur for various reasons, broadly categorized as termination with cause (summary dismissal) and termination without cause (redundancy or other reasons).
Termination with Cause (Summary Dismissal)
Summary dismissal occurs when an employer terminates an employee's employment without notice due to gross misconduct or serious violation of the employment contract. Grounds for summary dismissal include:
- Dishonesty or fraud
- Insubordination
- Gross negligence
- Willful damage to the employer's property
- Absence from work without permission or reasonable excuse
Termination Without Cause
Termination without cause typically involves redundancy, retirement, or the expiry of a fixed-term contract. In these cases, the employer must provide the required notice and severance pay (if applicable). Other legitimate reasons for termination without cause may include business restructuring, poor performance (after following a proper performance improvement process), or closure of the business.
Procedural Requirements for Lawful Termination
To ensure a lawful termination, employers must follow specific procedures outlined in the Employment Act and relevant case law. These procedures vary depending on whether the termination is with or without cause.
Termination with Cause (Summary Dismissal) Procedure
- Investigation: Conduct a thorough investigation into the alleged misconduct.
- Notification: Inform the employee of the allegations in writing and provide them with an opportunity to respond.
- Hearing: Hold a hearing where the employee can present their case and call witnesses.
- Decision: Make a fair and objective decision based on the evidence presented.
- Notification of Termination: If the decision is to terminate, notify the employee in writing, stating the reasons for the dismissal.
Termination Without Cause Procedure
- Notice: Provide the employee with the required notice period or payment in lieu of notice.
- Consultation (Redundancy): If the termination is due to redundancy, consult with the employee or their representative (e.g., trade union) to discuss the reasons for the redundancy and explore alternatives.
- Severance Pay: Calculate and pay the employee's severance pay (if applicable).
- Certificate of Service: Provide the employee with a certificate of service, stating the dates of employment and the nature of the work performed.
Employee Protections Against Wrongful Dismissal
Kenyan law provides several protections for employees against wrongful or unfair dismissal. An employee who believes they have been wrongfully dismissed can file a complaint with the Employment and Labour Relations Court.
Grounds for Wrongful Dismissal Claims
- Termination without a valid reason
- Failure to follow proper termination procedures
- Discrimination
- Violation of the employee's rights
Remedies for Wrongful Dismissal
If the court finds that an employee has been wrongfully dismissed, it may order the employer to:
- Reinstate the employee
- Pay compensation for lost wages and benefits
- Pay damages for emotional distress
- Issue an apology
To avoid wrongful dismissal claims, employers should always ensure they have a valid reason for termination, follow proper procedures, and treat all employees fairly and with respect. Maintaining thorough documentation of the termination process is also crucial for defending against potential claims.
