Termination of employment is an important part of managing an employment relationship, but employers cannot simply end an employee’s contract without considering the applicable legal requirements. Termination of employment under Kenyan labour law is governed mainly by the Employment Act, 2007, which sets out requirements relating to notice, reasons for termination, fair procedure, redundancy, and employee rights.
For employers, understanding these requirements can help reduce workplace disputes and improve the way difficult employment decisions are handled. Employees also benefit from knowing what the law provides when their employment comes to an end.
What Does Termination of Employment Mean?
Termination occurs when an employment relationship comes to an end. This can happen for different reasons, including resignation by the employee, expiry of a fixed term contract, dismissal, redundancy, or other circumstances recognised under employment law.
The process and requirements can differ depending on why the employment is ending. An employer dealing with misconduct, for example, may need to follow a different process from an employer whose business is reducing its workforce.
This is why businesses should avoid using the same approach for every termination.
Notice of Termination
Section 35 of the Employment Act provides minimum notice requirements for certain contracts of service. Where an employee is paid at intervals of one month or longer, the statutory notice period is generally 28 days, unless the contract provides for a longer period. The law also provides different notice arrangements depending on how wages are paid.
An employer may, where applicable, make payment in lieu of notice rather than requiring the employee to work through the notice period.
Businesses should therefore review the employee’s contract as well as the applicable law before determining the appropriate notice period.
The Employer Needs a Valid Reason
An employer should have a valid and fair reason for terminating employment. Section 43 of the Employment Act places the burden on the employer to prove the reason or reasons for termination where a claim arises.
Under Section 45, termination may be considered unfair if the employer cannot demonstrate that the reason was valid and fair and that the termination was carried out through a fair procedure. The reason may relate to the employee’s conduct, capacity, compatibility, or the operational requirements of the employer.
This means an employer should not make a termination decision simply because an employee is unpopular or because management wants them to leave.
Fair Procedure Matters
Having a valid reason is only part of the process. The procedure used to reach the decision also matters.
Where termination is being considered because of misconduct, poor performance, or physical incapacity, Section 41 requires the employer to explain the reason being considered to the employee in a language they understand. The employee must also be given an opportunity to make representations and may have another employee or a shop floor union representative of their choice present during the explanation.
Employers should therefore avoid making a final decision before properly hearing the employee’s response.
Summary Dismissal
There are circumstances where an employer may terminate employment without notice. This is known as summary dismissal.
Section 44 allows summary dismissal where an employee has fundamentally breached their obligations under the employment contract. The Act gives examples of conduct that may amount to gross misconduct, including unauthorised absence, certain forms of intoxication at work, wilful neglect of duties, abusive or insulting conduct, refusal to obey a lawful and proper command, and certain criminal conduct involving the employer or their property.
However, summary dismissal does not mean that employers should ignore fair procedure. Where Section 41 applies, the employee should still be given an opportunity to respond before the decision is made.
Termination Due to Redundancy
Redundancy is different from dismissal based on employee misconduct or poor performance. It generally arises when an employee’s position becomes unnecessary because of the employer’s operational requirements.
Section 40 of the Employment Act sets out specific requirements for redundancy. These include giving the required notifications, applying appropriate criteria when selecting employees for redundancy, paying any due leave, providing the applicable notice or wages in lieu of notice, and paying statutory severance where the requirements are met. The Act provides for severance pay of not less than 15 days’ pay for each completed year of service.
Businesses considering redundancy should therefore plan the process carefully rather than treating it as an ordinary dismissal.
Reasons That Cannot Justify Dismissal
Kenyan employment law also identifies certain reasons that do not constitute fair grounds for dismissal or disciplinary action.
Section 46 includes matters such as pregnancy, taking lawful leave, trade union membership or lawful activities, certain employee complaints or legal proceedings, and participation in a lawful strike. The law also prohibits dismissal based on specified discriminatory grounds, including race, colour, tribe, sex, religion, political opinion or affiliation, nationality, marital status, HIV status, or disability.
Employers should therefore ensure that employment decisions are based on legitimate workplace reasons rather than prohibited grounds.
Keep Proper Documentation
Documentation can be particularly important when an employment relationship ends. Businesses should keep relevant records showing the reason for the decision, communications with the employee, performance discussions, warnings where applicable, disciplinary proceedings, and other relevant documents.
Proper records can help management understand how a decision was reached and provide useful evidence if the termination is later challenged.
Employers should also provide employees with the documents they are legally entitled to receive following termination.
What Employees Can Do When They Believe Termination Was Unfair
Employees who believe their employment has been unfairly terminated may have avenues for seeking assistance or making a complaint. Section 47 provides for complaints to a labour officer and also recognises the employee’s right to pursue a matter before the Employment and Labour Relations Court, subject to the applicable requirements and timelines.
The Act also provides possible remedies for unfair termination, which may include compensation, reinstatement, or re-engagement depending on the circumstances of the case.
Employees should keep copies of their employment contracts, payslips, termination letters, warnings, and other relevant workplace documents.
Common Termination Mistakes Employers Should Avoid
Businesses can reduce employment disputes by avoiding common mistakes such as:
- Terminating without a clear reason: Employers should be able to identify and support the reason for the decision.
- Skipping the hearing process: Where applicable, employees should be given an opportunity to respond.
- Ignoring the employment contract: Contractual notice provisions should be reviewed alongside statutory requirements.
- Treating redundancy as ordinary dismissal: Redundancy has specific legal requirements.
- Poor documentation: Important employment decisions should be properly recorded.
- Making decisions based on prohibited grounds: Employment decisions should not be based on reasons protected by law.
Get Professional HR Support
Termination of employment can be complicated, particularly when the situation involves poor performance, misconduct, disciplinary action, redundancy, or an employee complaint. Businesses need to consider both the reason for termination and the procedure used to reach the decision.
At Coveted HR Services Ltd, we provide HR consultancy services to businesses that need practical support with employee management and workplace matters. We help businesses review their HR processes, manage employee related challenges, and develop clearer approaches to handling workplace issues.
If your business is dealing with a difficult employment matter or needs help reviewing its HR processes, contact Coveted HR Services Ltd today.
📞 Call/WhatsApp: 0798 330026
📧 Email: info@covetedhrservices.co.ke