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Employee termination is a sensitive yet crucial aspect of employment management. Employers must navigate the process in compliance with Kenyan labor laws to minimize legal risks and uphold fairness. This guide provides an overview of the legal framework, grounds for termination, procedural requirements, and best practices to ensure lawful employee terminations.

1. Legal Framework for Employee Termination in Kenya

Employee termination in Kenya is governed primarily by the Employment Act, 2007. This Act provides the foundation for employer and employee relationships, outlining the rights, responsibilities, and processes involved in termination. Employers must comply with this legal framework to ensure the termination process is fair and lawful.

The Employment Act also addresses aspects like notice periods, procedural fairness, protection against unfair dismissal, and remedies for unlawful termination. These provisions aim to strike a balance between protecting employee rights while allowing employers to manage their workforce effectively.

1. Types of Employee Termination

The Employment Act provides different types of termination, each with its own set of requirements and procedures.

a) Termination by Notice

Termination by notice is the most common form of employment termination. Either the employer or employee can terminate the employment contract by giving notice as per the terms of the contract but must comply with statutory notice periods (e.g., 7 days for employees with less than a year of service, and one month for those with longer service). If notice is not provided, payment in lieu of notice can be given.

b) Summary Dismissal

Summary dismissal occurs when an employer dismisses an employee without notice due to gross misconduct. Gross misconduct refers to serious offenses that violate workplace rules or threaten the company’s operation which include theft, fraud, assault, insubordination, and drunkenness at work. Employers must prove the misconduct was severe enough to justify immediate dismissal.

c) Redundancy

Redundancy arises when an employer reduces their workforce for economic, technological, or organizational reasons. Redundancy is governed by Section 40 of the Employment Act, which sets out the procedures for a lawful redundancy process.

• Notice: Employers must provide at least one month’s notice to the employee and the Ministry of Labour before implementing redundancy.
• Severance Pay: Employees affected by redundancy are entitled to severance pay, calculated at 15 days’ salary for each year worked.

d) Constructive Dismissal

While constructive dismissal is not explicitly outlined in the Employment Act, it occurs when an employer creates unbearable working conditions that force an employee to resign such as unfair treatment, harassment, unreasonable workload, or making the employee’s position untenable. The employee may claim they were forced to resign due to the employer’s actions.

1. Valid Grounds for Employee Termination

In Kenya, an employee’s dismissal must be based on justifiable reasons to be lawful. Employers must follow proper procedures to avoid unfair dismissal claims.

a) Poor Performance

When an employee consistently underperforms, the employer may consider termination. However, employers should first offer support, feedback, and training opportunities before resorting to dismissal.

• Performance Reviews: Set clear performance standards and provide regular evaluations. If no improvement is seen after support is provided, employers should follow a structured disciplinary process.

b) Misconduct

Misconduct can range from minor violations (e.g., late arrival) to more severe violations (e.g., theft or violence). The employer must ensure that disciplinary measures are appropriate and well-documented.

• Steps Before Termination: Employers must issue a show-cause letter, conduct an investigation, and give the employee a chance to defend themselves before taking disciplinary action.

1. Procedural Requirements for Lawful Termination

To ensure that a termination is lawful, employers must follow strict procedures set out by Kenyan labor laws. Failure to do so can result in claims for unfair dismissal or wrongful termination.

1. Provide Notice or Payment in Lieu of Notice: Employees are entitled to the statutory notice period as per their contract or the Employment Act, or payment in lieu of notice if the employer dismisses them immediately.
2. Conduct a Fair Hearing: The employee must be informed of the reasons for termination and given a chance to respond in a disciplinary hearing. This hearing can be attended by a union representative or colleague.
3. Issue a Written Termination Letter: After the decision to terminate, employers must provide the employee with a formal written termination letter, outlining the reasons for the dismissal and details on final dues.

1. Employee Rights and Employer Obligations

Upon termination, employers have several legal obligations to ensure the employee’s rights are upheld.

• Final Dues: Employers must pay all outstanding salary, severance pay, and accrued leave days.
• Certificate of Service: Employers are required by Section 51 to issue a certificate of service upon termination, which should include the employee's duration of employment and a summary of their duties.
• Unlawful Dismissal Remedies: If an employee challenges their dismissal, they may be entitled to remedies such as reinstatement or compensation (up to 12 months' salary).

1. Common Employer Mistakes to Avoid

Employers should be mindful of common mistakes that can lead to legal disputes, including:

• Failing to Follow Proper Process: Not giving notice, holding a hearing, or justifying the dismissal can result in claims of unfair termination.
• Lack of Documentation: Without proper records of performance reviews, disciplinary actions, and employee warnings, an employer's defense in case of a dispute may be weakened.
• Discriminatory Termination: Employers must ensure that decisions are made based on objective criteria, not personal biases, and avoid terminating employees for discriminatory reasons (e.g., age, gender, or disability).
• Not Honoring Employee Rights: Always fulfill obligations regarding final dues, certificates of service, and any legal entitlements owed to employees.

1. Frequently Asked Questions (FAQs)

Q1: Can an employer terminate an employee without a reason? No. Under the Employment Act, termination must be based on a valid reason such as poor performance or misconduct, and due process must be followed.

Q2: How much notice is required for termination? The notice period depends on the terms of the employee’s contract but must comply with the statutory minimums outlined in the Employment Act.

Q3: What happens if an employee challenges their termination? If an employee believes they were wrongfully terminated, they may file a complaint with the Employment and Labour Relations Court, which can assess the case and grant remedies such as reinstatement or compensation.

Conclusion

Employee termination in Kenya requires careful adherence to legal requirements to ensure fairness and avoid potential disputes. By following the steps outlined above, employers can protect both their business and their employees while adhering to the law.

At B.I.K Advocates LLP, we specialize in providing legal advice and support to employers navigating employee termination and other labor law matters. If you need assistance in ensuring your termination processes are compliant, or if you’re facing a legal challenge, contact us today to speak with one of our expert employment lawyers.

We welcome your feedback and inquiries and look forward to assisting you with your legal needs. For any questions, please reach out to us at info@bikadvocates.com

Disclaimer

This article is for informational purposes only and should not be construed as legal advice.