Understanding the Redundancy Process in Kenya

Introduction

Redundancy can be a difficult and often misunderstood process for both employers making tough organizational decisions and employees facing job loss. In Kenya, redundancy is not simply a matter of terminating an employee’s contract. It is a regulated legal process governed by the Employment Act, 2007, which sets out strict procedural and substantive requirements to protect workers’ rights.

Whether you are an employer considering restructuring or an employee affected by a redundancy notice, understanding the legal framework is essential.

What Is Redundancy?

Section 2 of the Employment Act, 2007 defines redundancy as “the loss of employment, occupation, job or career by involuntary means through no fault of the employee, involving termination of employment at the initiative of the employer, where the services of an employee are superfluous.”

Redundancy may occur due to:

Business restructuring
Mergers or acquisitions
Automation or adoption of new technology
Economic downturns
Closure of a business or department

Importantly, redundancy is not based on misconduct or poor performance. It arises from operational needs.

Legal Procedure for Declaring Redundancy

Under Section 40 of the Employment Act, 2007, employers must strictly follow the legal procedure. The key steps include:

1. Justification for Redundancy

The employer must demonstrate genuine and valid reasons for redundancy, such as operational, economic, or technological changes. These reasons must not be discriminatory or arbitrary.

2. Notification

The employer must issue written notice of the intended redundancy:

To the affected employee(s) – at least one month in advance.
To the Labour Officer – also one month before the redundancy takes effect.

The notice must explain:

Reasons for redundancy
Categories of employees affected
The selection criteria used

Failure to notify the Labour Office makes the process procedurally flawed, as emphasized in Kenya Airways Ltd v Aviation & Allied Workers Union of Kenya & 3 others [2014] eKLR.

3. Selection Criteria

Employers must apply fair and objective criteria such as:

Seniority or length of service
Skills, ability, and experience
Disciplinary record
Last-in, first-out (LIFO) principle

The criteria must be consistent and non-discriminatory.

4. Consultation

Although not expressly stated in the Employment Act, Kenyan courts have stressed the importance of genuine consultation with affected employees or their representatives. Consultation demonstrates fairness and reduces the risk of disputes.

5. Payment of Redundancy Benefits

Employees declared redundant are entitled to:

Notice pay
Severance pay – at least 15 days’ pay for each completed year of service
Accrued leave
Any other contractual benefits

Legal Risks for Employers

Non-compliance with redundancy procedures may expose employers to:

Claims for unfair termination under Section 45 of the Employment Act
Financial liability for compensation and damages
Reputational harm or strained labour relations

Employers should document the entire process and seek legal guidance to avoid these risks.

Employee Rights During Redundancy

If you are an employee facing redundancy in Kenya, you have the right to:

Receive formal written notice and be consulted
Obtain redundancy pay, notice pay, and accrued benefits
Challenge the redundancy if due process was not followed
File a complaint with the Labour Officer or the Employment and Labour Relations Court