6 Legal Steps for Termination of Employment in Kenya

This is a legal guide on the procedural and substantive obligations governing the termination of employment under the Employment Act, 2007. This opinion outlines the essential steps that employers must take to ensure compliance with statutory requirements, minimize the risk of claims for unfair termination, and adhere strictly to the principles of procedural fairness as prescribed by law.
Our analysis is informed by relevant statutory provisions contained in the Employment Act, 2007, judicial precedents, and best practices within the employment law framework.

1. The Legal Framework

Termination of employment in Kenya is governed by the Employment Act, 2007, which sets out both substantive and procedural requirements. Sections 35 to 44 of the Act outline the legal procedure, employee rights, and employer obligations in cases of dismissal or termination of employment.

An employer may lawfully terminate an employee’s contract on the following grounds:

1. Gross misconduct
2. Poor performance
3. Incapacity (due to illness or injury)
4. Redundancy
5. Other valid and fair reasons based on the operational requirements of the business

Section 35 provides that either the employer or the employee may terminate an employment contract by giving the required notice or payment in lieu of such notice. Where the contract does not specify the notice period, the statutory minimum periods under Section 35(1) apply.

Section 44 sets out the circumstances under which an employer may summarily dismiss an employee without notice, particularly in cases of gross misconduct. Subsections 44(4)(a) to (g) detail conduct that amounts to gross misconduct, including absenteeism, willful neglect of duty, insubordination, and criminal acts against the employer or workplace. Even in such cases, due process must be observed, and dismissal must be supported by evidence.

2. Unfair Termination

A termination is deemed unfair and unlawful if the employer fails to adhere to the provisions of Sections 35 to 41 of the Employment Act.
The following provisions of the law are clear on matters on unfair termination of employment.

Section 43: The employer bears the burden of proving that the reasons for termination are valid and justifiable.

Section 45(1): Termination is unfair if the employer fails to prove:

• That the reason for termination is valid;
• That the reason is fair (relating to the employee’s conduct, capacity, or compatibility); and
• That the termination was carried out in accordance with fair procedure.

Section 45(4): Termination is also unfair if, in all circumstances, the employer did not act in accordance with justice and equity.

Section 45(5): The Employment & Labour Relations Court (ELRC) or Labour Officer will consider factors such as the procedure adopted, communication of the decision, conduct and capability of the employee, compliance with statutory obligations (including issuance of a certificate of service), and observance of Section 41 procedures.

3. Procedural Fairness under Section 41

Section 41 of the Employment Act prescribes the mandatory procedure to be followed before terminating an employee:

Section 41(1): The employer must explain the reasons for termination to the employee in a language they understand, in the presence of a fellow employee or shop-floor union representative of their choice.

Section 41(2): The employer must hear and consider any representations made by the employee and/or their chosen representative before making a final decision.

4. Steps to Ensure Procedural Fairness

To comply with the Employment Act and avoid exposure to litigation, employers should observe the following:

1. Notice to Show Cause (NTSC)
   • Note to issue a written NTSC, clearly stating the allegations and giving the employee a reasonable opportunity to respond (typically 48–72 hours).
2. Hearing and Representation
   • If the response is unsatisfactory, convene a disciplinary hearing. The employee has a right to be accompanied by a fellow employee or shop-floor union representative of their choice.
   • The hearing should be documented through minutes, which must be shared with the employee for review and confirmation. 
3. Decision and Communication
   • After considering all evidence and submissions, the employer may terminate, warn, or take alternative disciplinary action.
   • The decision must be communicated in writing, clearly stating the reasons.
4. Right of Appeal
   • The employee must be informed of their right to appeal. Appeals should be lodged promptly and determined fairly, with outcomes communicated in writing.
5. Notice and Final Dues
   • Provide notice of termination as per the contract or pay in lieu of notice (per Section 35).
   • Promptly settle all terminal dues, including accrued salary, leave, and other entitlements, to avoid claims for delayed or unpaid dues.

5. Risks of Non-Compliance

It is important to note that failure to comply with substantive and procedural requirements exposes employers to successful claims for unfair termination under Section 49 of the Employment Act.

Remedies may include:

• Compensation of up to 12 months’ gross salary;
• Reinstatement or re-engagement (though rarely ordered);
• Payment of damages and accrued entitlements.

We wish to point out that a look at previous judicial pronouncements and case laws, the Courts have consistently taken a strict approach against procedural lapses, often awarding substantial compensation to employees.

6. Conclusion and Recommendations

It is our advise that to avoid exposure to litigation and labor related disputes, employers must approach termination of employment with diligence, transparency, and adherence to both procedural and substantive legal requirements. Strict compliance with the Employment Act safeguards against legal risks while fostering fair labour practices and a compliant workplace.

We strongly recommend that employers:

• Carefully plan and document every stage of the termination process and in compliance  the Employment laws;
• Engage legal counsel or Human Resource  professionals where necessary; and
• Always act in accordance with justice and equity.

By doing so, employers can effectively mitigate risks, uphold fair labour standards, and avoid costly litigation.