How does Kenyan law define a casual employee?
Section 2 of the Employment Act, 2007, defines a casual employee as a person whose terms of engagement provide for payment at the end of each day and who is not engaged for a longer period than twenty-four hours at a time. This is intended for truly short, day-to-day engagements with no expectation of ongoing work beyond each day.
However, in practice, many employers use casual terms to avoid statutory obligations, a practice that exposes them to significant legal and financial risks.
What is the legal foundation governing casual work in Kenya?
Casual employment is mainly governed by:
- The Constitution of Kenya, 2010, especially the right to fair labour practices under Article 41.
- Employment Act, 2007 (definition of casual employee; written particulars; records; conversion under section 37; termination safeguards; remedies).
- Occupational Safety and Health Act, 2007 (OSHA) (employer duty to ensure safety, health, and welfare at work).
Work Injury Benefits Act (WIBA) (workplace injury compensation framework).
Do casual workers have any rights under Kenyan law?
Yes. Even as casual workers, casuals are entitled to basic labor rights/ protections, including fair labour practices under Article 41 of the Constitution and minimum terms under the Employment Act, such as payment for work done, rest days, protection against “casualisation” through statutory conversion where the law deems the engagement no longer casual (section 37), and safe working conditions. A casual employee is also entitled to at least one paid rest day after working continuously for six days, and protection against unlawful deductions and forced labour.
Do casual employees enjoy leave, notice, and other benefits?
Pure casual employment (in the strict legal sense) does not carry the full package of leave, notice of termination, medical cover, house allowance, and other benefits that apply to monthly employees. However, once the engagement meets the conversion thresholds in section 37, the worker becomes entitled to those benefits in the same way as an ordinary term employee.
When Does Casual Employment Convert to Term Employment?
Section 37 of the Employment Act provides for the automatic conversion of casual employment to a term contract in two specific scenarios:
- The Aggregate Time Test: If the casual employee works for a period or a number of continuous working days which amount in the aggregate to the equivalent of not less than one month; or
- The Nature of Work Test: If the casual employee performs work that cannot reasonably be expected to be completed within a period of three months.
If either of these thresholds is met, the casual employee is deemed by law to be employed on a monthly contract, and termination notice must be issued as provided by section 35(1)(c).
What are the legal implications upon conversion of casual to contract terms?
Once Section 37 is triggered, the worker is no longer a “casual.” They effectively become a monthly employee with full statutory rights.
- Notice Period: They are immediately entitled to a notice period before termination. Under Section 35(1)(c), this is typically 28 days’ written notice (or pay in lieu).
- Full Benefits: If the converted employee works continuously for two months or more after conversion, they become entitled to all terms and conditions of a permanent employee (Section 37(3)), including:
- Annual Leave (21 days).
- Sick Leave (7 days full pay, 7 days half pay).
- Maternity/ Paternity leave.
- Housing allowance (if applicable to other staff).
- Protection from unfair termination: Termination must comply with the provisions of Section 41 (Fair hearing), Section 43 (Valid reason), and Section 45 (Fair termination)
- Backdated entitlements: Courts often award:
- Backdated leave
- Underpayments
- Service pay (if no NSSF remitted)
- Overtime
- Compensation for unfair termination
What are the risks of misclassifying workers as casuals?
Misclassification occurs when an employer treats a worker as a casual (paying daily, offering no benefits) when, legally, they have already converted to a term employee. The risks are severe:
- Unfair Termination Suits: If you stop giving a “long-term casual” worker without notice, they can sue for Unfair Termination under Section 45. Since you likely did not follow a disciplinary hearing or give notice (because you thought they were casual), the termination will almost certainly be ruled unfair.
- Damages: The Employment and Labour Relations Court (ELRC) can award:
- Compensation: Up to 12 months’ gross wages for unfair termination.
- Notice Pay: Payment in lieu of the notice they should have received.
- General Damages: For violation of fair labour practices (Article 41 of the Constitution).
- Accrued Leaves, Holidays, overtime damages
- Gratuity: Service pay for the years worked (usually calculated at 15 days’ pay for every year of service) if they were not members of NSSF.
What are the financial implications of conversion?
Beyond court damages, the retrospective financial cleanup is costly. If the court rules that a worker was an employee for the last 5 years, the employer is liable for:
- Statutory Deductions (NSSF & SHIF/NHIF): You will be ordered to pay all unremitted NSSF and SHIF (Social Health Insurance Fund) contributions for the entire period, usually with penalties and interest.
- Housing Levy: Arrears on the Affordable Housing Levy (1.5% employer + 1.5% employee share) may be demanded.
- PAYE Taxes: The Kenya Revenue Authority (KRA) may demand backdated PAYE taxes that should have been deducted.
- Accrued Leave Pay: Payment for all leave days not taken over the years of service.
- Reputational damage: Labour disputes harm employer branding and investor confidence and can also disrupt the operations of a company.
What should employers do to avoid the “Casualisation of Labour?
To mitigate these risks, employers must adopt a proactive strategy:
- Use casual engagement only for truly day-to-day work that is genuinely intermittent and paid daily.
- Strict Monitoring: Implement systems to track casual days. Ensure no casual workers work continuously for 30 days unless you intend to hire them.
- Fixed-Term Contracts: If a job will take 4 months, do not use a casual arrangement. Issue a Fixed-Term Contract that clearly stipulates the start and end date, remuneration, and leave (prorated). This protects you from “automatic conversion” claims.
- Periodic Workforce /Jobs Audits: Assess whether “casuals” are performing core, perennial duties (e.g., a receptionist or cleaner who comes every day). If the role is permanent, the contract should reflect that to avoid litigation.
- Avoid “Break in Service” Schemes: Courts have frowned upon employers who artificially break service (e.g., firing for a few days every 3 months) to avoid conversion. This is often viewed as an Unfair Labour Practice.
- Maintain statutory records (time, attendance, pay, leave, contracts) because disputes often turn on proof of continuity and hours.
- Follow fair termination processes: where a relationship is (or may be deemed) term/monthly, ensure notice and a fair process consistent with the Employment Act.
- Train HR teams on labour law compliance
How Njaga & Co. Advocates LLP Can Assist
At Njaga & Co. Advocates LLP’s Employment and Labour department, we support employers and employees in navigating Kenya’s complex labour environment. We offer specialized support to ensure your workforce is compliant and your business is protected.
- Drafting compliant employment contracts
- HR and labour law audits
- Advisory on casual, fixed-term, and permanent employment structures
- Representation in Employment & Labour Relations Court
- Mediation and dispute resolution
- Advisory on termination, redundancy, and restructuring
- Training HR teams on compliance
- Employee rights advisory
Disclaimer: This article provides general information and does not substitute legal advice on specific circumstances of any individual or organization. While the information is accurate as of the date published, we cannot guarantee it remains accurate at the time you read it or that it will stay current. Before acting on any of this information, please seek professional legal advice tailored to your situation.
