Termination Under Kenyan Employment Law

Introduction to Employment Termination and Dismissal in Kenya

The leading cause of employment disputes in Kenya is founded on the termination and dismissal processes. If, as an employer, you do not comply with the provision of the Employment Act while handling the termination and the dismissal of your employees, the Kenyan labour courts won’t hesitate to rule that such termination or dismissal was unfair and unlawful and thus be forced to pay compensatory damages to the employee.

Termination is a statutory term and procedure that involves ending the contractual relationship between an employer and employee. An employer must adhere to the stipulated procedure for a termination to be deemed fair and lawful. We will elaborate here by outlining the various types of terminations and dismissals under the Kenyan Labour laws, the procedure, unfair termination and remedies for unfair termination.

Issue a notice of termination.

The first step of terminating an employment contract is to issue a written termination notice by the party intending to terminate the contract. Termination notices by the employer entail giving the employee(s) the intention of the employer to end the contract and outlining the reasons for the intended termination. The employee must receive the notice and acknowledge it. The length of the termination notice is included in the employment contract, but in the absence of explicit terms, the duration depends on the periodic payment of the wages/salary.

• If wages are paid daily, the notice should be given a day before termination.
• If wages are paid weekly, the notice should be given a week before.
• If the wages are paid monthly or more than a month interval, the notice should be twenty-eight (28) days earlier.
• If an employee is on a probationary contract, either party may terminate the contract by giving a notice of not less than 7 days.

The employer has to explain orally a termination notice to an employee who does not understand the notice in a language they understand.

Suppose the employee is satisfied with the termination notice and does not dispute the legality of the termination process. In that case, if they were not receiving statutory deductions such as NHIF, NSSF, or the employer pension scheme, they should be paid their service pay for every year calculated fixedly.

It is critical to note that an employee is not required to justify their termination. However, an employer may be required to justify their termination when an employee claims it was unfair and unlawful.

Payment in lieu of notices

A party to a contract, the employer or employee, may terminate it by paying the other party a sum equivalent to their periodic wages. Say if an employee was receiving a weekly salary, paying them a double salary for the week, or if the wages are monthly, paying the employee two (2) months’ salary before terminating the contract or if the employee is on a probationary contract by paying them a salary in lieu of the 7 days’ notice.

Termination through redundancy

The Employment Act defines redundancy as loss of employment, occupation, job, or career by involuntary means through no fault of an employee involving termination of Employment at the initiative of the employer, where the services of the employee are superfluous and the practices commonly known as abolition of office, job or occupation and loss of employment.

Section 40 of the Employment Act outlines the employer’s mandatory requirements for termination of employment on grounds of redundancy.

The obligations of the employer in declaring redundancy are, in summary, the following;

• Give notice to the union or labour office at least a month before the process commences.
• If an employee is not a trade union member, the employer should notify the employee personally in writing and the labour officer.
• The employer should demonstrate he used criteria of seniority, ability, and reliability for each employee.
• If there is a Collective Bargaining Agreement, it should not be used to the disadvantage of an employee.
• Employee to be given one month’s notice or pay in lieu of notice.
• Severance pay at the rate of not less than 15 days for each completed year of service.

Courts have severally held that these conditions are mandatory, and the redundancy is to be declared on positions and not employees.

Termination on the grounds of misconduct

As observed, an employer may not terminate an employee except for good cause. Some grounds that constitute good cause under section 41 of the Act are poor performance, physical incapacity, and gross misconduct.

Notwithstanding, even where there exists substantive ground(s) to justify a termination, the law obligates the employer to observe certain procedural strictures to ensure the upholding of the broad principles of natural justice in undergoing the termination process between them and the affected employee.

The employer, while terminating a  contract on the grounds of misconduct, has to:

• Provide the employee with details of the accusations against them;
• Allow the employee an opportunity to respond to the charges;
• Allow the employee to be accompanied by a shop steward or co-employee of his choice during the hearing process; and
• Finally, provide the employee with a decision to either terminate or save the contract of service.

Where the employer fails to do the above, termination is deemed unlawful. In law, the burden of justifying the lawfulness of the termination, both in terms of whether there was a substantive ground to terminate and whether the procedure for the release of the employee was adhered to, lies with the employer.

Critically, in any claim arising out of the termination of a contract, the employer shall be required to prove the reason or reasons for the termination, and where the employer fails to do so, the termination shall be deemed unfair.

Under Section 47(5) of the Employment Act, the limits of an employee’s burden of proof to a claim of unfair termination are to place before the court prima facie evidence suggesting that a termination has occurred and that the said termination lacks a substantive justification and or is procedurally flawed. Once the employee makes a prima facie case, the burden of proof shifts onto the employer to justify the termination.

Termination on summary dismissal

 Section 44 of the Employment Act, 2007 stipulates when summary dismissal can occur, thus:

“Summary dismissal shall take place when an employer terminates the employment of an employee without or with less notice than that which any statutory provision or contractual term entitles the employee.”

Under the Act, an employer may dismiss an employee summarily when the employee has, by his conduct, indicated that he has fundamentally breached his obligations arising under the contract of service.

Some of the lawful grounds that warrant the summary dismissal of an employee include:

• Absenteeism by the employee from his place of work without leave of lawful cause;
• Intoxication by the employee during the working hours;
• Willful neglect to perform the work mandated to or improperly and/or carelessly doing the work;
• Use of vulgar and insulative language by the employee to the employer or fellow employees;
• Where an employee knowingly fails or refuses to obey a lawful and proper command which it was within the scope of his duty to obey, issued by his employer or a person placed in authority over him by his employer;
• Where in the lawful exercise of any power of arrest given by or under any written law, an employee is arrested for a cognizable offence punishable by imprisonment and is not within fourteen days either released on bail or on bond or otherwise lawfully set at liberty; or,
• An employee commits, or on reasonable and sufficient grounds is suspected of having committed, a criminal offence against or to the substantial detriment of his employer or his employer’s property.

However, the above list is not exhaustive. An employer can summarily dismiss an employee on an account outside those in the catalogue above by independently assessing factors such as the industry that the Claimant was working in, the nature of the relationship between employer and employee, the alleged conduct of the employee amounting to a fundamental breach of the employment contract by the employee.

Though an employer can dismiss an employee, the employer must adhere to the stipulated procedures and accord the employee a fair hearing. Below are the steps an employer should take before invoking a summary dismissal of an employee: –

• Before an employee can be dismissed for gross misconduct, the employer must thoroughly investigate whether there is a basis for dismissal. The investigation report can be shared with the employee before the disciplinary hearing.
• If the employer believes there is a lawful case against the employee, they should communicate their allegations and the grounds for allegations against the employee via a show cause letter and be allowed to respond in writing.
• Employees should be allowed to defend themselves in a disciplinary hearing. They have the right to be accompanied by a colleague or trade union representative at this hearing. Advocates are outlawed from representing a party before the hearing tribunal or before a labour officer under Section 48 of the Act.
• After the hearing, the employer should decide whether or not to proceed with the dismissal. If they decide to dismiss, they should provide the employee with a written statement of the reasons for dismissal, the date on which the employment will end, and information about the right to appeal.
• The employee has the right to appeal against the decision. The appeal should be heard without unreasonable delay and ideally at an agreed time and place.

Unfair Termination

A termination or dismissal is unfair if the employer does not provide and prove the reasons for the termination, and neither does the employer adhere to the statutory procedure of the termination.  Under Section 45 of the Employment Act, a termination is unfair if the employer fails to do the following: –

Fails to prove the validity of the reason(s) for the termination;

• Fails to prove that the reason for the termination is a fair reason related to the employee’s conduct, capacity, or compatibility;
• Fails to prove that the reason for the termination is a fair reason based on the operational requirements of the employer; and,
• Fails to prove that the employment was terminated in accordance with fair procedure and did not comply with rules of equity and justice.

In deciding whether it was just and equitable for an employer to terminate the employment of an employee, a Labour Officer or the Employment and Labour Court shall consider—

• the procedure adopted by the employer in deciding to dismiss the employee, the communication of that decision to the employee, and the handling of any appeal against the decision;
• the conduct and capability of the employee up to the date of termination;
• the extent to which the employer has complied with any statutory requirements connected with the termination, including the issuing of a certificate of service and the procedural requirements set out in section 41;
• the previous practice of the employer in dealing with the type of circumstances which led to the termination; and
• the existence of any previous warning letters issued to the employee.

As an employer, you need to note that the following reasons do not amount to a fair termination: –

• a female employee’s pregnancy or any reason connected with her pregnancy;
• the going on leave of an employee, or the proposal of an employee to take any leave to which he was entitled under the law or a contract;
• an employee’s membership or proposed membership of a trade union;
• the participation or proposed participation of an employee in the activities of a trade union outside working hours or, with the consent of the employer, within working hours;
• an employee’s seeking of office as, or acting or having acted in the capacity of, an officer of a trade union or a workers’ representative;
• an employee’s refusal or proposed refusal to join or withdraw from a trade union;
• an employee’s race, colour, tribe, sex, religion, political opinion or affiliation, national extraction, nationality, social origin, marital status, HIV status or disability;
• an employee’s initiation or proposed initiation of a complaint or other legal proceedings against his employer, except where the complaint is shown to be irresponsible and without foundation or
• an employee’s participation in a lawful strike.

 Remedies for Unfair Termination

Where an industrial court or the Labour Officer determines the termination of an employee was unfair, the following are the available remedies.

• A declaration that the employee’s termination was unfair and unlawful;
• Compensation for the lack of notice, that is, payment of the employee’s wages, which they would have earned had the employee been given the period of notice to which he was entitled under this Act or his contract of service;
• Payment for the wages of the work done by the employee before the termination;
• Payment of damages for the loss occasioned to the employee from the dismissal date to the expiry of the notice of termination had it been given;
• Compensation with the equivalent of the employee’s monthly salary not exceeding twelve months;
• Reinstatement of the employee to their previous work position;
• Re-engagement of the employee in a role that is comparable to their previous position, with the same pay;
• The issuance of a certificate of services, in which it is a criminal offense to give false comments in the certificate;
• Severance pays at the rate of not less than 15 days for each completed year of service;
• Payment of service pay, where the employee was not under any form of social security scheme; and,
• Payment for any underpayment or any leaves not given to the employee.