Employment 2019 Second Edition

Last Updated August 06, 2019

Kenya

Law and Practice

Authors



Munyao Muthama and Kashindi is a medium-sized, fast-growing and progressive firm that offers legal service to local and international clients. The firm's offices are strategically located in Nairobi, Mombasa and Kakamega. Its key practice areas are employment and labour relations, environmental law, energy and natural resources, environmental law, corporate and civil litigation, banking and finance, tax advisory, environmental law, family law, IP, public procurement, insurance, immigration advisory services, legislative drafting, compliance and governance audits. The firm's expertise extends to advising and representing clients in all aspects of employment law. It handles contentious and non-contentious matters, including representations in court, drafting of employee contracts, drafting and reviewing policies and manuals, advice on termination, dismissals, redundancies and restructuring, managing employee exits, advising on post-termination restrictions, advice on collective bargaining and negotiations, secondment, outsourcing and transfer of employees, offering a wide range of advice on employment and labour laws. The legal team comprises leading lawyers who have been acclaimed locally and internationally for their expertise in employment and labour relations matters. The firm also conducts legal training on employment laws and emerging and developing issues in this area.

Kenyan employment law does not make a distinction between blue-collar and white-collar workers. The distinction of the status of employees is generally based on the terms of engagement. The distinct statutes under the law are casual and non-casual employees.

Casual employees are engaged for a period not longer than 24 hours at a time and are paid at the end of each day. Casual employment automatically converts to term contracts if a casual employee works continuously for a period of three months.

Employees who do not fall under the casual employment category can be employed under a fixed-term or open-ended contract. Piece-rate employment is also provided under the law where employees are engaged to perform specific tasks.

Definite and indefinite contracts are recognised by the law. Casual employment lasts for not more than 24 hours. Casual employment, however, automatically converts to term contracts if a casual employee works continuously for a period of three months. Employees who do not fall under the casual employment category can be employed under a fixed-term or open-ended contract.

Piece-rate contracting is also provided under the law where employees are engaged to perform specific tasks. The entitlement for payment to the piece-rate worker arises after the task has been completed. The payment is proportional to the amount of work already done at the end of the day (at the option of the employer), or the end of each month or upon completion, whichever is earlier.

An employment relationship can be implied in cases of misclassification by applying the common law principles applicable to employees vis-à-vis independent contractors. The court usually applies the four-pronged common law test relating to the level of control, mutuality of obligations, economic or business reality, and integration. The courts have recognised that these tests cannot resolve the issue decisively on their own. In many cases, the issue will be resolved by examining all the various elements that constitute the relationship between the parties.

A contract of service is necessary for the establishment of an employment relationship. Contracts of service can be made orally or in writing. A contract of service that is for a period of more than three months should be in writing.

The law requires that a written contract must contain certain particulars, namely: name, age and permanent address of the employee, name of the employer, job description, date of commencement of the employment, form and duration of the contract, place of work and hours of work. Other prescribed particulars are remuneration, the interval of payment of remuneration and date of commencement of continuous employment. These mandatory particulars should be agreed upon not later than two months after commencement of employment. An employer is obliged by the law to keep these written particulars of the contract for a minimum period of five years after the termination of the employment.

Minimum working hours are provided under the Regulations of Wages (General) Order as well as under other sector-specific Wage Orders.

The general normal number of hours per week is a maximum of 52 hours spread over a six-day working week. The normal working week of a person engaged on night work consists of not more than 60 hours of work spread over six days of the week. Overtime plus time worked during the normal hours per week, in any period of two consecutive weeks, should not exceed 144 hours for employees engaged in night work and 116 hours for all other adult employees. Overtime is payable at one-and-a-half times the normal hourly rate for time worked in excess of the normal number of hours per week, and twice the normal hourly rate for time worked on the employee’s normal rest day or a public holiday. Employees are entitled to at least one rest day in every period of seven days. Such rest days can be deferred up to a maximum of 14 rest days, which can then be taken as the usual leave on full pay.

There are slight variations of working hours under certain sector-specific Orders but the General Order provisions apply to most workers.

Flexible arrangements on overtime are possible through contractual arrangements or collective bargaining agreements so long as the minimum statutory entitlements are not taken away. For instance, provisions on time off in lieu of overtime pay can be incorporated in contracts of employment. In practice (which has been upheld by a number of court decisions), management employees are not usually entitled to overtime and their contracts usually have such provisions.

Working hours in part-time contracts are governed by contractual provisions.

The law provides for minimum wages for certain categories of workers. The substantive statute on minimum wages is the Labour Institutions Act No 12 of 2007 but the minimum wages are published regularly (usually yearly but it can be longer) by the Cabinet Secretary in charge of labour matters.

The minimum wages are prescribed through publications referred to as “Wages Orders”. The General Wages Order covers a wide categorisation of workers, including general labourers, watchmen, machine operators, nannies, domestic workers, caretakers, drivers, cashiers, sweepers, messengers and artisans, among others. The applicable rates vary according to the various categories of workers and location. The rates are the same in all major cities (namely, Nairobi, Mombasa and Kisumu). The minimum wage rates applicable in other areas are a bit lower compared to the major cities.

There are other sector-specific minimum Wages Orders, including the Protective Security Services Order; the Wholesale and Retail Distributive Trades Order; the Tailoring, Garment Making and Associated Trades Order; the Road Transport Order; the Timber and Sawmilling Trades Order; and the Agricultural Industry Order. Most of the sector-specific minimum Wages Orders have not been reviewed for some time.

There are no statutory provisions on payment of bonuses, including thirteenth month salaries. Such payments can, however, be provided in the contract of employment or collective bargaining agreements. Payment of such bonuses can be held to be an implied term of the contract even if not expressly provided. In the case of Isabel Wayua Musau v Copy Cat Limited [2013] eKLR, the Employment and Labour Relations Court held that once a management practice or a policy has gained notoriety, it hardens and is incorporated as an implied term of the contract of employment, creating an obligation upon an employer. In the case of Kenya Chemical & Allied Workers Union v Bamburi Cement Ltd [2017] eKLR, the court held that if an employer has consistently and persistently paid a thirteenth month cheque/bonus and such practice or custom is reasonable, certain and notorious, it becomes an implied term of the employment contract that can be legally enforced provided that sufficient and clear evidence is placed before the court.

The government intervenes in compensation and salary increases in various ways, including the following:

  • the minimum wages are fixed by the government;
  • the Salaries and Remuneration Commission is a public body whose functions are to set and regularly review the remuneration and benefits of all State Officers and to advise the national and county governments on the remuneration and benefits of all other public officers; and
  • in cases of economic disputes – meaning those relating to remuneration – involving a collective bargaining agreement or on any other related issue, the law allows the Employment and Labour Relations Court to order the Central Planning and Monitoring Unit (CPMU) to file a report in court. CPMU is a public body that is manned by economists and other officers from the National Treasury. CPMU’s reports are not binding to the court but are usually considered.

An employee is entitled to not less than 21 days of annual leave, with full pay, after twelve consecutive months of service. Where employment is terminated after completion of two or more consecutive months' service during any twelve-month leave-earning period then the employee is entitled to not less than one-and-three-quarters days' leave with full pay for each completed month of service of that period.

Section 30 of the Employment Act provides that employees are entitled to sick leave of not less than seven days with full pay and thereafter to sick leave of seven days at half pay, after two consecutive months of service. Regulation 12 of the Regulation of Wages (General) Order, on the other hand, provides for a maximum of 30 days' sick leave with full pay and thereafter to a maximum of 15 days' sick leave with half pay in each period of twelve months’ consecutive service. The court has favoured the application of the General Order provisions, which are considered more favourable to employees; see, for instance, the case of Kennedy Nyanguncha Omanga v Bob Morgan Services Limited [2013] eKLR.

Female employees are entitled to three months of maternity leave with full pay, in addition to annual leave. A male employee is also entitled to two weeks' paternity leave with full pay, in addition to the annual leave.

The Regulation of Wages and Conditions of Employment (General Order) provides that an employee is entitled to compassionate leave up to their earned annual leave entitlement. In addition, an employee may be granted compassionate leave of five days without pay in any one year.

Rules on confidentiality on the part of employees and liabilities arising therefrom are governed by common law principles and contractual provisions since there are no express statutory provisions. The same position applies to non-disparagement requirements.

The applicable law on the enforceability of non-competition clauses is set out in statute, common law and judicial precedent.

Statutory Provisions

The main statutory provisions are set out in the Contracts in Restraint of Trade Act, Chapter 24 of the Laws of Kenya (the Act), which was enacted for the purpose of making lawful certain contracts in restraint of trade. The Act provides that any agreement or contract that contains a provision or covenant whereby a party thereto is restrained from exercising any lawful profession, trade, business or occupation shall not be void only on the ground that the provision or covenant is contained therein.

The Act provides that the court, however, has the power to declare such provision or covenant to be void. In doing so, the High Court must take into account all the following factors:

  • the nature of the profession, trade, business or occupation concerned;
  • the period of time and the area within which it is expressed to apply; and
  • all the circumstances of the case.

Common Law Position and Judicial Precedent

There has been little litigation on the issue in Kenya. Where the issue has been litigated upon, courts have been rather reluctant to enforce contracts in restraint of trade. Some of the main reasons for the reluctance in enforcing such clauses is the weak position of the employee in terms of bargaining and the compulsion that may exist upon an employee to take employment so as to earn a living.

The leading authority on this issue is the case of Giella v Cassman Brown [1973] EA 358, which was decided by the East Africa Court of Appeal in 1973 and continues to be upheld by the courts in more recent cases. The court ruled that contracts in restraint of trade are generally invalid as being contrary to public policy, but a partial restraint in a contract may be enforced if it is reasonable in the interests of both parties.

The test of enforceability of non-compete clauses is thus that of reasonableness. A non-compete clause can be declared valid and enforceable if it is reasonable in the interests of the parties to the covenant, and reasonable having regard to the interests of the public. To be reasonable in the interests of the parties, the restraint must afford adequate protection to the party in whose favour it is imposed. To be reasonable in the interests of the public, it must be in no way injurious to the public interest.

In the case of LG Electronics Africa Logistics FZE v Charles Kimari [2012] eKLR, the court held that a restrictive period of five months post-termination of a contract of employment was unreasonable. In the case of Steel Structures Limited v David Engineering Ltd & Another [2007] eKLR, the court held that as a general rule, contracts in restraint of trade are against public policy but not necessarily illegal.

Despite general reluctance in enforcing non-compete clauses, the courts have enforced them in some cases. The most recent case on the issue that attracted a lot of public interest is that of NRG Media Limited v Andrew Kibe Mburu & 2 Others [2019] eKLR, in which the court temporarily restrained former employees of the claimant from taking up employment with a competitor. The litigation is ongoing at the time of this publication.

In determining the enforceability of non-compete clauses, the court looks at the competing interest of the employer and the ex-employee. A covenant that is purely against potential competition on the part of the employee will not be held valid since an ex-employee has the legitimate right to earn a living using the skills and experience acquired during employment. An employer is, however, entitled to have certain of his interests protected from interference or attack by the employee even if this may also operate to prevent competition. An employee’s knowledge of his employer’s trade secrets, processes of manufacture and the like, and his knowledge of the customers who deal with the employer, all belong to the employer. As such, an employer can control the employee’s use of it by a covenant that restrains the freedom of activity and work of the employee.

Although not provided for in statute, there is a developing trend for employers to offer to pay the ex-employees during the non-compete periods or part thereof, ostensibly to deal with the issue of ex-employees being unreasonably restrained from earning a living. This trend, which appears to be borrowed from other jurisdictions, is yet to be tested by litigation as to whether it meets the reasonableness test.

The enforceability of non-solicitation clauses is also governed by the Contract in Restraint of Trade Act, Chapter 24, Laws of Kenya, common law and judicial precedent as discussed in 2.1 Non-competition Clauses.

The test for enforceability is also that of reasonableness. The employer bears the burden to prove that the restriction is reasonable and intended to protect his legitimate business interest. The court will easily decline to enforce such a clause if, having regard to the nature of the profession, trade or business concerned, the period and area of implication, it is unreasonable and inhibits the interest of the ex-employee.

Constitutional and Statutory Provisions

The main legal provision on data privacy is found in the Constitution under Article 31 Right to privacy, and this includes the right not to have information relating to private affairs unnecessary revealed. The notion of privacy is related to the right to inherent dignity, which is also guaranteed by Article 28 of the Constitution. In the case of Robert K Ayisi v Kenya Revenue Authority & another [2018] eKLR, the court reiterated the provisions of the Universal Declaration of Human Rights (UDHR) and the International Covenant on Civil and Political Rights (ICCPR), and stated that the right to privacy is tied to the dignity of a person and must be accorded for one to be able to enjoy rights and freedom under the law.

There is no specific statutory provision on data privacy. The Data Protection Bill, 2018, which seeks to regulate the use and protection of personal information, is still pending before Parliament for consideration. The bill guaranteed protection against persons who collect or process any personal data, except for public bodies processing personal data for the purposes of national security or for combating money laundering activities.

The right to privacy under the Bill is guaranteed to every citizen but the right can be limited for reasons of national security, prevention, detection, investigation and punishment of crime, safeguarding the rights of the data subject or another person, public interest and in compliance with objections imposed in law.

The Bill creates the office of Data Protection Commissioner, which shall be an independent office responsible for the implementation of the provision of the Bill once enacted and promoting self-regulation among data controllers and data processors, and many other functions described in the bill.

There are other statutes that have provisions on data privacy, including the HIV/AIDS Prevention and Control Act, No 14 of 2006, which requires employers to keep confidential personal information of employees regarding their medical status. Information on the medical status of employees must be treated with confidence and should not be conveyed, except in accordance with the law.

The Health Act, 2017 also imposes confidentiality obligations in relation to health status information or treatment and requires such information to be treated as private information that should not be disclosed unless allowed by law.

Employers who bear certain information about their employees are prohibited by Section 6 of the Access of Information Act No 31 of 2016 from disclosing information that is likely to involve unwarranted invasion of the privacy of a person.

International Law Provisions and Principles on Data Protection

International law provisions and principles have been invoked in the enforcement of data protection. For instance, the courts have invoked the provisions of Article 2(5) and (6) of the Constitution – which provide that the principles of international law as well as any treaty and convention ratified by Kenya form part of Kenyan law – to import protection from the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights in such enforcement.

Article 12 of the Universal Declaration of Human Rights provides that no person shall be subjected to arbitrary interference with his privacy, family, home or correspondence, nor to attacks upon his honour and reputation.

Article 17 of the International Convention on Civil and Political Rights similarly prohibits arbitrary or unlawful interference with a person’s privacy, family or correspondence and unlawful attacks on the person’s honour or reputation. This right is guaranteed for everyone and the law should protect against such interference or attack.

Implications of the EU's General Data Protection Regulation (GDPR)

The GDPR, which took effect on 25 May 2018, has certain implications outside the EU, including Kenya, in view of the provisions of Article 3, which has provisions on territorial coverage. The said Article provides that the Regulation applies to the processing of personal data of data subjects (individuals) who are in the EU by a controller (any company) not established in the Union. As such, if an employer has employees who are data subjects (EU citizens), it should comply with the GDPR.

The limitations on the use of foreign workers are set out in the Kenya Citizens and Immigrations Act, No 12 of 2011. The key limitation is that a foreign employee is not allowed to work in Kenya without a valid work permit or pass issued by the Department of Immigration.

There are several classes of work permits that are issued depending on the nature of work/engagement foreigners are involved in. The most relevant class for foreign workers is Class D. Class D permits are issued to foreign workers who have been offered employment by a specific employer, the government of Kenya, an organ of the United Nations or any other agency approved by the Department of Immigration. To acquire this permit, foreign workers must show that they possess skills or qualifications that are not available in Kenya.

In 2018, the government carried out a permit verification exercise on foreign workers, which resulted in various changes to policies and procedures aimed at streamlining and ensuring efficient vetting and approval of permits. These changes led to the increased scrutiny of applications by the Immigration Department. Key changes and heightened focus now include the general requirement that all applications include an understudy setting out details on training, transitioning and phasing out. The changes also include the creation and maintenance of an up-to-date digital database for foreign workers.

The processing fee for an application for the Class D permit is KES10,000, and the issuance fee is KES200,000.

In early 2019, the government rolled out a mass registration under the National Integrated Identity Management System (NIIMS), dubbed Huduma Namba, for all Kenyan residents, including foreigners. The registration is intended to result in the issuance of digital identity cards to Kenyan residents, used for access of government services; “huduma” is a Kiswahili word that means “service”. The Huduma Namba/Digital Identity Cards are intended to consolidate crucial documents such as identity cards, driving licences, passports and alien cards. Litigation ensued to challenge the mass registration. The High Court allowed the registration to proceed but held that the government should not withhold any services or bar anyone from accessing public facilities and services in the absence of the number.

There is currently no legal framework to govern the NIIMS registration but a bill was subsequently proposed that had not yet been passed by the time of this publication. The bill makes it mandatory to use the digital identity card to access more than 15 public facilities and services, including paying taxes, opening bank accounts, electricity connection, issuance of passports, registering or renewing a driving licence and transacting in the financial markets. The bill proposes harsh penalties for transacting without the digital identity card. There have been widespread debates on the registration and the bill, and it will be interesting to see what will happen regarding the passage of the bill.

The right for employees to form, join or participate in the activities of a trade union is not only provided in statute but is also enshrined in the Bill of Rights under the Constitution as one of the tenets of fair labour practice under Article 41.

The principal roles of trade unions include the regulation of relations between their members and employers, promotion, and advocating and advancing the rights and interests of their members, mainly relating to better working conditions and remuneration. They also advocate for collective relations between employers and workers through the promotion and protection of freedom of association and negotiation of collective bargaining agreements. The collective bargaining agreements usually contain provisions on remuneration, grievance, complaint and disciplinary procedures, complaint procedures, rules governing hiring, promotion of workers, benefits, workplace safety and policies, among others.

Section 54 of the Labour Relations Act provides that for a trade union to be “recognised” by an employer for purposes of collective bargaining, it must represent the simple majority (more than 50%) of unionisable employees. A unionisable employee is defined by Section 2 of the Act as an employee eligible for membership to a particular trade union. As such, unionisable employees are determined by considering the provisions of a trade union’s constitution.

In view of the provisions of Section 54 of the Labour Relations Act, a trade union and an employer are required to enter into recognition agreements once the simple majority threshold of unionisable employees is met. Such recognition agreement must be in writing, in line with the provisions of Section 54(3) of the Act and must set out the terms upon which the employer recognises a trade union. A recognition agreement should provide for trade union members in a workplace to elect from among themselves trade union representatives in accordance with the constitution of a trade union. A recognition agreement should also grant a trade union reasonable access to the employer’s premises for officials or authorised representatives of the trade union to pursue lawful activities of the trade union.

Once a recognition agreement is in place, a trade union and an employer can then enter into a collective bargaining agreement.

Employee representative bodies that have statutory backing are the trade unions. Employees may also collectively bargain or relate in other representative bodies (although not very common) such as a works council or other agency or representative body but how they do it would depend on the contractual provisions or internal policies of the employers.

The main roles of representative bodies, including trade unions, are the regulation of relations between their members and employers, promotion, and advocating and advancing the rights and interests of their members, mainly relating to better working conditions and remuneration.

A trade union’s registration commences by applying for issuance of a registration certificate from the Registrar of Trade Unions (the Registrar) as required by Section 12 of the Labour Relations Act. The Registrar is required to issue a certificate within 30 days of receiving the application if it is in order. A trade union is then required to apply for registration to the Registrar within six months of issuance of the certificate. When applying for registration, a trade union is required to submit a constitution that complies with the requirements of the Labour Relations Act, among other things.

Section 2 of the Labour Relations Court Act defines a collective bargaining agreement (CBA) as a written agreement concerning any terms and conditions of employment made between a trade union and an employer, group of employers or organisation of employers.

Once a recognition agreement is entered into between an employer (or group of employers or employers' organisation) and a trade union as explained in 5.1 Status/Role of Unions, a CBA should be entered into setting out the terms and conditions of service for all unionisable employees covered by the recognition agreement.

The terms of a CBA should be incorporated into the contract employment of every employee who is covered by the CBA.

CBAs have to be registered with the Employment and Labour Relations Court for them to have effect in law. They should be submitted within 14 days of their conclusion. Submission of the agreement to the court for registration is made by the employer or employer’s organisation, although the submission can also be made by the trade union if the employer fails, or is not willing, to do so. The court may decline to register a CBA that conflicts with the Labour Relations Act or any other law, or if it does not comply with any of the guidelines concerning wages, salaries and other conditions of employment issued by the Cabinet Secretary in charge of labour.

The key statute governing the termination of employment is the Employment Act, which was passed in 2007 together with five other key statutes that govern employment and labour relations in Kenya. Certain constitutional provisions are also applicable in the event of termination of employment, key amongst these being Article 41, which guarantees the right to fair labour practice as a fundamental right. Since the coming into force of the Constitution in 2010, there has been an elevation of employee’s labour rights and freedoms due to this Constitutional underpinning under Article 41 and this is reflected in judicial interpretations in numerous aspects of employment and labour relation matters, including termination of employment.

One of the fundamental changes introduced with the enactment of the Employment Act in 2007 is that termination of employment has to be for just cause, valid and fair reasons. A reason for termination is fair or valid if it is related to the employee’s conduct, capacity and compatibility or based on the operational requirements of the employer.

The other vital change is that an employee has the right to be heard before termination of employment on account of misconduct, poor performance and incapacity.

Prior to 2007, an employer could terminate an employee’s contract of employment for any reason or no reason at all and without according an employee an opportunity to be heard. This is no longer the case. It is no longer permitted to simply terminate contracts of employment for convenience. Notice of termination of employment is not by itself sufficient due to express statutory provisions on just and valid reasons for termination as well as judicial precedent.

Different procedures are applicable depending on the grounds and mode of termination.

For termination on account of poor performance, misconduct or incapacity, Section 41 of the Employment Act, as interpreted by the courts, sets out a mandatory procedure to be followed by employers. The main aspects are:

  • a duty to explain the reasons why the employer is considering terminating the employment; and
  • giving an opportunity to an employee to be heard before effecting the termination (commonly known as the show cause process). An employee is entitled to have a fellow employee or union representative present during the show cause hearing.

Judicial precedent has developed additional obligations on the employer for termination for poor performance and incapacity, other than those set out in statute.

For termination on account of poor performance, an employer should have a structured system of reviewing an employee’s performance and allowing the employee to improve over a reasonable period of time, before a decision of termination is made. A period of two to three months has been held by the courts to be a reasonable period to place a poorly performing employee on a Performance Improvement Plan (PIP). The PIP should be participatory in that it should have the employee’s input. Regular appraisals, reviews and evaluations should be undertaken during the PIP period. All evaluation sessions must be documented and must specify the employee's actual performance in line with the PIP goals. The employer is also required to demonstrate measures put in place to support a poorly performing employee to improve and that despite such support, the poorly performing employee has not improved to a satisfactory standard and hence the reason for termination. If an employee does not improve after the end of the PIP programme, the employer should not simply dismiss the affected employee. The employee should be taken through a show cause process under which an employee should be given yet another opportunity to make representations as to why their employment should not be terminated for poor performance.

For termination for illness or incapacity, two key considerations that have emerged from judicial precedent are:

  • an employer should provide all reasonable accommodation to a sick or ailing employee to improve or offer alternative facilities, including reassignment of light duties or modifying the working environment, before termination on medical grounds; and
  • employers must exercise due care and sensitivity in the process of termination for incapacity or sickness.

According reasonable accommodation to employees and exercising due care and sensitivity entails several actions on the part of an employer. First, the employer must show support to the employee to recover and resume duty; this goes beyond the grant and exhaustion of sick leave. Second, once the employer begins to consider termination, they must subject the employee to a specific medical examination aimed at establishing the employee’s ability to resume work in the foreseeable future. Treatment notes and sick off sheets do not qualify as medical reports for purposes of termination of employment on medical grounds. Third, the employer must give the employee specific notice of the impending termination and an opportunity to be heard. Failure to follow this procedure, even where there is overwhelming evidence of an employee’s inability to work, amounts to unfair termination for want of procedural fairness.

Termination on account of redundancy is based on a specific procedure different from termination for misconduct, incapacity, poor performance and other modes of termination. Redundancy is defined under Section 2 of the Employment Act, 2007 as the loss of employment, occupation, job or career by involuntary means through no fault of an employee. It involves the termination of employment at the initiative of the employer, where the services of an employee are superfluous. Section 40 of the Employment Act sets out the mandatory procedure for termination on account of redundancy, which includes the issuance of notices to employees, unions (for unionised members) and the labour officer.

Section 40 also provides for minimum redundancy payments that include severance, accrued leave and notice pay. The section also provides for the selection criteria applicable in collective redundancies. In selecting the employees to be declared redundant, the employer must have due regard to the seniority in time, skill, ability and reliability of each employee of the particular class of employees affected by the redundancy. All these parameters must be considered. The selection criteria should be fair, objective and transparent. The criteria must be applied systematically and uniformly across the board, and they must be structured and comparatively based.

In addition to the express statutory provisions on redundancy under Section 40 of the Employment Act, judicial precedent provides that the obligation to consult employees likely to be affected by redundancies or their unions is implicit from the provisions of Section 40. Further legal basis upheld by the courts for the obligation for employers to carry out consultations is Article 13 of Recommendation No 166 of the ILO Convention No 158 – Termination of Employment Convention, 1982, which requires consultation between the employers and the employees or their representatives before termination of employment on account of redundancy.

Consultations have been stated by the courts as intended to discuss measures to be taken to avert or to minimise the terminations and measures to mitigate the adverse effects of any terminations on the workers concerned, such as finding alternative employment. The consultations are therefore meant to cause the parties to discuss and negotiate a way out of the intended redundancy, if possible, or the best way of implementing it if it is unavoidable. If redundancy is inevitable, consultations are meant to discuss measures to be taken to ensure that as little hardship as possible is caused to the affected employees.

An employer can terminate employment by notice but this by itself is not sufficient; there must be valid reasons related to the employee’s conduct, capacity and compatibility or based on the operational requirements of the employer.

The notice periods are determinable by the intervals upon which wages or salary are paid. For instance, where the contract is to pay wages daily, the contract is terminable at the close of any day without notice to either party; where the contract is to pay wages periodically at intervals of less than one month, the contract is terminable at the end of the period next following the giving of notice in writing; where the contract is to pay wages or salary periodically at intervals of or exceeding one month, the contract is terminable by either party at the end of the period of 28 days next following the giving of notice in writing.

The foregoing will not apply if a longer notice period is provided in a contract of employment.

Service pay is payable to an employee whose contract of service has been terminated by notice but no payment is due if the employee was a member of a registered pension or provident fund scheme, a gratuity or service pay scheme established under a collective agreement, or any other scheme established by the employer whose terms are more favourable than those of a service pay scheme established under the Employment Act, or the National Social Security Fund.

The applicable procedure for termination on account of redundancy and other applicable payments is as follows.

  • Selection of employees affected by the redundancy by considering seniority in time, skill, ability and reliability of each employee of the particular class of employees affected by the redundancy (see 6.1 Grounds for Termination for additional detail on the selection criteria).
  • Issuance of the notice of intended termination due to redundancy to the affected employees or a union where applicable, at least one month prior to the date of intended redundancy. Consultations (see 6.1 Grounds for Termination for additional detail on consultations) are required to be carried out during currency of this notice.
  • Notice to the labour officer at least one month prior to the date of intended redundancy.
  • An employee should not be placed at a disadvantage for being or not being a member of a trade union for purposes of redundancy payments.
  • Payment of severance pay at the rate of not less than 15 days’ pay for each completed year of service.
  • Payment of accrued leave in cash.
  • Payment in lieu of notice, which is payable at the end of the 30 days’ notice of intended redundancy. The employee can alternatively serve notice instead of being paid in lieu thereof.

Courts have firmly held that the procedure prescribed under Section 40 of the Employment Act is mandatory and must be followed for any redundancy to be fair.

Section 44 of the Employment Act, 2007 provides that summary dismissal shall take place when an employer terminates the employment of an employee without notice or with less notice than that to which the employee is entitled by any statutory provision or contractual term.

For a summary dismissal to be fair and lawful, there must be compliance with two things: there must be substantive justification for the dismissal (termination based on valid/fair grounds) and there must be adherence to requirements of procedural fairness. Failure to comply with both aspects renders a termination/dismissal unlawful and unfair. An employee whose employment has been unlawfully and unfairly terminated is entitled to maximum compensation of twelve months' pay or reinstatement, among others.

Regarding substantive justification/valid reasons for summary dismissal, Section 44 (3) states that an employer may dismiss an employee summarily when the employee has by his conduct indicated that he has fundamentally breached his obligations under the contract of service.

Section 44 (4) provides that the following amount to gross misconduct to justify the summary dismissal of an employee for lawful cause:

  • without leave or other lawful cause, an employee absents himself from the place appointed for the performance of his work;
  • during working hours, by becoming or being intoxicated, an employee renders himself unwilling or incapable to perform his work properly;
  • an employee wilfully neglects to perform any work that it was his duty to perform, or if he carelessly and improperly performs any work that from its nature was his duty, under his contract, to have performed carefully and properly;
  • an employee uses abusive or insulting language, or behaves in an insulting manner, to his employer or to a person placed in authority over him by his employer;
  • an employee knowingly fails, or refuses, to obey a lawful and proper command that was within the scope of his duty to obey, issued by his employer or a person placed in authority over him by his employer;
  • in the lawful exercise of any power of arrest given by or under any written law, an employee is arrested for a cognisable offence punishable by imprisonment and is not within 14 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.

The above list is not exhaustive and an employer is not precluded from summarily dismissing on other grounds that constitute gross misconduct or a fundamental breach of contractual obligations. What amounts to a valid ground for dismissal is based on the test of reasonableness. The courts have noted that it is not for the court to audit the truth of reasons for termination of employment. All the court needs to ensure is that the reason put forward for dismissal or termination is a reasons that the employer reasonably believed to exist and is a reason for which a reasonable employer would terminate the services of an employee. This, however, does not mean that a court cannot scrutinise and analyse the validity or grounds for summary dismissal. There are numerous cases in which the courts have found that the reasons for termination were not valid nor reasonable.

On procedural fairness, an employer should comply with the mandatory provisions of Section 41 of the Employment, the main aspects of which are:

  • the duty to explain the reasons why the employer is considering terminating the employment; and
  • giving an opportunity to an employee to be heard before effecting the termination (commonly known as the show cause process). An employee is entitled to have a fellow employee or union representative present during the show cause hearing.

Internal disciplinary procedures and policies (which do not conflict with the law) should also be adhered to. This may, for instance, include appeal procedures.

The foregoing provisions in the Employment Act on the right to be heard are modelled on the International Labour Organization Termination of Employment Convention No 158 of 1982. In particular, like Section 46 of the Act, Article 7 of the Convention requires, in mandatory terms, that no decision to terminate the services of a worker for reasons relating to the worker’s conduct or performance can be taken without providing him with an opportunity to defend himself on the allegations.

Mutual separation/termination agreements are permissible in Kenya. There are no statutory provisions governing such agreements and so the common law principles apply in terms of what constitutes a valid and enforceable contract.

There have also been judicial pronouncements on mutual termination and the courts have upheld the fact that parties to an employment relationship are free to agree to terminate it at any time.

Mutual termination agreements may take the form of a usual contract or a Voluntary Early Retirement scheme, where employees voluntarily agree to retire based on terms offered by an employer and accepted by an employee.

Mutual separation agreements usually have provisions whereby the employee agrees to waive, release or discharge the employer from any liability arising from the separation in consideration of the employee receiving a separation package.

A mutual separation agreement will not be enforced if it is shown that it was vitiated by undue influence, intimidation, coercion, inducement, duress or misrepresentation, or any other factors that would vitiate any other contract.

There is no specific protection in law against dismissal for particular categories of employees.

In practice, most employers hesitate in employees who are pregnant or on maternity leave, ostensibly to avoid being accused of discrimination based on pregnancy, which is prohibited in both statute and the Constitution. In addition, Section 29(2) of the Employment Act provides that a female employee has the right to return to the job she held immediately prior to the maternity leave or to a reasonably suitable job on terms and conditions no less favourable than those that would have applied had she not been on maternity leave.

However, as noted in 6.1 Grounds for Termination, before termination of employees on account of illness or incapacity, judicial pronouncements have placed obligations upon employers to accord reasonable accommodation and exercise due care and sensitivity to employees before termination. Judicial pronouncements have also placed obligations on how to terminate on account of poor performance by affording employees opportunities to improve over time; see 6.1 Grounds for Termination for more details.

For there to be a lawful termination, there must be both substantive procedural fairness. Substantive fairness entails ensuring that there are valid and fair reasons for termination, which reason is related to an employee’s conduct, capacity and compatibility or based on the operational requirements of the employer.

Section 46 of the Employment Act, 2007 provides for wrongful and unfair grounds for termination or dismissal, or the imposition of a disciplinary penalty:

  • 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.

Procedural fairness requires employers to accord employees an opportunity to be heard before a decision on termination is made. It also obliges employers to observe and follow other applicable procedural provisions in the law or internal policies and procedures.

If a determination is made that a dismissal or other termination is unjustified or unfair, an employee may be granted the following reliefs:

  • an order for compensation up to a maximum of twelve months’ pay;
  • where the employer failed to issue notice preceding termination, payment in lieu of notice;
  • reinstatement to employment without loss of benefits in that the employee is treated as if they never left employment;
  • salary arrears, if any, to which the employee is entitled to at the time of termination; and
  • re-engagement in work comparable to what the employee was engaged in before the dismissal or other reasonably suitable work at the same wage.

For orders of reinstatement and re-engagement, several factors need to be considered, including the practicability of reinstatement or re-engagement, whether the employee wishes to return to work and the circumstances in which termination took place.

Section 5 of the Employment Act, 2007 prohibits direct or indirect discrimination and harassment against any employee or prospective employee on grounds of race, colour, sex, language, religion, political or other opinion, nationality, ethnic or social origin, disability, pregnancy, mental status or HIV status. Article 27 of the Constitution lists all these grounds and add the following as prohibited grounds for discrimination: age, health status, ethnic or social origin, conscience, belief, culture, dress, language and birth.

Section 5 states that the prohibition of discrimination is with respect to recruitment, training, promotion, terms and conditions of employment, termination of employment or other matters arising from employment.

Section 5 provides that it is not discrimination to:

  • take affirmative action measures consistent with the promotion of equality or the elimination of discrimination in the workplace;
  • distinguish, exclude or prefer any person on the basis of an inherent requirement of a job;
  • employ a citizen in accordance with the national employment policy; and
  • restrict access to limited categories of employment where it is necessary in the interest of State security.

Damages for discrimination are not fixed and at large. They are awarded based on the discretion of the court, depending on the circumstances of each case.

The Employment and Labour Relations Court is the main specialised court established by the Constitution and the Employment and Labour Relations Court Act to determine disputes relating to employment and labour relations. Appeals from the Employment and Labour Relations Court lie to the Court of Appeal and ultimately to the Supreme Court, but only in limited circumstances.

Some magistrates of the subordinate courts have recently been granted jurisdiction to hear certain employment disputes.

The Directorate of Occupational Health and Safety has recently been recognised by the court as having the power to adjudicate work injury claims; however, there is ongoing litigation on this at the appellate courts.

Most employment-related claims are instituted by the individual grievants/claimants. Class, group or representative actions are also possible and this usually happens through trade unions. Group and representative actions to agitate employment and labour relations matters of a constitutional nature can also be instituted – and this has mostly been done by human and civil rights activists – in view of the provisions of Articles 22 and 258 of Constitution, which allow such actions.

Representation in court is usually in person (individual claimant), by an advocate or a trade union.

In the initial stages of its existence, the Employment and Labour Relations Court was reluctant in enforcing pre-dispute arbitration agreements. This has changed in recent years and the court is now embracing ADR mechanisms. The general rule, therefore, is that arbitration agreements are enforceable in view of the provisions of Article 159 of the Constitution, which requires courts to encourage ADR. Also relevant is Section 15(4) of the Employment and Labour Relations Court Act, which has certain provisions on ADR. Rule 15 of the fairly recent Employment and Labour Relations Court Procedure Rules 2016 also requires the court to encourage parties to consider ADR. The Constitution, as well as the Employment Act require the courts to encourage parties to embrace ADR.

The Employment and Labour Relations Court has in the recent past (from early 2019) rolled out the court-annexed mediation programme, whereby cases are screened by the Mediation Registrar and referred to the court-mandated mediation programme. A number of cases have been settled through this mechanism.

Being a common law jurisdiction, costs usually follow the event, meaning the successful party should be awarded costs, although it is usually at the discretion of the court. Prevailing employees are usually awarded costs, although the court is usually reluctant in awarding costs against employees.

Munyao Muthama and Kashindi

Chaka Place 3rd Floor (“TCA”)
Argwings Kodhek Road
PO Box 24482-00100
Nairobi

+254 20 2117477

+254 20 2714208

nairobi@mmkadv.co.ke www.mmkadv.co.ke
Author Business Card

Law and Practice

Authors



Munyao Muthama and Kashindi is a medium-sized, fast-growing and progressive firm that offers legal service to local and international clients. The firm's offices are strategically located in Nairobi, Mombasa and Kakamega. Its key practice areas are employment and labour relations, environmental law, energy and natural resources, environmental law, corporate and civil litigation, banking and finance, tax advisory, environmental law, family law, IP, public procurement, insurance, immigration advisory services, legislative drafting, compliance and governance audits. The firm's expertise extends to advising and representing clients in all aspects of employment law. It handles contentious and non-contentious matters, including representations in court, drafting of employee contracts, drafting and reviewing policies and manuals, advice on termination, dismissals, redundancies and restructuring, managing employee exits, advising on post-termination restrictions, advice on collective bargaining and negotiations, secondment, outsourcing and transfer of employees, offering a wide range of advice on employment and labour laws. The legal team comprises leading lawyers who have been acclaimed locally and internationally for their expertise in employment and labour relations matters. The firm also conducts legal training on employment laws and emerging and developing issues in this area.

Compare law and practice by selecting locations and topic(s)

{{searchBoxHeader}}

Select Topic(s)

loading ...
{{topic.title}}

Please select at least one chapter and one topic to use the compare functionality.