Fired, Laid Off or Let Go? Your Guide to Termination and Dismissal of Employees in Kenya
- Muhoro & Gitonga Associates
- Jan 24, 2024
- 6 min read
Updated: Oct 1
Quick Summary
Termination and Dismissal of Employees in Kenya is governed by the Employment Act and strict procedural requirements to protect both employers and employees. Employers must provide fair and valid reasons for termination, follow due process including notice and hearing, and comply with payment obligations.
Failure to do so can lead to claims of unfair termination with compensation up to 12 months’ salary. This guide covers key legal concepts, practical checklists, recent landmark court decisions, and answers common questions to empower both employers and workers.
Understanding Termination and Dismissal under Kenyan Law
In Kenya, termination broadly means the ending of employment by any means — resignation, mutual agreement, expiry of fixed-term contract, redundancy, or dismissal. Dismissal specifically refers to employer initiated termination often due to misconduct, poor performance, or operational reasons.
Summary dismissal (without notice for gross misconduct) is permissible but requires strict procedural compliance under the Employment Act (Sections 41, 44, 45). Distinguishing between termination and dismissal is critical because unfair dismissal claims can result in significant compensation awards.
Kenyan Employment Act 2007: Crucial Sections for Termination
Several Employment Act provisions define employer obligations and employee rights on termination:
Section 40: Procedures for redundancy including notification of Labour Officer, consultation, and severance pay.
Section 41: Fair hearing requirements before dismissal for misconduct or poor performance.
Section 42: Regulation of probationary employment periods.
Section 44: Grounds and process for lawful summary dismissal.
Section 45: Definition and consequences of unfair termination, including claim procedures.
Section 47 & 49: Complaint and remedy mechanisms including compensation and reinstatement.
Common Types of Termination: What You Need to Know
Voluntary Resignation or Mutual Agreement: Employee initiated separation with agreed terms.
Termination with Notice: Common form where employer or employee provides written notice (28 days monthly, 7 days or daily wages).
Summary Dismissal: Immediate dismissal for serious gross misconduct. Employers must hold a fair hearing allowing employee representation.
Redundancy / Retrenchment: Employer reduces workforce for operational reasons following statutory consultation and severance payment procedures.
Probation Termination: Special rules apply; probationary period must be bona fide and performance issues documented.
Constructive Dismissal: When employer breaches contract terms forcing employee resignation.
Remedies and Compensation for Unfair Termination
If termination is found to be unfair or unlawful, remedies include:
Reinstatement or Re-engagement: Rare and dependent on feasibility.
Compensation: Often up to 12 months’ gross salary reflecting loss and damages.
Certificate of Service: To assist employee future employment.
Claims Filing: Employees can file a complaint with the Labour Office under the Ministry of Labour and Social Protection within 3 months or the Employment and Labour Relations Court (ELRC) within 3 years, established under Article 162 (2) (a) of the Constitution of Kenya 2010, if they believe their dismissal was unfair or unlawful.
Landmark Kenyan Court Cases (2023 - 2025)
These decisions highlight enforcement of fair termination laws and procedural fairness:
Facts: The employee, a loader, was summarily dismissed for allegedly causing loss of Ksh 21,000 without proper procedure.
Legal Issues: Whether the employer complied with fair hearing requirements under Sections 41 and 45 of the Employment Act.
Outcome: The court found the summary dismissal unfair due to a hurried hearing without employee representation or witness examination. Compensation was awarded.
Lesson: Even in gross misconduct cases, procedural fairness is mandatory; failure leads to unfair termination claims.
Facts: An employee laid off through redundancy challenged the process citing procedural and substantive unfairness , lack of notice and failure to notify the Labour Officer.
Legal Issues: Compliance with Section 40 redundancy procedures, including notification, consultation, and payment of severance.
Outcome: The court fined the employer Kshs 2.1 million, declaring the redundancy unfair due to non-compliance.
Lesson: Redundancy must follow strict procedural steps, including statutory notifications, to avoid legal penalties.
Facts: Employee’s position was abolished during company restructuring. Employer claimed financial hardship justified redundancy and proper procedure was followed.
Legal Issues: Whether redundancy was genuine and if fair selection criteria were applied.
Outcome: The Court found that the redundancy process was done procedurally and fairly whilst following the laid down legal procedures.
Lesson: Employers must prove genuine operational reasons and apply fair, transparent selection criteria in redundancies.
Facts: Employee dismissed by letter citing redundancy due to “out of crop period” (seasonal business loss).
Legal Issues: Compliance with redundancy procedures including consultation and proper notice.
Outcome: Termination declared unlawful and unfair for failure to follow statutory redundancy requirements. Compensation awarded (10 months’ salary).
Lesson: Business cycles alone do not justify bypassing statutory redundancy procedures; adherence is essential.
Facts: Employee terminated while away on bereavement leave; employer cited redundancy without proper notice or consultation.
Legal Issues: Whether employee was afforded natural justice, including consultation and notice rights.
Outcome: Court found the termination unfair and unlawful due to lack of procedural fairness and deprivation of terminal dues.
Lesson: Employers must uphold employee rights to notice and consultation, even during difficult employee circumstances.
6. Mijengo Investments Limited v Kemunto (Employment and Labour Relations Appeal E040 of 2024) [2025] KEELRC 387 (KLR) (14 February 2025) (Judgment)
Facts: Dispute over redundancy and mutual termination agreement; employer’s adherence to statutory redundancy steps under scrutiny.
Legal Issues: Whether the employer complied with Section 40. Notification, severance calculation, and consultation.
Outcome: Depending on compliance, court emphasized need for rigorous observance of procedural fairness and statutory formulas.
Lesson: Employers cannot shortcut redundancy steps; accuracy and fairness prevent costly disputes.
Facts: Employee terminated without a show-cause letter or fair disciplinary hearing.
Legal Issues: Violation of procedural fairness safeguards under Sections 41, 43, and 45.
Outcome: Court ruled termination substantively and procedurally unfair; awarded certificate of service and pay in lieu of notice.
Lesson: Proper disciplinary procedure is a cornerstone protecting employer and employee rights.
8. Mugumo Munene v Nation Media Group Limited [2020] KEELRC 228 (KLR) & Nation Media Group Limited v Munene (Civil Appeal E603 of 2021) [2025] KECA 114 (KLR) (24 January 2025) (Judgment)
Facts: Employee served redundancy letter on same day without consultation; issues arose over terminal dues calculation and alleged discrimination.
Legal Issues: Adequacy of notice and consultation; fairness in terminal dues payment.
Outcome: Termination declared unfair; compensation of approximately Ksh 3.8 million awarded by the Employment and Labour Relations Court (ELRC) and upheld by the Court of Appeal.
Lesson: Redundancy must be handled with procedural fairness, consultation, and fair severance to avoid large liability.
Practical Checklists to Avoid or Address Termination Disputes
For Employers:
Provide written notice aligned with contract and law
Allow fair hearing with employee representation in misconduct cases
Document all warnings, appraisals, and communications
Notify and consult Labour Officer and unions in redundancy cases
Calculate severance and terminal payments accurately and timely
Train managers and HR regularly on labor law compliance
For Employees:
Understand your contract termination clauses and your rights
Seek timely legal or union advice when facing dismissal
Request relevant documentation and clarity on reasons for termination
File claims promptly within statutory deadlines
Maintain records of all related communications and payments
Drafting Tips for Contracts & HR Policies
Explicitly state termination procedures referencing Employment Act provisions
Include clear notice and severance terms
Incorporate procedural fairness requirements in dismissal clauses
Keep language simple but legally precise for enforceability
Frequently Asked Questions (FAQ) Termination and Dismissal of Employees in Kenya
Q: What is the role of the Labour Officer in termination?
A: Mandatory notification for redundancies (Section 40). Failure renders redundancy unfair and subject to penalties.
Q: How soon can I challenge a termination?
A: Claims typically must be filed within 3 months of termination to Labour Officer or within 3 years to the Court.
Q: What compensation can I expect for unfair termination?
A: Up to 12 months’ salary depending on circumstances and compliance by employer.
Q: Are probationary employees protected?
A: Yes, but probation must be bona fide and employers should give feedback and notice for termination.
Q: When can summary dismissal be used?
A: Only for gross misconduct with procedural fairness and evidentiary support.
