Employee termination is one of the most sensitive and legally fraught responsibilities employers face. In Kenya, labour disputes dominate the dockets of the Employment and Labour Relations Court, with termination-related cases often resulting in hefty compensation awards, reputational harm, and strained workplace morale.

For businesses, mastering the balance between legal compliance and compassionate practice is not optional—it’s a strategic imperative. This guide, grounded in Kenya’s Employment Act 2007 and real-world case law, equips employers and HR professionals with actionable steps to conduct terminations lawfully, ethically, and with minimal risk.

1. Legal Framework: The Employment Act 2007 And Key Requirements

Kenyan law provides a robust framework to protect both employers and employees during termination. Below are critical legal pillars every employer must understand:

Valid Grounds for Termination (Section 35)

The law permits termination only for the following reasons:

• Misconduct: E.g., theft, fraud, harassment, or repeated insubordination.
• Poor Performance: After documented opportunities for improvement.
• Redundancy: Economic or operational necessity (e.g., automation, restructuring).
• Incapacity: Physical/mental inability to perform duties (supported by medical evidence).

Key Legal Obligations:

• Notice Periods: Vary by contract type (Section 35):
  • Permanent employees: At least 28 days’ written notice (or payment in lieu).
  • Casual workers: No statutory notice, but fairness is still required.
• Procedural Fairness:
  • Employees must be informed of allegations in writing.
  • A disciplinary hearing must be conducted (Section 41), allowing the employee to respond and call witnesses.
  • Employers must provide a written termination letter stating the reason(s) and referencing prior warnings.

Case Study 1: Okiya Omtatah vs. Kenya Airports Authority (2018)

Activist Okiya Omtatah was summarily dismissed for allegedly disrupting operations. The High Court ruled the dismissal unlawful because KAA failed to grant him a fair hearing. The court emphasized that procedural flaws invalidate even substantively valid terminations, ordering reinstatement and back pay.

Summary Dismissal (Section 44)

Reserved for gross misconduct (e.g., embezzlement, workplace violence, or willful neglect of duty). Employers must:

• Conduct an immediate, thorough investigation.
• Provide the employee with evidence of wrongdoing.
• Allow representation during hearings.

Example: A bank cashier caught stealing funds may face summary dismissal if CCTV footage, witness statements, and a disciplinary hearing confirm guilt.

2. Best Practices For A Fair And Ethical Termination Process

A. Misconduct: Investigate, Document, and Follow Due Process

• Step 1: Preliminary Investigation

Gather evidence (e.g., emails, witness statements, CCTV). Suspend the employee with pay if necessary (avoid unpaid suspensions unless contract permits).

• Step 2: Disciplinary Hearing
  • Issue a formal notice detailing allegations, evidence, and hearing date.
  • Allow the employee to respond and present witnesses.
  • Appoint an impartial chairperson (e.g., HR manager or external consultant).
• Step 3: Decision and Appeal
  • Deliver findings in writing.
  • Offer a right to appeal (internally or through the Labour Office).

Red Flag: Avoid “kangaroo courts.” In Joseph Kamau vs. Nairobi Hospital (2019), the court overturned a dismissal because the hearing panel included the accuser’s direct supervisor, creating bias.

B. Poor Performance: Progressive Discipline

• Performance Improvement Plans (PIPs)
  • Set measurable goals (e.g., “Increase sales by 15% in 3 months”).
  • Provide training, mentorship, and weekly feedback.
  • Document all discussions.
• Termination as a Last Resort

If performance fails to improve, terminate with notice and pay accrued benefits.

C. Redundancy: Consultation and Alternatives

Kenyan law (Section 40) mandates:

• Consultation: Engage affected employees/unions at least one month before redundancy.
• Criteria: Use objective metrics (e.g., “last in, first out” or skills-based assessments).
• Severance Pay: At least one month’s salary per year of service (for employees with 1+ years of service).

Case Study: Bamburi Cement Ltd (2020)

Bamburi Cement retrenched 90 employees without prior consultation. The court ordered the company to pay additional compensation, stressing that meaningful dialogue is non-negotiable, even during financial distress.

D. Incapacity: Medical and Compassionate Considerations

• Request a medical report from a recognized practitioner.
• Explore accommodations (e.g., reduced hours, lighter duties).
• Terminate only if incapacity persists and no alternatives exist.

3. Essential Documentation: Your Shield Against Litigation

Courts prioritize documentary evidence. Maintain:

1. Signed Employment Contracts: Clearly define roles, KPIs, and termination clauses.
2. Disciplinary Records:
   • Dated warning letters (first written, final written).
   • Signed acknowledgment of warnings by the employee.
3. Hearing Minutes: Detailed notes of proceedings, evidence, and decisions.
4. Termination Letter: Must include:
   • Reason for termination (e.g., “redundancy under Section 40”).
   • Reference to prior warnings/PIPs.
   • Breakdown of final dues (notice pay, leave days, severance).

Case Study: Eveready East Africa Ltd (2016)

Eveready lost a wrongful dismissal case after failing to produce warning letters. The court ruled the termination unfair, awarding the employee 12 months’ salary.

Template: Termination Letter Checklist

• Employee name, job title, and start date.
• Clear reason for termination (align with Employment Act).
• List of final payments (attach calculations).
• Return of company property deadline.
• Right to appeal process.

4. Avoiding Disputes: Proactive Strategies For Employers

A. Train Managers and HR Teams

• Conduct workshops on the Employment Act, focusing on Sections 35–44.
• Role-play termination scenarios to build empathy and legal awareness.

B. Alternative Dispute Resolution (ADR)

• Mediation: A neutral third party facilitates a mutual agreement (e.g., reduced severance in exchange for a confidentiality clause).
• Arbitration: Binding decisions without court delays.

Example: A Nakuru retail company resolved an absenteeism dispute via mediation, agreeing to a mutual separation with two months’ severance.

C. Conduct Regular Compliance Audits

• Review termination policies annually with legal counsel.
• Ensure templates (e.g., warning letters, PIPs) align with current law.

D. Post-Termination Support

• Offer outplacement services (e.g., CV writing workshops).
• Provide a neutral reference letter to avoid defamation claims.

5. Mitigating Litigation Risks: Lessons From Kenyan Courts

• Compensation Awards: Courts may award up to 12 months’ salary for unfair termination.
• Reinstatement: Rare but possible if procedural flaws are egregious (e.g., Omtatah case).
• Reputational Costs: Social media backlash can harm employer branding.

Kenyan Case Studies

Case 1: Mary Chemweno Kiptui vs. Kenya Power & Lighting Co. Ltd (2014)

Facts: Ms. Kiptui, a Kenya Power employee, was dismissed for alleged absenteeism without a formal hearing.

Ruling: The court declared the termination unfair due to procedural flaws. Kenya Power failed to:

• Issue written allegations.
• Conduct a disciplinary hearing.

Outcome: Ms. Kiptui was awarded 12 months’ salary as compensation.
Lesson: Employers must strictly follow Section 41’s hearing requirements.

Case 2: Kenya Revenue Authority vs. Reuben Mwangi Wafula (2015)

Facts: The KRA dismissed Mr. Wafula for gross misconduct (fraudulent tax clearance certificate issuance).

Ruling: The termination was upheld because:

• KRA provided evidence of misconduct.
• A fair hearing was conducted with union representation.

Lesson: Thorough investigations and adherence to due process validate summary dismissal under Section 44.

Case 3: Thomas De La Rue (K) Ltd vs. David Opondo Omutelema (2017)

Facts: The employee was dismissed for redundancy but claimed unfair termination.
Ruling: The court found the redundancy lawful because:

• The employer proved economic necessity.
• Consultations were held with the union.
• Severance pay was provided.

Lesson: Redundancy requires proof of necessity and consultation per Section 40.

English Law Precedents Influencing Kenyan Practice

Kenyan courts often reference English common law. Key cases include:

Case 1: Western Excavating (ECC) Ltd v Sharp (1978)

Facts: An employee resigned due to his employer’s breach of contract (withholding pay).
Ruling: The resignation constituted “constructive dismissal” (akin to unfair termination under Kenyan law).

Lesson: Employers must avoid unilateral changes to employment terms without agreement.

Case 2: British Home Stores Ltd v Burchell (1978)

Facts: An employee was dismissed for alleged dishonesty.
Ruling: The dismissal was fair because the employer:

• Conducted a reasonable investigation.
• Had genuine belief in misconduct.
• Followed a fair procedure.

Lesson: The “Burchell Test” is cited in Kenyan courts to assess fairness in misconduct dismissals.

Essential Documentation

• Signed employment contracts: Define termination clauses.
• Warning letters: Dated and acknowledged by the employee.
• Hearing minutes: Signed by all attendees.
• Termination letter: Cite specific sections of the Employment Act.

CONCLUSION

Terminating an employee is never easy, but a legally sound and humane process protects your organization and upholds workplace dignity.

By adhering to the Employment Act, documenting rigorously, and prioritizing fairness, employers can navigate this complex terrain confidently.

At Mukamba & Company Advocates, we specialize in guiding businesses through employment law challenges. From drafting airtight termination policies to representing you in disputes, our team ensures compliance while safeguarding your reputation.

This article is for informational purposes only and does not constitutes legal advice.

 

Author: Eugene

Mukamba Managing Partner

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