INTRODUCTION

“A promise is a debt unpaid!” but to our Courts, it is something more than that.

The doctrine of legitimate expectation has increasingly become a powerful tool in employment disputes, particularly where employees rely on promises, conduct, or established practices of their employers. Traditionally rooted in public law, this doctrine has evolved significantly and is now firmly part of Kenya’s employment law landscape.

A key area where this doctrine has gained traction is in fixed-term employment contracts, especially where such contracts are renewed repeatedly over time. This raises a critical legal question:

Can repeated renewals create a reasonable expectation of continued employment?

This article explores the legal framework, key judicial decisions, and practical implications of legitimate expectation in fixed-term contracts in Kenya.

LEGAL FRAMEWORK

Understanding Employment Contracts in Kenya

Under the Kenya’s Employment Act,2007, employment relationships fall into four main categories. This was affirmed by the Court in the case of Krystalline Salt Limited v Kwekwe Mwakele & 67 Others [2017] eKLR :

“The Employment Act recognizes four main types of contracts of service: contract for an unspecified period of time, for a specified period of time, for a specific task (piece work), and for casual employment. The decision to elect which form of employment to go for, either as an employee or employer, will depend on a number of factors, but the dominant consideration is, for the employee, the earnings and other physical conditions of employment, and on the other hand, savings for the employer.”

Among these, fixed-term contracts are particularly common in both the private and public sectors. These contracts have a defined start and end date and are generally understood to terminate automatically upon expiry.

However, as we shall see, the legal position is not always that straightforward.

The Doctrine of Legitimate Expectation -what is legitimate expectation?

The doctrine of legitimate expectation arises where a party reasonably relies on a clear promise or representation.

The Supreme Court of Kenya in the case of Communications Commission of Kenya & 5 others v Royal Media Services Ltd & 5 others [2014] eKLR set out the key elements for legitimate expectation:

• • • there must be an express, clear and unambiguous promise ;
    • the expectation itself must be reasonable;
    • the representation must be one which it was competent and lawful for the decision-maker to make; and
    • there cannot be a legitimate expectation against clear provisions of the law or the Constitution.

Although originally applied to public authorities, Kenya Courts have extended these principles to private employment, particularly regarding renewal of fixed term contracts.

Fixed-Term Contracts: The General Legal Position

The Employent Act recognizes fixed-term contracts under Section 10(3), which requirews that the contract specify its duration or end date.It provides as follows:

“Where the employment is not intended to be for an indefinite period, the period for which it is expected to continue or, if it is for a fixed term, the date when it is to end.”

It is notable that the Employment Act does not go further than recognizing and acknowledging the existence of fixed-term employment contracts.

Despite this gap, fixed-term contracts are largely used in Kenya, especially in the private sector and there is now an uptake of the same by Government. Our Courts have over time developed significant jurisprudence on fixed-term contracts even in the absence of substantial legislation on the same.

Kenyan Courts have consistently emphasized that fixed-term contracts carry no rights, obligations, or expectations beyond the expiry date, unless continuous renewals or contractual clauses create a legitimate expectation.

In the case of  Transparency International – Kenya v Omondi [2023] eKLR the Court of Appeal confirmed that:

“It is trite law that a fixed-term contract of employment is a lawful mode of employment with a start and end dates.”

The general position on termination of fixed-term contracts is that upon its expiry, the relationship and duties of the parties to the contract automatically cease. This was enunciated by the Court of Appeal in Keen Kleeners Limited v Kenya Plantation and Agricultural workers’ Union [2021] eKLR where the court stated that:

“The general position on the consequences of expiry of a fixed term contract, as can be gleaned from various decisions of this Court and that of the Employment and Labour Relations Court, is that once a fixed term contract is at an end, the employer has no obligation to justify termination on other grounds beyond the lapse of the fixed period.”

Further, the Court of Appeal in Registered Trustees of the Presbyterian Church of East Africa & another v Ruth Gathoni Ngotho- Kariuki [2017] eKLR held that that fixed term contracts carry no rights, obligations, or expectations beyond the date of expiry.

The court in Wanjohi Muriuki vs. Kirinyaga Water and Sanitation Company Limited & another [2012] eKLR stirred the pot a little further by stating that:

“In the view of the Court, there is no obligation on the part of an employer to give reasons to an employee why a fixed-term contract of employment should not be renewed. To require an employer to give reasons why the contract should not be renewed, is the same thing as demanding from an employer to give reasons why, a potential employee should not be employed. The only reason that should be given is that the term has come to an end, and no more. … Reasons, beyond effluxion of time, are not necessary in termination of fixed-term contracts, unless there is a clause in the contract, calling for additional justification for the termination.”

Further, Courts have ruled that giving reasons for non-renewal is expected only if there was such an obligation created by the contract. The Court in Transparency International – Kenya v Omondi [2023] eKLR restated this position and held as follows:

“We dare say that an automatically renewable fixed-term contract is a contradiction in terms, as it would subject the parties to an indeterminate employment contract.”

From the above decisions, it is notable that Courts look at fixed-term contracts as strict deadline contracts. The Courts assume that by the provision of a termination date, a party should not expect further engagement or even reasons for termination other than the fact that the termination date has passed, unless the contract itself specifies otherwise.

However, various unique circumstances have led the Courts to veer off the general position and to create an exception for certain circumstances. Legitimate expectation is an exception that Courts have since acknowledged.

The Exception: Legitimate Expectation in Practice

Despite the general rule that fixed term contracts are strict deadline contracts, Courts have carved out exceptions on legitimate expectation, particularly in cases of continuous renewal or consistent past practice.

1. Long and Continuous Renewals

Changalwa Vs Unga Limited [2025] eKLR

In this case, the employee had worked under successive fixed-term contracts for over 13 years. The Court held as follows:

“I find in the instant case that any reasonable person in the Claimant’s position would have expected a renewal of contract, or at least notification of non-renewal before the contract term came to an end, based on the previous conduct of the Respondent over more than 13 years that the Claimant worked for the Respondent. I accordingly find and hold that the Claimant had legitimate expectation of renewal of his contract which the Respondent breached to his detriment by failing to either renew the contract or to notify him in advance of the intention not to renew the contract.”

The decision demonstrates that long standing, uninterrupted renewals can create a legitimate expectation of continued employment.

2. Consistent Past Practice

Keen Kleeners Limited v Kenya Plantation and Agricultural workers’ Union (2019) eKLR

In this case, the employee was engaged on successive fixed-term contracts from 2007, each renewed routinely until August 1, 2011. The Court found that consistent renewals without notice create an expectation of renewal requiring justification.

“The long-standing, uninterrupted and consistent practice of renewing or extending the grievants’ contracts would have surely led the grievants to believe that their last contracts would be renewed, more so in the absence of any reasonable notice to the contrary given to them by the appellant…Having established the existence of a legitimate expectation of renewal on the part of the grievants, the appellant had to prove the reasons for terminating the employment relationship.”

The Court emphasized that legitimate expectation is grounded in reasonableness and fair dealing, and that employers must justify non-renewal where such expectations exist.This means employers cannot create a pattern of renewals and then abruptly terminate without warning.

3. Contractual Renewal Clauses

Mweni v Child Welfare Society of Kenya [2025] KEELRC

In this case, the ELRC Court held that where the terms of a fixed-term contract provide for renewal based on performance, availability of funds, conduct of the employee, productivity to the organization, and human resource needs, an employee had a legitimate expectation that an employer would follow the pre-requisite considerations for renewal outlined in the contract.

Failure to demonstrate adherence to the conditional renewal clauses in the fixed-term contract amounts to unfair termination.

Conflicting Judicial Position

Transparency International – Kenya Vs Omondi [2023] eKLR

In this case, the Court of Appeal departed from the decisions in Changalwa and Keen Kleeners above, affirming that legitimate expectation generally does not arise in fixed term contracts. The Court of Appeal held as follows:

“We quote the above findings of the learned judge with approval and hold that there are no reasons that we can discern, that would make one depart from those findings. Indeed, the doctrine of legitimate expectation does not arise in the renewal of a fixed-term contract and its non-renewal cannot constitute unfair termination or dismissal. Having noted that the respondent was in employment under a fixed-term contract and that the contract came to an end at the appointed time, we are of the view that any relief sought by the respondent on basis of her assertion that her employment was unfairly terminated was automatically not available to her.”

CONCLUSION

Fixed-term contracts in Kenya are, by their nature, time-bound engagements that ordinarily terminate automatically upon expiry. However, the doctrine of legitimate expectation introduces an important qualification grounded in fairness and reasonableness.

Ultimately, until the Supreme Court definitively reconciles these competing lines of authority, the doctrine of legitimate expectation will continue to operate as a context-driven exception to the general rule on fixed-term contracts one that demands careful navigation by employers and employees alike.

Ultimately, in Kenyan employment law, what is written in the contract may not always be the end of the story conduct matters too.

 

At SSM Law Advocates, we provide comprehensive legal support in all matters relating to employment and labour law. Our team of skilled employment lawyers advises both employers and employees on the drafting, review, and enforcement of employment contracts, including probationary and permanent contracts. We ensure that the employment contracts of our clients are fully compliant with the Employment Act, the Constitution, and evolving judicial interpretations. Whether you’re looking to implement sound HR practices, navigate employee laws, or resolve workplace disputes, we help you mitigate risk, maintain regulatory compliance, and uphold fair labour standards at every stage of the employment relationship.

If you require structured legal guidance on termination of fixed-term contracts in Kenya, our experienced legal team is available to assist. Contact: smusembi@ssmlawadvocates.com; pgatua@ssmlawadvocates.com

Contributors:

Peter Njoroge Gatua – Legal Associate

Gloria Samba – Trainee Advocate

Disclaimer

This article is for informational purposes only and should not be construed as legal advice.

A. INTRODUCTION

Imagine this scenario: a disciplinary hearing is scheduled in a few days, and the employee has formally been invited by HR to attend. Then, just a day before the hearing, the employee sends a brief email:

“kindly accept this as my resignation with immediate effect.”

For many employees facing allegations of workplace misconduct, resignation can appear to be a convenient exit strategy. By terminating the employment relationship before the disciplinary process concludes, the employee hopes to avoid potential consequences, including dismissal for gross misconduct, loss of benefits, and reputational damage.

But does the does the law actually permit this?

It has become increasingly common for employees to resign in an effort to pre-empt or evade disciplinary proceedings. This practice raises a critical legal question:

Can an employee lawfully resign to evade disciplinary action?

This question has generated significant debate among employers, HR professionals, and legal practitioners, particularly following the decision of the Court of Appeal in Peter Chege vs Timsales Limited (2025) eKLR.

Some commentators have interpreted the judgment to mean that resignation cannot be used to defeat disciplinary proceedings. Others remain uncertain about the precise legal implications of the decision.

This article unpacks the legal framework governing resignation in Kenya and examines what the courts have actually settled on the question of whether an employee may resign while facing disciplinary action.

B. LEGAL FRAMEWORK GOVERNING EMPLOYEE RESIGNATION IN KENYA

To answer the question posed above, it is important to first understand the legal basis for resignation under Kenyan Law.

Resignation is one of the recognized modes of terminating a contract of service in Kenya. Although not expressly defined in statute, it is grounded in the provisions of the Employment Act, 2007.

Sections 35 & 36 of the Act provide the statutory basis for termination of employment by either party through notice or payment in lieu of notice.

Termination by Notice

Section 35 of the Employment Act, 2007 requires employees paid monthly to issue at least 28 days’ written notice before terminating employment. It provides as follows:

where the contract is to pay wages or salary periodically at intervals of or exceeding one month, a contract terminable by either party at the end of the period of twenty-eight days next following the giving of notice in writing.

Payment in Lieu of Notice

Section 36 on the other hand, allows either party to terminate the contract of employment without issuing notice, provided that the terminating party pays the other party the equivalent salary for the notice period.

The said section provides as follows:

“Either of the parties to a contract of service to which section 35(5) applies, may terminate the contract without notice upon payment to the other party of the remuneration which would have been earned by that other party, or paid by him as the case may be in respect of the period of notice required to be given under the corresponding provisions of that section.”

Collectively, these provisions establish a fundamental principle of Kenyan employment law:

Either party to an employment contract has the right to terminate the relationship by issuing notice or paying salary in lieu of such notice. However, where termination is initiated by the employer, the law imposes more stringent procedural and substantive safeguards that the employer must satisfy before lawfully terminating the employment relationship

C.WHAT THE COURTS HAVE SAID

Kenyan Courts have consistently characterized resignation as a unilateral act.

In principle, resignation does not require acceptance by the employer to be effective. Once an employee properly communicates their decision to resign in accordance with statutory or contractual notice requirements, the employer cannot simply reject the resignation.

However, Courts have had to confront a critical question:

At what point does an employer cease to have authority/jurisdiction to subject an employee to disciplinary proceedings for alleged workplace misconduct?

The case of Chege v Timsales Ltd (Civil Appeal 29 of 2020)[2025] KECA 1660 (KLR)

Brief Facts of the Case:

The Appellant was an employee of the respondent and a member of a trade union.

In July 2018, employees of the respondent demanded payment of delayed salaries and were subsequently locked out after allegedly participating in an unprotected strike. The Union Challenged the lockout in the Employment and Labour Relations Court (ELRC) but the Court dismissed the claim and authorized the respondent to proceed with disciplinary action.

Following the ruling the respondent(the employer) issued notices to show cause to the affected employees, including the appellant.

Before the disciplinary process was concluded, the appellant(the employee) purported to retire under clause 18 of the collective bargaining agreement (CBA), which allowed retirement at the age of 47  years. He claimed that he served a retirement notice dated 30^th June 2019.

The employer denied receiving the notice and proceeded to dismiss him for misconduct.

The appellant subsequently filed suit before the Employment and Labour Relations Court seeking declarations that his retirement was valid and that the disciplinary process was null and void.

The ELRC dismissed the claim, holding that retirement could not be used to sanitize misconduct or defeat a lawful disciplinary process. Dissatisfied with the decision, the appellant appealed to the Court of Appeal.

Issues for determination:

1. Whether an employee could lawfully issue a retirement or resignation notice to defeat or evade pending disciplinary proceedings.
2. Whether the respondent had a valid and lawful basis to subject the grievants to a disciplinary process in accordance with the collective bargaining agreement and the Employment Act.
3. Whether an employee who sought to retire to escape disciplinary consequences for gross misconduct was entitled to rely on the CBA to claim retirement benefits or gratuity.

Holding of the Court

The Court of Appeal affirmed the trial Court’s decision that a retirement notice cannot be allowed to evade lawfully disciplinary proceedings if that notice itself is invalid due to non-compliance with a binding Court directive, statutory and CBA notice requirements.

However, this case should be read in the context of its very specific facts.

Two key factors influenced the Court’s decision:

First, there existed a binding court order directing the employees to undergo disciplinary proceedings under the CBA and the Employment Act before resuming work.

The appellate court noted that a ruling delivered on 21 June 2019 by Justice Jane Onyango expressly directed the affected employees to undergo disciplinary proceedings. That ruling was never appealed.

By attempting to retire before complying with the court-sanctioned directive, the appellant effectively acted in defiance of a binding court order.

Second, the court found that the appellant’s purported retirement notice did not comply with the mandatory statutory and CBA notice requirements.

For these reasons, the court held that the retirement notice was invalid and incapable of defeating the disciplinary process.

Our view, as will be demonstrated by the authorities discussed below, is that but for the existence of the binding court directive compelling the appellant to undergo the disciplinary process, nothing in law would have prevented the employee from resigning with immediate effect, provided that the resignation complied with the applicable statutory, contractual, and CBA requirements.

The current legal framework governing employment relationships in Kenya permits either party to terminate the contract of service by issuing the requisite notice prescribed in the contract of employment or by making payment in lieu of such notice, as contemplated under Sections 35 and 36 of the Employment Act.

Consequently, it is our considered view that the growing perception that an employee cannot resign with immediate effect, or cannot resign in circumstances where disciplinary proceedings are pending, is not grounded in the existing statutory framework governing employment relationships in Kenya.

Rather, the decision in Peter Chege v Timsales Limited must be understood within its specific factual matrix,  particularly the existence of a binding court directive and the appellant’s failure to comply with the mandatory notice requirements under the statute and the collective bargaining agreement.

This interpretation is consistent with earlier jurisprudence of the Employment and Labour Relations Court, which has repeatedly affirmed that resignation remains a unilateral act capable of terminating the employment relationship where the statutory and contractual requirements are satisfied.

Our position finds further support in the jurisprudence discussed below.

Supporting Jurisprudence

a) Kennedy Obala Oaga v Kenya Ports Authority [2018] KEELRC 2247 (KLR)

This case established the position that if an employee takes the proper steps to validly terminate the employment relationship ie (by providing notice or payment in lieu of notice), even if done solely to escape disciplinary consequences, the employment relationship lawfully ceases, and the employer losses the jurisdiction to subsequently discipline or dismiss the individual.

In this case, the Claimant resigned after being heard by the Disciplinary Committee of the Respondent, but before the Committee gave its verdict, he tendered his resignation with immediate effect and opted to pay the Respondent one (1) month’s salary in lieu of notice.

The court held as follows:

resignation by an Employee from employment is basically termination of employment at the instance of the Employee. It is a unilateral act

The Court further emphasized that the Employment Act does not restrict an employee from terminating employment before, during, or after disciplinary proceedings, provided the requirement on notice are complied with.

 The Employment Act does not require the Employer to accept a notice of termination issued by the Employee, for that notice to take effect.

The Employment Act does not bar, or in any way limit an Employee, from terminating his/her contract of employment before, during or after, a disciplinary hearing.

There is no limitation imposed on an Employee who desires to terminate his contract of Employment under Section 35 and 36 of Employment Act 2007, except that termination is preceded by a written notice, or pay in lieu of notice.

The Court has not come across any provision limiting the right of termination in the Employment Act 2007, the Kenya Ports Authority Act Cap 391 the Laws of Kenya, the Disciplinary Handbook, and the Human Resource Manual, which governed the Claimant’s contract of employment. There is no clause, or provision, compelling an Employee to put off his decision to leave employment before the outcome of a disciplinary process initiated against him.”

The existing legal framework enables Employees to resign and place themselves beyond the disciplinary authority of their Employers.”

 

Importantly, the court observed that employees often resign during disciplinary processes to avoid consequences such as loss of benefits, stigma associated with dismissal for gross misconduct, and diminished employability.

“ It is common for Employees who commit acts of gross misconduct, such as the Claimant herein, to tender resignation to avoid the consequences of their acts. Such consequences include denial of terminal benefits; stigma associated with dismissal for gross misconduct; and diminished employability.

The Claimant resigned because he felt by doing so, he would avoid or mitigate the consequences of summary dismissal.

 b) Ayonga v Falcon Signs Ltd Cause 878 of 2017 KEELRC 300 KLR

 Similarly in this case, the court affirmed that resignation is one of the recognized modes of terminating the employer-employee relationship. The court held as follows:

resignation is one of the modes of terminating the employer-employee relationship. It is a tool that is available to an employee to trigger his separation from the employer. Being a unilateral act, the employee who wishes to sever the employer-employee relation can elect to serve the employer with resignation. The resignation may be expressed to take effect either immediately or at a later date as indicated by the employee. Once an employee communicates the decision to resign from employment, the contract of employment is effectively terminated. The validity of the resignation is not dependent on the employer accepting it.

At the same time, an employee is under no obligation to justify the decision to resign from employment. All that he is required to do is provide the requisite notice to terminate the contract or make payments in lieu of such notice.

The above case underscores our argument that once an employee communicates their decision to resign from employment, the employment contract of employment is effectively terminated depending on whether the resignation is to take immediately (wherein they will be required to payment their employer in lieu of the notice) or at a later date as prescribed in their contract of employment.

The Courts have also noted that rejecting an employee’s resignation may be amount to forcing an employee into continued employment, which would be inconsistent with the prohibition against forced labour under Article 30 of the Constitution of Kenya 2010.

D.JURISDICTION TO CONTINUE DISCIPLINARY PROCEEDINGS

The Courts have drawn an important distinction between resignation by notice and resignation with immediate effect.

Where the employee has given notice and is serving a notice period, the employment relationship continues and the employer retains the jurisdiction/authority to discipline the employee until the notice period ends.

However, where resignation is with immediate effect, and the employee has paid the employer for the notice period in lieu then the employer ceases to have jurisdiction or authority to commence or continue with disciplinary proceedings against that employee.

This principle was articulated in the South African decision of  Mtati v. KPMG (Pty) Ltd (2017 which has been was cited with Approval in the case of Kennedy Obala (cited above).

The South African Labour Court in the case held that the authority to discipline an employee is grounded in the existence of an employment relationship. Once that relationship terminates, the employer’s disciplinary jurisdiction ceases.

an employee’s immediate resignation deprives the employer of jurisdiction to continue disciplinary proceedings. The court emphasized that authority to discipline is based on the existence of an employment contract, which ends upon immediate resignation. The Court, however, distinguished the consequences of immediate resignation and resignation by notice on a pending disciplinary process. If the employee has given notice and is serving the notice period, the employer retains jurisdiction to discipline the employee until the notice period ends.

The basic principle, as I understand it, is that the fact that an employee has given notice to terminate the employment contract does not take away the power of the employer to discipline him or her whilst serving the notice period. In other words, if an employee is serving notice he or she is still subject to the authority and the power of the employer in as far as the employment relationship is concerned.

E. PRACTICAL REMEDIES TO EMPLOYERS

Although the law allows employees to resign during disciplinary proceedings as established, Courts have acknowledged that this creates a regulatory gap that can be exploited.

In the case of Kennedy Obala Oaga cited above, the Court shed some light on the reason behind an employee resigning during a disciplinary process in the following terms:

It is common for Employees who commit acts of gross misconduct, such as the Claimant herein, to tender resignation to avoid the consequences of their acts. Such consequences include denial of terminal benefits; stigma associated with dismissal for gross misconduct; and diminished employability.The Claimant resigned because he felt by doing so, he would avoid or mitigate the consequences of summary dismissal.

 The Court notes that for employees who commit acts of gross misconduct, they tend to tender resignation in order to avoid the consequences of their act which would include denial of terminal benefits, stigma associated with dismissal for gross misconduct and diminished employability.

Accordingly, the Court in the case suggested practical measures employers can adopt to address this challenge. The Court advised employers to consider including provisions in their Human Resource Manuals and Employee Contracts, stating that employees who resign while facing disciplinary proceedings shall not be entitled to certain terminal benefits which would otherwise be payable on regular termination such as notice and severance pay.

F.CONCLUSION

The debate surrounding resignation during disciplinary proceedings is often clouded by misconceptions.

The decision in Peter Chege v Timsales Limited did not establish a blanket rule that the employees cannot resign to avoid disciplinary action.

The broader legal position remains clear: Employees retain the right to terminate their employment by issuing notice or paying salary in lieu of notice.

However, the legal consequences depend on how the resignation is effected.Where resignation is issued by notice, the employer retains disciplinary jurisdiction during the notice period.
Where resignation takes effect immediately through payment in lieu of notice, the employment relationship ends and the employer’s disciplinary authority ceases.

At SSM Law Advocates, we provide comprehensive legal support in all matters relating to employment and labour law. Our team of skilled employment lawyers advises both employers and employees on the drafting, review, and enforcement of employment contracts including probationary and permanent contracts. We ensure that the employment contracts of our clients are fully compliant with the Employment Act, the Constitution, and evolving judicial interpretations. Whether you’re looking to implement sound HR practices, navigate employee laws, or resolve workplace disputes, we help you mitigate risk, maintain regulatory compliance, and uphold fair labour standards at every stage of the employment relationship.

If you would like to consult on this article or any other legal issue, you may contact our legal team  through smusembi@ssmlawadvocates.com; pgatua@ssmlawadvocates.com

Contributors

Gloria Samba.-Trainee Advocate

Peter Njoroge Gatua-Associate Advocate

 Disclaimer

This article is for informational purposes only and should not be construed as legal advice.

1. Introduction

It is 9.17 AM, and the office is quiet. The day has barely begun when you open your office email expecting routine correspondence. Instead, you see it:

“Subject: Notice of Intended Redundancy.”

The words feel clinal, almost detached. But their impact is immediate and deeply personal. Your mind begins to race. Is this final? Have I done something wrong? What does the law say? What happens next?

Next door, in the HR office, the same email was drafted after weeks of financial modelling, restructuring proposals, and difficult internal conversations. To the employer, it is a strategic business decision but to the employee it presents a moment of uncertainty.

In Kenya, the law recognizes both realities. Redundancy may be commercially necessary, but it is also legally regulated. The process is not merely administrative, it is legal. When mishandled, it becomes a costly burden for the employer, exposing the organization to litigation, compensation claims and reputational risk.

2. Legal Foundation

Article 41 of the Constitution of Kenya guarantees every person the right to fair labour practices. When employers are terminating contracts of service on the basis of redundancy, they need to remain aware of their mandate to uphold fair labour practices as contemplated in the Constitution.

Section 2 of the Employment Act, 2007 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”

Redundancy therefore arises where, despite the employee being blameless, their role/position becomes superfluous to the employer’s operational requirements. Typical triggers include- business closure, restructuring, automation, downsizing, funding constraints and diminished workload.

At this juncture it is important for us to emphasis that it is a job role/position that becomes redundant and not an employee.

Further, because the employee is blameless, the law imposes strict procedural and substantive safeguards. Even where the business justification is valid, non-compliance with the statutory process renders the termination unlawful.

3. What Must an Employer Do?

The governing provision is Section 40 of the Employment Act, which sets out Mandatory preconditions for a valid redundancy. Non-compliance with these conditions renders the process procedurally unfair, even where the redundancy is substantially justified.

a) Apply Objective Selection Criteria

An important aspect of procedural fairness in redundancies is the criteria employed to determine which employees are to be laid off. An employer must apply objective and transparent selection criteria when identifying employees to be declared redundant.

 Section 40 (1) (c) of the Employment Act lists the considerations which include the employee’s seniority in time and to the skill, and the ability and reliability of each employee or of the particular class of employees affected by the redundancy. This is to mean that before selecting the employee(s) to be declared redundant, an employer has to consider these set of factors.

Courts often interpret “seniority in time” through the  principle of “last- in-first-out”. This denotes that in deciding the employees to lay off, the employer should consider the number of years an employee has worked and the more the number of years worked, the lesser the probability of being declared redundant. The same criterion is also applied to the skills of an employee. The employee with the most or finest skills should have lesser chances of being laid off as compared to the less skilled ones.

An employer is also required to be objective in the selection criteria by considering attendance records, an employee’s efficiency at the job, their experience, or the length of their service as set out in the case of Standard Group Limited v Rugami & another [2025] eKLR.

This process must not be discriminatory, arbitrary, or targeted at specific individuals under the guise of redundancy. If the process appears pre-determined or discriminatory, courts are likely to invalidate it.

b) Issue a Notice of Intention to Declare Redundancy

Section 40 requires an employer to issue a written notice of intention to declare redundancy at least one month prior to the intended termination.

 The notice must explain:

1. The reasons for the redundancy; and

2. The extent of the intended redundancy

This notice serves as a trigger for consultation. Courts have made it clear that redundancy should not be abrupt  and consultation is  required to be genuine, meaningful engagement with affected employees and must not be treated as mere procedural “box ticking” exercise.

In interpreting the depth of this requirement, Kenya Courts frequently rely on International Labour Organization (ILO) Convention No. 158 (Termination of Employment Convention). While Section 40 of the Employment Act outlines the notice period, Article 13 of the ILO convention provides the substantive “soul“ to the process. It mandates that an employer must provide relevant information to workers’ their representatives in good time and consult on measures to be taken to avert or minimize terminations, as well as measures to mitigate the adverse effects.

By adopting these international standards, Kenyan jurisprudence most notably in the Kenya Airways vs. Aviation Allied Workers Union [2014] case has established that “consultation” is not just a courtesy but a mandatory opportunity for employees to propose alternatives to their job loss. If an employer fails to engage in this “back-and-forth” dialogue, the redundancy may be declared procedurally unfair regardless of the company’s financial justification.

The notice requirements differ depending on union membership

• • • • • Where the affected employee is a member of a trade union(unionized), notice must be given to both the relevant trade union and the labour officer in charge of the area; and
        • Where the employee is not a member of a trade union (not unionized), notice must be given to the employee personally and the labour officer.

Failure to notify the Labour Officer is one of the most common and fatal procedural defects in redundancy cases.

c)Issue a Notice of Termination or Pay one month’s wages in lieu of notice. (Distinct from Redundancy Notice)

In addition to the one-month redundancy notice (notice of intended redundancy) discussed above, the employer must also issue:

• • • • • One month’s notice of termination; or
        • Pay one month’s wages in lieu of notice.

These are two distinct notices. The redundancy notice informs of the intention and enables consultation and must be issued and allowed to run while the termination notice effects the termination.

Therefore, an employer cannot pay in lieu of first notice. It must be issued and allowed to run.

This distinction was affirmed in Nyakwara v Housing Finance Company of Kenya Limited & another, where the court held that compliance with Section 40 is mandatory and procedural lapses invalidate the redundancy.

Therefore, collapsing the two notices into one will lead to the whole redundancy process being declared invalid.

d)Leave and Severance pay(pay separation benefits)

Upon redundancy, an employee is entitled to:

1. Accrued Leave

     Any earned but untaken leave must be paid in cash.

2. Severance Pay

              Section 40 mandates severance pay of not less than fifteen (15) days’ pay for each completed year of service.

For example:

• • • • • If an employee earns KES 100,000 per month and has worked for 30 years:
        • 15 days’ pay = KES 50,000
        • Severance = 50,000 × 30 = KES 1,500,000

Severance is mandatory and separate from notice pay, leave pay, gratuity (if applicable), or pension entitlements.It is therefore a statutory minimum and not a discretionary benefit.

e)Protection Against Trade Union Discrimination

An employer must not disadvantage or treat an employee differently based on:

• • • • • Membership in a trade union; or
        • Non-membership in a trade union.

Where a Collective Bargaining Agreement (CBA) exists, its redundancy provisions must be honored. Section 40 prohibits discriminatory treatment in the computation or payment of redundancy benefits.

4. Practical Summary: Compliance Checklist

In summary, before an employer effects lawful redundancy, they should confirm:

• • • • • An objective and documented selection criteria to select the employee(s) to be declared redundant was applied;
        • Issue a proper notice of intended redundancy to the employee’s trade union and the relevant labour officer or in the event an employee is not a member of a trade union, the notice is issued to them personally and to the relevant labour officer;
        • Genuine consultation occurred
        • A separate termination notice is issued or the affected employee is paid one month’s wages/salary in lieu of notice;
        • Pay off any accrued but unpaid leave and severance pay; and
        • Ensure an employee is not disadvantaged due to their affiliation or lack thereof to a trade union.

N.B.- The redundancy notice issued in no. 2 above must be issued to the affected employee/s to set stage for consultation, an employer is not allowed to pay one month’s wages in lieu of this first notice.

5. Final Observations

For Employees: If you have received that email, pause but do not panic then ask yourself the following questions?

a) Has the Labour Officer been formally notified of the intended redundancy?

b) Will a genuine consultation process take place with the affected employee(s)?

c) What objective criteria will be applied in selecting employees for redundancy?

d) Will the employer issue all statutory notices required under law, or provide wages in lieu of notice where applicable?

e) Have all terminal benefits, including accrued leave and severance, been correctly calculated?

For Employers: Redundancy is both legally sensitive and financially significant. Most failed redundancy processes collapse not because the business lacked justification, but because the procedure was flawed.

For professional guidance on implementing a lawful redundancy process in Kenya or challenging an unlawful redundancy, contact our Employment Law team today:smusembi@ssmlawadvocates.com; pgatua@ssmlawadvocates.com

CONTRIBUTORS:

Gloria Samba – Trainee Advocate

Peter Njoroge Gatua – Associate Advocate

 

You can also visit our website https://ssmlawadvocates.com/en for more information about us and our services.