The Insider's Guide to Hiring in Kenya

Kenya Employee Resignation

Notice

Form

Written resignation letter is standard.

Notice period

According to the Employment Act, employees paid monthly are required to give their employer one month’s notice before resigning, unless their employment contract specifies a different notice period.

Payment in lieu of notice or notice waiver: If an employee doesn’t provide the required notice, they must compensate you with wages equal to the notice period. Additionally, if the resignation breaches a contractual agreement to work for a set duration, the employee may be held responsible for damages.

End-of-Service Benefits

Severance/Gratuity

Generally, employees who resign aren’t eligible for severance pay.

Other Benefits

• Final Dues: All wages earned up to the employee’s last working day

• Accrued Leave Pay: Payment for any unused annual leave days, calculated on a pro-rata basis

• Service Pay (if applicable): Payable only if the employee was not a member of NSSF, a registered pension scheme, or a gratuity scheme. As most formal employees are enrolled in NSSF, service pay is often not payable

Termination Documentation

• Signed resignation letter

• Acknowledgement of resignation in writing

• Certificate of Service (mandatory under Section 51): Must be issued to any employee who has worked for more than four consecutive weeks, including employer’s name and address, employee’s name, job description, employment start and end dates, nature of termination (resignation), and signature with date

• Final payslip and computation of dues

• Clearance confirmation (IT, finance, HR, etc.)

• Statement of final payments and any deductions

Employer Termination With Cause in Kenya

Acceptable grounds

The Employment Act permits you to summarily dismiss an employee for “gross misconduct.” This includes situations where the employee:

• Is absent from work without authorization or a valid reason

• Is intoxicated to the point of being unable to perform duties

• Intentionally neglects, refuses, or improperly performs work

• Uses abusive or offensive language

• Willfully disobeys a superior’s instructions

• Is arrested for a criminal offense punishable by imprisonment and remains in custody for more than 10 days

• Engages in criminal conduct against the employer or its property

Before terminating an employee for gross misconduct, you’re required to inform the employee of the allegations and give them a chance to respond. If the employee believes the dismissal was unjust or carried out in bad faith, they have the right to pursue compensation through the court.

Notice

Form

In summary dismissals, you must provide written reasons for the dismissal, proof of a fair hearing (Section 41), and documentation of disciplinary proceedings.

Notice period

Not applicable. Summary dismissal (Section 44) requires no notice period, but still requires a procedural hearing.

Payment in lieu of notice or notice waiver

If the employee commits gross misconduct and is summarily dismissed under Section 44(4), no notice or pay in lieu is required. You must demonstrate that the reason was valid and lawful and that due process (including a disciplinary hearing) was followed.

End-of-Service Benefits

Severance

Not applicable.

Other Benefits

When an employee is lawfully dismissed without notice (summary dismissal), you’re required to pay any pending wages, allowances, or other benefits. Additionally, within seven days, you must file a written report with the labor officer in the district where the employee was working, outlining the reasons for the dismissal and the applicable notice period.

Termination Documentation

• Letter of Termination: States the reason for termination (e.g., gross misconduct), specifies whether it’s with or without notice, and refers to any disciplinary proceedings held

• Minutes or Records of Disciplinary Hearing: Evidence that the employee was informed of the charges, given an opportunity to respond, and the decision made by a neutral panel

• Final Dues Statement: Breakdown of salary up to the last day, accrued leave, and deductions (if any)

• Clearance Documents (if part of company policy): Confirmation that the employee returned company property, exit interviews, or HR clearance forms

• Certificate of Service: Under the Employment Act, employers must issue a certificate of service upon termination (even for dismissal with cause), unless the employee worked less than four weeks. This certificate must include employer’s name and address, employee’s name, start date, nature and usual location of the job, end date, and any additional legally required details. Failure to provide it may result in a fine up to KES 100,000 and/or imprisonment up to six months

Employer Termination Without Cause in Kenya

Acceptable Grounds

“Without cause” generally refers to termination that’s not disciplinary—meaning the employee isn’t guilty of misconduct, but you end the contract for other reasons (e.g., contract expiry or performance-based decisions). Termination “without cause” must still be for a valid reason and accompanied by procedural fairness, or you may be liable for unfair termination (Section 49).

Form

Termination must be in writing. Letter must include: date of termination, applicable notice period (or pay in lieu), stated reason (even if general), reference to employee’s rights (final dues, certificate, etc.)

Notice period

Employees on indefinite contracts are entitled to a minimum of one month’s written notice if they’ve been employed for five years or less. For those who have worked more than five years, the required notice period increases to at least two months.

Payment in lieu of notice or notice waiver

If you opt to waive all or part of an employee’s notice period, you’re still obligated to pay the employee for the duration that would have been worked. You may also choose to provide payment in place of giving notice.

End-of-Service Benefits

Severance

Only payable if termination is due to redundancy (which is not possible under the EOR setup).

Other Benefits

Upon termination without cause, the employee is entitled to:

• Final Salary: Wages earned up to the final day, including pay in lieu of notice if not worked

• Accrued Leave: Cash payment for any unused annual leave (Section 28)

• Service Pay (only if NSSF not paid): Must be calculated in accordance with Section 35(5)

• Pension / NSSF Contributions: Ensure that final contributions are submitted

Termination Documentation

You must issue and maintain the following documents:

• Termination Letter: Clearly states the reason for termination, the termination date, and any payments due

• Final Dues Statement: Includes gross earnings, leave days balance, notice pay, and deductions

• Certificate of Service: Required under the Employment Act for employees working more than four weeks. Must include employer’s name and address, employee’s name, start date, nature and usual location of the job, end date, and any other legally required details. Failure to provide may result in a fine up to KES 100,000 and/or imprisonment up to six months

• Clearance Documents (internal policy dependent): IT, HR, and Finance sign-offs, and return of company property

• Evidence of Fair Procedure: Performance records, meeting notes, or records of warnings/reviews in case of non-disciplinary poor performance

Mutual Termination Agreements in Kenya

Mutual termination occurs when both you and the employee voluntarily agree to end the employment relationship under mutually agreed terms. While not explicitly detailed in the Employment Act, 2007, mutual separation is legally recognized under contract law principles, provided it’s voluntary, both parties consent in writing, and the agreement doesn’t violate labor rights. Courts will typically uphold a mutual termination agreement if it’s not coerced, ambiguous, or made under duress.

Notice

Form

A written mutual separation agreement is required, signed by you (or authorized officer), the employee, and a witness (optional but standard). The agreement must clearly outline: effective date of termination, reason for mutual separation, waiver of further claims (if any), breakdown of final payments.

Notice period

Not legally required if the parties agree to waive it in the mutual agreement. However, the agreement must specify whether notice is being served, waived, or if payment in lieu is being made.

Waiver of notice

Allowed and common in mutual separation. You may offer notice pay, or the employee may waive it. The Employment Act allows for payment in lieu of notice under Section 36, and it applies here unless expressly waived.

End-of-Service Benefits

Severance

Not mandatory unless the agreement includes it.

Other Benefits

• Final Salary: All earnings up to the final working day

• Accrued Leave: Cash compensation for any unused annual leave (Section 28)

• Notice Pay (if not waived): One month’s salary if applicable

• Pension/NSSF Contributions: Ensure all contributions are up to date and final payments submitted

• Medical Cover: Usually terminates with employment unless otherwise extended by agreement

• Bonus or Commission: Must be paid if contractually earned by the date of separation

Termination Documentation

• Mutual Separation Agreement: Includes the termination date, final entitlements, waiver of further claims (if applicable), confidentiality clause (if needed), and signatures

• Final Payslip or Settlement Sheet: Provides a clear breakdown of salary, leave days, benefits, and deductions

• Certificate of Service: Required under the Employment Act for employees working more than four weeks. Must include employer’s name and address, employee’s name, start date, nature and usual location of the job, end date, and any other legally required details. Failure to provide may result in a fine up to KES 100,000 and/or imprisonment up to six months

• Clearance Form (based on internal policy): Confirms return of company property and HR/Finance sign-offs

• Exit Interview or Handover Report: Optional but standard practice

Offboarding Process for the End of Fixed-term Contracts in Kenya

If the Fixed-Term Contract Ends Normally

This applies when the contract runs its full course and ends on the agreed date.

Notice

Not legally required if the contract specifies a clear end date. However, standard practice is to give written communication of non-renewal at least one month before expiry (unless otherwise agreed in contract or CBA). No payment in lieu of notice is due if the term simply ends as agreed.

End-of-Service Benefits

Severance/Gratuity

Severance pay is not payable.

Other Benefits

Upon expiry, you must settle:

• Final wages
• Accrued leave pay
• Any contractual benefits
• NSSF/SHIF remittances

If the Employer Terminates Early

This occurs when you end the contract before the agreed end date, outside misconduct grounds.

Notice

Written notice is mandatory unless the contract provides otherwise. Notice period is as per the contract, or at least one month (for monthly contracts), per Section 35. Payment in lieu of notice is allowed under Section 36.

End-of-Service Benefits

Severance/Gratuity

Severance pay is not payable.

Other Benefits

• Early Termination Compensation: If the contract does not allow early termination, the employee may claim salary for the remaining period as damages, based on case law

• Final Salary: Payment up to the date of termination

• Pay in Lieu of Notice

• Accrued Leave Pay

• Clearance and Exit Documentation

• Certificate of Service

Final Payment Timing & Immigration and Visa Compliance in Kenya

Final Payment Deadline

According to Section 18(4) of the Employment Act, 2007, you must pay the employee’s final wages and any other dues on or before the next payday following the termination or resignation.

Penalty

While the Employment Act doesn’t specify a direct monetary penalty for late payment, failure to pay wages timely is considered a breach of contract and can lead to complaints to the Directorate of Labour or Employment and Labour Relations Court. You may be ordered to pay the wages plus compensation for damages and interest.

Visa and Immigration Compliance

Employers hiring foreign nationals (expatriates) must comply with the Kenya Immigration Act, Cap 172 and Immigration Regulations.

Work Permit Requirements:

• Foreign employees must hold a valid work permit issued by the Directorate of Immigration Services before starting employment
• Work permits must be renewed annually
• It’s illegal to employ foreigners without valid permits

Obligations on Termination:

• Upon termination (including resignation), you must notify the Directorate of Immigration and the employee must surrender the work permit or visa if applicable
• Failure to comply can result in fines or sanctions against you
• You should ensure that the employee’s visa status remains valid throughout employment and assist with renewals if necessary

Penalties: Employing a foreign national without a valid work permit can attract a fine up to KES 1,000,000, imprisonment, or both (Immigration Act).