Employment and Labour Laws in Kenya: A Comprehensive Guide

Kenya’s employment and labour laws form the framework for the management of relationship between employers and employees. Both parties are endowed with legal rights and obligations that ensure fair treatment.

In this article, we provide a general overview of the specific Acts of Parliament that govern the employer-employee relataionship and highlight the law in relation to the taxation of employees.

The purpose of this article to provide a general understanding for consideration when drafting employment contracts, facing or handling disciplinary or dismissal issues, and dealing with tax concerns.

Kenya’s Employment and Labour Laws Legal Framework

The employment and labour legal framework is mainly guided by the following key laws which outlines the rights and duties of both employers and employees:

In relation to taxation of employees and employers the following laws apply:

The Persons with Disabilities Act
The Pensions Act
The Retirement Benefits Act
The National Social Security Fund Act; and
The Social Health Insurance Act which replaces the National Health Insurance Fund Act

Let’s take a closer look at the rights and obligations of employers and employees below.

Rights of Employees in Kenya

Right to Fair Remuneration: Every employee is entitled to a fair wage for the work they perform. This means payment for services rendered, ensuring the wage is not below the statutory minimum wage set by the government.
Right to Rest Days: Employees are entitled to rest periods. The law mandates that an employee should have at least one rest day every week. This helps maintain their well-being and productivity.
Right to Leave: Employees have the right to annual leave, sick leave, and maternity/paternity leave. Maternity leave is granted for 90 days, while paternity leave is generally 14 days.
Right to Safe Working Conditions: Employers are required to provide a safe and healthy working environment. This includes ensuring that employees are protected from injury at work.
Right to Join Trade Unions: Employees have the right to join or form trade unions. These unions work to protect workers’ rights and negotiate better terms of employment.

Duties of Employees

Duty to Perform Work: Employees are expected to perform their tasks diligently, as agreed in the employment contract. Neglecting duties could lead to disciplinary action.
Duty to Obey Reasonable Orders: Employees must follow lawful and reasonable instructions given by their employers, as long as the instructions do not violate any laws.
Duty of Loyalty: Employees are expected to act in good faith and not engage in activities that harm their employer’s business interests, such as disclosing confidential information.
Duty to Respect Company Policies: Employees must adhere to company rules, including those related to dress code, punctuality, and behavior.

Rights of Employers in Kenya

Right to Manage the Workplace: Employers have the right to organize, manage, and supervise the workplace as they see fit, as long as they respect the rights of employees.
Right to Dismiss Employees: Employers can terminate employees, but the termination must be fair and lawful. Employees can be dismissed for reasons such as poor performance, misconduct, or redundancy. However, fair procedure and notice are required.
Right to Control Work Standards: Employers can set reasonable standards for work performance, conduct performance reviews, and enforce policies that promote productivity.
Right to Protect Business Interests: Employers have the right to protect their intellectual property, confidential information, and trade secrets.

Duties of Employers in Kenya

Duty to Pay Wages: Employers must pay employees their wages on time and in full. Failing to do so can lead to legal actions by the employee.
Duty to Provide Safe Working Conditions: Employers are legally obligated to ensure that the workplace is safe and free from any risks that could harm the health and safety of employees.
Duty to Issue Employment Contracts: Under Kenyan law, every employee should have a written contract. This contract must specify the terms and conditions of employment, including remuneration, job description, and benefits.
Duty to Treat Employees Fairly: Employers must avoid any form of discrimination, harassment, or victimization in the workplace. This duty includes protecting employees from unfair treatment based on gender, age, disability, or any other unlawful grounds.

Termination of Employment Contracts in Kenya

Dismissal is one of the most common issues in employment law. Understanding what constitutes a fair dismissal is vital for both employers and employees. We have written more in-depth articles on Unfair termination and Unfair dismissal in Kenya and Constructive Dismissal in Kenya.

What is a Fair Dismissal?

A dismissal is fair if the employer has a valid reason, such as poor performance, misconduct, or redundancy, and follows a fair process. The law outlines the following steps for a fair dismissal:

Investigate the Issue: Employers must investigate any allegations thoroughly before taking action.
Issue a Warning: In most cases, employees must be warned about the issue before dismissal, especially for performance or behavior-related issues.
Provide a Hearing: Employees should be given a chance to defend themselves in a disciplinary hearing.
Give Notice: The employer must give the employee notice of termination unless the dismissal is due to gross misconduct.

What is an Unfair Dismissal?

An employee may claim unfair dismissal if the termination did not follow the due process or lacked a valid reason. Common reasons for unfair dismissal include:

Dismissal without a fair hearing.
Discrimination or retaliation (e.g., firing an employee for joining a union).
Dismissal without notice or without paying for leave days and other benefits owed.

If you believe your dismissal was unfair, you may file a claim with the Industrial Court or the Employment and Labour Relations Court.

Taxation for Employers and Employees in Kenya

Kenya’s tax system impacts both employers and employees. Employers must deduct and remit taxes from their employee’s wages, as stipulated by the Pay As You Earn (PAYE) system. Employers also contribute to the National Social Security Fund (NSSF) and Social Hospital Insurance Fund (SHIF) on behalf of their employees.

For employees, tax obligations include paying income tax based on their earnings. However, certain deductions like retirement savings can lower taxable income for both the employer and employee.

Employers need to ensure they comply with the tax laws, including accurate and timely remittance of taxes, health insurance and social security contributions.

Resolving Employment Disputes in Kenya

If either party breaches the employment contract or fails to comply with labor laws, legal action may be necessary. Employees can seek legal redress if their rights are violated, while employers can take legal steps against employees for non-compliance or misconduct.

Some common disputes include wrongful termination, failure to pay wages, discrimination, and breach of contract. Resolving these disputes may involve negotiation, mediation, or legal proceedings in court.

Conclusion

Kenya’s employment and labour laws are designed to create a fair and safe working environment for both employers and employees. By understanding the rights and duties of each party, you can avoid legal conflicts and ensure a positive working relationship. If you’re drafting or reviewing an employment contract, facing dismissal, or dealing with tax matters, it’s always advisable to seek expert legal advice.

For businesses and individuals seeking professional legal advice on employment law in Kenya, our law firm provides comprehensive services, including employment contract drafting, dispute resolution, and guidance on tax matters. Don’t navigate the complexities of employment law alone—contact us today for expert support.