Lawful Termination of Employees in Kenya

Introduction

Under Kenyan law, when terminating an employee, an employer must have both a valid reason for the termination and follow the fair disciplinary procedure set under the Employment Act. This helps prevent legal disputes for unlawful or unfair termination.

A termination that appears commercially reasonable may still be declared unfair or unlawful if procedural requirements were ignored.

What Is Termination of Employment?

Termination of employment refers to the lawful ending of an employment relationship between an employer and employee.

Termination of an employer-employee relationship may occur through:

• Resignation by the employee
• Dismissal by the employer
• Expiry of a fixed-term contract
• Redundancy
• Retirement
• Mutual separation

This article focuses mainly on employer-initiated termination, also termed dismissal by the employer.

The Legal Framework Governing Termination in Kenya

Termination of employment in Kenya is governed primarily by:

• The Employment Act 2007
• The Constitution of Kenya 2010
• Employment contracts
• Human resource policies
• Collective Bargaining Agreements (CBAs)
• Decisions of the Employment and Labour Relations Court

Kenyan law strongly protects employees against arbitrary dismissal.

Substantive Justification: A Valid Reason for Termination

Substantive Justification refers to whether the employer had a genuine and lawful reason to fire the employee.

The employer must prove the reason actually existed, including proper documentation of whether the employee is a repeat offender.

Common grounds for termination justifying a termination for cause include:

Misconduct

Misconduct includes behaviour inconsistent with workplace obligations, including theft, fraud, violence, harassment, discrimination, dishonesty, workplace intoxication, breach of confidentiality, and insubordination. Serious misconduct may justify summary dismissal.

To properly define incidents of misconduct tailored to your business’s operations. We recommend that having in place proper HR policies and procedures. Contact Us or Schedule a Consultation for assistance.

Poor Performance

Poor performance is a valid ground for the termination of employees. If it results in a dispute, courts expect the employer to show that a proper performance management process was followed.

Gross Negligence

Serious carelessness causing substantial risk or loss to the business may justify a termination for gross negligence.

Fraud

An employee may be terminated for fraud where there is clear evidence of their involvement in dishonest practices, such as falsifying documents or misappropriating company funds.

Insurbordination

Insubordination refers to an employee’s willful refusal to obey legitimate instructions or directives from a supervisor or authority figure, undermining the established hierarchy and/or disrupting workplace efficiency and morale.

Absenteeism

Repeated or unexplained absence may justify disciplinary action. However, employers should investigate the reasons, request explanations, and document communication carefully.

Incapacity or Illness

Termination related to illness or incapacity is a delicate ground for termination. It requires careful handling. The employer is required to obtain medical evidence, consider accommodation, and assess whether the employee can be reassigned to perform duties different from those for which they were hired.

Where the employee’s illness or incapacity is caused by a result of a workplace injury, the employer should comply with the applicable Occupational Health and Safety law.

Poorly handled medical terminations can create discrimination exposure.

Procedural Fairness: Following a Fair Disciplinary Process

Procedural Fairness refers to whether the employer followed a fair disciplinary process before terminating an employee.

In determining fairness, courts examine:

• Whether the allegations were explained clearly
• Whether the employee had a chance to respond
• Whether a hearing occurred
• Whether the employee was allowed to be represented during the hearing
• Whether investigations were fair
• Whether other documentation exists
• Whether the decision was reasonable

Even where an employee has a valid reason for terminating the employee, an employer may still lose a case if proper procedure was not followed.

A fair and proper disciplinary process implements the following:

Documentation of Misconduct

An employer should keep meticulous records of all employees. This includes communication of employee rights obligations through up-to-date employment contracts, company policies and procedures. They should also communicate all instances of poor conduct or performance, whether verbal or written.

Investigation

An employer should avoid rushing to conclusions before gathering facts. Before disciplinary action begins, employers should investigate the cause or if based on an allegation by:

• Reviewing documents
• Interviewing witnesses
• Examining emails or records
• Obtaining written statements
• Reviewing CCTV or digital evidence

Show Cause Letter

If investigations determine that the employee should be disciplined, the employee should be issued a sufficiently detailed written notice explaining:

• The allegations
• The supporting facts
• Possible consequences
• The opportunity to respond

Employee Response

The employee should be given a reasonable time to respond.

The response should be reviewed fairly and objectively.

Disciplinary Hearing

Under Section 41 of the Employment Act, employees are generally entitled to be heard before termination. This often includes:

• An oral hearing
• Explanation of allegations
• Opportunity to defend themselves
• Representation by another employee or union representative, where applicable

Step 5: Decision-Making

The employer should refrain from predetermined decisions. Instead, they should make decisions based on careful consideration of:

• The facts and evidence
• The employee’s explanation
• Prior disciplinary history
• Consistency with company policy
• Proportionality of the sanction

Outcome Letter

The final decision should be communicated clearly in writing. The outcome letter should explain:

• Findings
• If the decision results in termination, the effective termination date
• Terminal dues
• The right to appeal and who to appeal to, where applicable

What Is Summary Dismissal?

A summary dismissal occurs where an employee is terminated without notice. The Employment Act permits summary dismissal in very limited circumstances, including:

• Theft
• Fraud
• Physical violence
• Serious insubordination
• Gross dishonesty

Employers are still required t o follow fair procedure.

Even where misconduct appears obvious, employers should follow a fair process implementing the principles of natural justice.

Performance Improvement Plans (PIPs) and Dismissals for Poor Performance

Where poor performance is the issue, employers should usually implement a structured performance improvement process before considering termination. A proper PIP may include:

• Defined performance targets
• Timelines
• Training or support
• Monitoring meetings
• Written feedback
• Consequences for failure to improve

What Is Unfair Termination?

An unfair termination or dismissal may be deemed to occur where:

• There was no valid reason
• The procedure was defective
• The employer acted discriminatorily
• The decision was unreasonable
• The process violated statutory rights

Employees may file claims before the Employment and Labour Relations Court.

Consequences of Unfair Termination

Upon finding a termination as unfair, courts may award an employee:

• Compensation of up to 12 months’ salary
• Notice pay
• Salary arrears and employee dues
• Leave pay
• Reinstatement orders
• Legal costs and interest

The financial exposure can become substantial, especially for senior employees.

A business may also suffer reputational harm and operational disruption.

Redundancy Is Different

Employers frequently confuse redundancy with ordinary termination.

Redundancy follows a separate statutory process involving notification to the employee and labour officer, consultations, selection criteria and payment of severance pay.

Employers should not attempt to disguise disciplinary issues as redundancy.

Common Employer Mistakes During Termination

• Predetermined Outcomes: If management has already decided to dismiss the employee before the hearing, the process may be considered unfair.
• Poor Documentation: Missing records are one of the biggest problems in employment litigation. Employers often fail to retain the required documentation, including the show cause letters, hearing minutes, warnings, investigations, performance reviews, or employee acknowledgements.
• Using Informal Processes: Verbal warnings and undocumented meetings are difficult to prove later. Document all verbal warnings and meetings in minutes shared with all parties.
• Bias and Emotional Decision-Making: Managers sometimes react emotionally during workplace disputes. Emotion-driven dismissals often create avoidable liability.
• Confusing Poor Performance with Misconduct: The legal handling process differs significantly.
• Ignoring Company Policies: Courts frequently examine whether the employer followed its own HR procedures.

Conclusion

Termination of employment in Kenya is far more than an administrative HR process.

Employers must balance operational realities with strict statutory and procedural obligations. Even where termination appears justified, procedural mistakes can create major legal exposure.

Businesses that invest in proper documentation, investigations, performance management, and disciplinary systems are significantly better positioned to defend employment claims.

Early legal guidance is often the difference between a defensible termination and expensive litigation.

How We Assist Employers

At Wacu Mureithi & Co. Advocates, we work with businesses to create legally defensible employment processes that reduce operational disruption and litigation exposure. We assist employers with:

• Disciplinary process advisory
• Workplace investigations
• Drafting show cause letters
• HR compliance reviews
• Developing performance management processes
• Termination risk assessments
• Employment litigation defence
• Executive separation strategy

Contact Us or Schedule a Consultation for tailored assistance.