The Employment Act 2007 (Chapter 226) is the primary legislation governing the employment relationship in Kenya. It covers the formation and content of employment contracts, working hours, leave entitlements, statutory deductions, discipline, termination, and the rights of vulnerable groups. Every employer, whether a multinational subsidiary, an NGO, or a domestic SME, is bound by its provisions regardless of what the employment contract says. A contractual term that falls below the Act's minimum standards is void; the statutory minimum applies automatically. This guide covers the obligations most likely to create employer liability.
Employment Contracts
The Employment Act requires that every employee who has worked for an employer for a continuous period of three months or more is entitled to a written statement of particulars of employment. In practice, best-practice employers issue written contracts from day one. A compliant Kenya employment contract must include:
- The names and addresses of both employer and employee
- The date employment began and the nature of the contract (indefinite, fixed-term, or casual)
- Job title and a brief description of duties
- Place of work
- Remuneration: gross salary, any allowances, and the payment interval
- Normal working hours per day and week
- Leave entitlements
- Notice period on both sides
- Reference to any applicable collective bargaining agreement
Contracts should also address probation (the Act permits a maximum probationary period of 12 months), intellectual property, confidentiality, and data protection obligations under the Data Protection Act 2019. Our HR outsourcing service includes a full contract drafting and review function aligned to the current Act.
Working Hours and Overtime
The Employment Act sets the normal working week at 52 hours (8 hours per day, six days per week) for most categories of workers. For employees covered by specific sector regulations, retail, manufacturing, hotels, sector-specific orders may impose shorter hours. Any work beyond the contracted hours must be compensated as overtime at the following rates:
- Weekday overtime: 1.5× the hourly rate
- Sunday and public holiday overtime: 2× the hourly rate
Employers who routinely require employees to work beyond contracted hours without paying overtime create significant liability. Employment and Labour Relations Court awards for unpaid overtime claims regularly include six years of back-pay, calculated from the employee's complaint date.
Leave Entitlements
Kenya law provides several categories of mandatory leave. No employment contract can provide less than these minimums:
- Annual leave: 21 working days per year of continuous employment (for employees working six days per week). Employees working five days per week are entitled to 21 working days on a pro-rated calculation. Leave cannot be forfeited. Untaken leave accumulates and must be paid out on termination.
- Sick leave: 7 days on full pay and 7 days on half pay per year, on production of a medical certificate from a registered medical practitioner.
- Maternity leave: 3 calendar months (approximately 13 weeks) on full pay. This applies to all female employees regardless of their length of service. The employer cannot demand that the employee use annual leave entitlement during maternity leave.
- Paternity leave: 2 weeks on full pay for male employees on the birth of a child.
- Bereavement leave: Not expressly prescribed by the Act, but many sector agreements and employer policies provide 3–5 days.
- Study leave: Not mandatory under the Act but may arise under collective bargaining agreements.
Leave management is one of the most frequently audited areas in our HR compliance audit engagements. The most common failure is employers not maintaining a proper leave register and allowing leave to be forfeited, both expose the employer to retrospective liability.
Statutory Deductions
Every employer must deduct and remit the following from employee salaries, in addition to PAYE:
- NSSF: Contributions under the NSSF Act 2013 (Tier I and Tier II, as upheld by the Court of Appeal). Employee and employer contributions are mandatory.
- SHIF: 2.75% of gross salary per month, both employee and employer side.
- Housing Levy: 1.5% of gross salary from employee, matched by 1.5% employer contribution.
All deductions must be remitted by the statutory deadlines. Failure to remit deductions that have been withheld from employee salaries is a criminal offence under both the Tax Procedures Act and the NSSF Act. Our payroll processing service handles all statutory deductions and remittances with a zero-penalty track record across 385+ client organisations.
Discipline and Termination
The Employment Act prescribes a detailed procedure for discipline and dismissal that must be followed even where the grounds for termination are valid. The key requirements are:
- Fair reason: Termination must be based on valid reasons, poor performance, misconduct, redundancy, or the expiry of a fixed-term contract. Constructive dismissal (forcing an employee to resign by making conditions intolerable) is treated as unfair dismissal.
- Fair procedure: The employee must be informed of the specific allegation or performance concern in writing. They must be given a reasonable opportunity to prepare a response. They must be allowed to have a representative present at any disciplinary hearing. The hearing must be conducted fairly and the decision communicated in writing with reasons.
- Notice: The minimum statutory notice period depends on the contract: 28 days for monthly-paid employees. Payment in lieu of notice is permissible. Summary dismissal (without notice) is only permitted for gross misconduct as defined in the Act.
- Certificate of service: Employers must issue a certificate of service on termination, stating the dates of employment and the nature of the work performed.
The Employment and Labour Relations Court regularly awards compensation of 12–24 months' salary for procedurally unfair dismissals, even where the substantive reason for termination was valid. Procedure is not a formality; it is a statutory obligation with significant financial consequences. For complex terminations or redundancy programmes involving multiple employees, our labour relations advisory team manages the entire process.
Special Protections
The Employment Act and related legislation provide additional protections for specific categories of workers. An employer cannot terminate a female employee because of pregnancy, maternity leave, or conditions connected to pregnancy. An employer cannot dismiss a worker for trade union membership or legitimate union activity. Employees with disabilities must be reasonably accommodated under the Persons with Disabilities Act. Young persons (16–18 years) may only be employed in certain types of work and with specific restrictions on hours.
Data Protection in Employment
The Data Protection Act 2019 applies fully to the employment relationship. Employers collect extensive personal data, identity documents, payroll details, medical records, disciplinary histories, and must have a lawful basis for processing each category. Employee consent is a weak basis for most HR data processing; legitimate interest or legal obligation are stronger grounds. Employers must register as data controllers with the Office of the Data Protection Commissioner where they process personal data as part of their core business.
Common Compliance Failures We Identify
Across our HR compliance audit engagements, the most frequent Employment Act violations we find are:
- Contracts that do not specify the leave entitlement, leaving the employer exposed to the statutory maximum
- No written disciplinary procedure, meaning terminations cannot be demonstrated to have followed a fair process
- Leave registers not maintained, creating unlimited retrospective liability for untaken leave
- Casual workers employed on recurring casual terms for more than 12 months, making them entitled to permanency
- No certificate of service issued on termination
- Probationary periods exceeding the 12-month statutory maximum
- Fixed-term contracts automatically renewed beyond two renewals without conversion to permanent employment
An annual HR compliance audit is the most cost-effective way to identify and remedy these exposures before they become tribunal claims. Contact us to discuss a risk-rated audit scoped to your organisation's size and complexity.
