Important Elements of an Employment Contract in Kenya

A clear 2025 guide to employment contract requirements in Kenya. Learn the essential clauses, SHIF & Housing Levy updates, privacy rules, and employer compliance steps.

An employment contract in Kenya is more than a hiring document—it is the legal foundation of the employer–employee relationship. In today’s compliance-driven environment, an employment contract is the first line of defence in the Employment and Labour Relations Court (ELRC) and a critical tool in preventing unfair termination claims, wage disputes, data protection violations, and statutory deduction disputes.

From 2024 to 2025, Kenya’s employment law landscape changed significantly. With the rollout of the Social Health Insurance Fund (SHIF), the Affordable Housing Levy, and increased scrutiny by the Office of the Data Protection Commissioner (ODPC), many organisations discovered that their existing HR templates were outdated and non-compliant. As a result, employers risk exposure to labour disputes, KRA penalties, and privacy lawsuits.

If your employee contracts were drafted before March 2024, they likely contain major gaps. This guide outlines the essential elements of a modern, compliant employment contract under Kenyan labour laws, and how WKA Advocates supports organisations in safeguarding their legal and financial interests.

1. Statutory Non-Negotiables Under Section 10 of the Employment Act

Section 10 of the Employment Act, 2007 requires all employment contracts lasting three months or longer to be in writing. Missing any of these statutory elements automatically puts the employer at a disadvantage in court, as Kenyan labour courts often interpret ambiguity against the employer.

A compliant employment contract in Kenya must include:

✔ Parties to the Contract

Full legal names, contact details, and identification of both the employer and employee.

✔ Job Description

Clear duties and responsibilities. Kenyan courts now challenge vague phrases like “any other duties assigned”, especially during performance-based termination disputes.

✔ Start Date & Employment Type

Define whether the job is permanent, fixed-term, casual, or project-based, as each category carries different rights under Kenyan labour law.

✔ Place of Work

A crucial clause in the era of remote work, hybrid arrangements, and flexible workspaces.

✔ Working Hours

Must align with labour regulations such as the 52-hour workweek limit, and must specify how overtime, rest days, and public holiday work are handled.

✔ Remuneration & Benefits

State the gross salary, allowances, bonuses, commissions, and benefits to ensure clarity in payroll compliance, especially under updated PAYE, NSSF, SHIF, and Housing Levy rules.

✔ Termination Clause

A modern contract must outline notice periods, grounds for termination, and procedures aligned with Sections 35, 41, 43, and 45 of the Employment Act to avoid unfair termination claims.

2. The Essential 2025 Compliance Updates Employers Must Include

Many organisations are unaware that most older contracts fail to address new compliance risks. These missing clauses expose employers to labour litigation, KRA audits, and data privacy penalties.

A. The Gross Pay Clause — Preventing Payroll Disputes

Many legacy contracts express wages in net pay terms. Under Kenya’s modern tax regime, doing so forces employers to absorb increases in:

• SHIF rates

• Housing Levy

• PAYE adjustments

• NSSF Tier II contributions

To remain compliant and avoid unexpected costs, salary must always be stated in gross terms, with explicit authority to deduct:

PAYE, NSSF, SHIF, Housing Levy, and any statutory deductions enacted by the Government of Kenya.

This protects employers from backdated payroll liabilities and KRA compliance disputes.

B. Data Privacy and Image Rights — Data Protection Act Compliance

Kenyan organisations increasingly face claims under the Data Protection Act, 2019, especially relating to:

• employee photographs

• biometric data

• CCTV footage

• email monitoring

• marketing use of staff images

The ODPC has ruled that a standard confidentiality clause does not grant employers the right to use an employee’s image or personal data. Without explicit consent, companies risk substantial penalties.

A modern employment contract must include a Consent to Process Personal Data and Image Rights clause aligned with ODPC guidelines.

This ensures compliance and protects employers from privacy-related claims.

C. Place of Work & Remote Work Recall Rights

Many Kenyan employers now allow work-from-home or remote work arrangements. However, without a clear recall clause, employees may lawfully refuse to return to the office or claim constructive dismissal.

A compliant clause must:

• define the primary workplace

• allow remote work at the employer’s discretion

• reserve the employer’s right to recall employees with reasonable notice

This provision is critical for maintaining operational control and avoiding disputes related to workplace flexibility.

3. Critical Protective Clauses Every Employer Needs in 2025

Beyond the statutory basics, these contract clauses provide powerful legal protection and reduce exposure to HR disputes.

A. Probation Clause

Probation in Kenya is limited to a maximum of six months.
Extension beyond six months is only valid if:

• both parties provide written consent

• the extension is signed before the probation period expires

Proper probation management protects employers against poor hires and reduces termination liability.

B. Restrictive Covenants (Non-Compete and Non-Solicit Clauses)

Kenyan courts enforce restrictive covenants only if:

• they are reasonable in duration (often 6–12 months)

• they are limited to specific industries or geographic areas

• they protect legitimate business interests

Overly broad non-compete clauses are routinely rejected by judges.

Most employers benefit more from non-solicitation clauses, which prevent former employees from poaching clients, suppliers, or staff.

This is one of the strongest and most enforceable tools for protecting your business interests.

C. Intellectual Property (IP) & Invention Assignment

If your employees create:

• software

• designs

• business processes

• product inventions

• creative content

your organisation must own the IP. Without a clear IP assignment clause, employees may claim ownership long after leaving, creating costly disputes.

An effective IP clause ensures all work created in the course of employment becomes the employer’s exclusive property.

4. How WKA Advocates Strengthens Your Employment Contracts

At WKA Advocates, we understand that modern HR compliance in Kenya requires precision, clear drafting, and awareness of new regulatory obligations. We provide three core services that protect employers from misclassification, payroll disputes, and litigation.

A. Employment Contract Audit (2025 Compliance Review)

We review existing templates for:

• exposure to SHIF and Housing Levy liabilities

• outdated termination clauses

• non-compliant job descriptions

• weak IP protections

• missing data protection clauses

• unclear remuneration structures

• invalid non-compete terms

• risks under the Employment Act, WIBA, OSHA, and ODPC regulations

Our audits help organisations eliminate risks before they escalate into disputes.

B. Bespoke Employment Contract Drafting

We create custom contracts for:

1. Executive-level contracts — bonuses, performance metrics, confidentiality, non-compete, IP rights

2. Standard employees — statutory compliance, clarity of roles, disciplinary procedures

3. Fixed-term and project staff — automatic expiry clauses, end-of-contract provisions, redundancy avoidance

We ensure every contract is tailored to your organisational structure and compliant with Kenyan labour law 2025.

C. HR Policy & Employee Handbook Creation

A strong contract is supported by an equally strong HR manual.
We design and update policies on:

• disciplinary procedures

• sexual harassment reporting

• performance management

• remote work and flexible hours

• grievance handling

• data protection & cybersecurity

• workplace conduct and ethics

These policies reduce ambiguity and provide a defence in ELRC proceedings.

Conclusion: Prevention Is Cheaper Than Litigation

In Kenya, vague or outdated employment contracts expose employers to expensive litigation, regulatory penalties, and compliance risks. Under the Contra Proferentem rule, courts interpret unclear clauses against the employer.

By updating your employment contracts with WKA Advocates, you protect your business from millions in potential claims and secure a compliant, transparent, and enforceable workplace structure.

Secure Your Business Today

William Karoki Advocates (WKA Advocates)
📞 +254 798 035 580
📧 info@wka.co.ke
📍 Valley View Business Park, 6th Floor, Suite 35, City Park Drive, Parklands, Nairobi
🌐 wakilihub.co.ke/