Carrying Out Termination of Employment in Kenya

Terminating an employee in Kenya in 2025 is one of the most complex and high-risk decisions any employer can make. The Employment and Labour Relations Court (ELRC) has adopted a strict, employee-protective approach, focusing heavily on procedural fairness, valid reasons, documentation, and compliance with the Employment Act, 2007.

In the 2024–2025 period, Kenyan courts have increasingly awarded employees between 8 and 12 months’ gross salary for unfair termination, along with interest, legal costs, and in some cases additional compensation for breach of rights. As a result, every employer—whether in finance, manufacturing, technology, hospitality, logistics, NGO operations, or professional services—must understand the legal requirements for termination.

WKA Advocates, a leading firm in employment law, HR compliance, and workplace investigations, continues to advise corporates and multinationals facing these challenges. Drawing from hundreds of cases, this definitive guide explains exactly how to carry out a lawful termination, avoid ELRC penalties, and strengthen compliance.

1. The Only Five Lawful Grounds for Termination in Kenya

Under Sections 41 and 45 of the Employment Act, an employer can only terminate employment for specific lawful reasons. Any termination outside these categories is automatically classified as unfair termination.

Here are the only valid grounds:

a) Poor Performance

Poor performance remains the most litigated ground for termination in Kenya. A lawful performance-based termination requires:

a clear job description
measurable KPIs (Key Performance Indicators)
documented performance concerns
written warnings
a structured Performance Improvement Plan (PIP)
review meetings and coaching

Courts expect an employer to demonstrate a genuine attempt to support the employee before ending the relationship.

b) Misconduct

Misconduct may include:

negligence
lateness
violation of company policy
misuse of company property
failure to follow instructions

Ordinary misconduct requires a progressive disciplinary process (warnings).

Gross misconduct—handled under Section 44—may justify summary dismissal, but only with strong evidence.

c) Incapacity (Medical or Physical Inability to Work)

This applies where an employee can no longer perform their duties due to:

chronic illness
physical injury
mental incapacity

Employers must obtain verified medical reports and explore reasonable adjustments first.

d) Operational Requirements (Redundancy)

Redundancy arises where a job role becomes obsolete due to:

restructuring
financial constraints
technological changes
closure of departments

Redundancy is governed by Section 40 of the Employment Act, which requires:

notice to employee and labour officer
objective selection criteria
severance pay
consultation

Failure to comply results in unlawful redundancy findings.

e) Mutual Separation Agreement

A voluntary agreement by both parties to terminate employment.
When drafted correctly, it eliminates future claims.

2. The Mandatory Pre-Termination Process (“Due Process”)

A termination is unlawful not only when the reason is invalid but also when the procedure is flawed. Kenyan labour law demands a fair, transparent, and well-documented disciplinary or performance management process.

Courts expect employers to follow these steps:

Step 1: Issue a Detailed Show Cause Letter

This letter must:

specify allegations, dates, and evidence
cite breached policies or responsibilities
give the employee adequate time to respond
warn of potential consequences

A vague show cause letter almost guarantees an ELRC loss.

Step 2: Allow the Employee to Respond

The employee has the right to:

explain themselves
submit documents
call witnesses
be heard in full

Failure to allow this violates Section 41.

Step 3: Conduct a Proper Disciplinary Hearing

A compliant hearing must:

be chaired by a neutral decision-maker
be minuted
allow representation by a colleague or union representative
evaluate evidence fairly
follow company HR policies

WKA Advocates frequently chairs hearings to ensure neutrality and compliance.

Step 4: Provide a Clear Written Decision

The outcome must be:

reasoned
evidence-based
lawful
documented

The decision letter should outline reasons and inform the employee of their right to appeal.

Step 5: Provide an Internal Appeal Process

ELRC expects a genuine, accessible appeal mechanism.
Skipping this step leads to findings of unfair termination.

3. Termination for Poor Performance — The Highest Risk Area

Courts are extremely critical of performance-based terminations. They require:

a current job description
achievable KPIs
PIP sessions with notes
performance evaluations
proof of training and support

A sudden performance termination—without warnings or clear KPIs—is almost always ruled unlawful.

Employers must show a complete timeline of efforts to help the employee improve.

4. Summary Dismissal vs Ordinary Misconduct

Summary Dismissal (Section 44):

This is immediate termination without notice, reserved for gross misconduct such as:

theft or fraud
physical assault
intoxication at work
gross insubordination
serious data breaches
confidentiality violations
sexual harassment

However, the burden of proof lies on the employer.
Courts demand objective, verifiable evidence such as:

CCTV footage
forensic audit reports
email logs
witness statements
digital records

Ordinary Misconduct:

Includes lateness, poor attitude, or minor policy violations.
Termination requires:

verbal warning
written warning
final warning
hearing

Employers often lose cases because they confuse ordinary misconduct with gross misconduct.

5. Statutory Terminal Dues and Payroll Compliance

Regardless of the nature of termination—including summary dismissal—employers must pay:

salary up to last working day
accrued annual leave (cash payout)
notice pay (if applicable)
severance pay (for redundancy)
NSSF, PAYE, SHIF, and Housing Levy deductions
Certificate of Service (mandatory under Section 51)

Withholding these dues violates Kenyan labour law and exposes the employer to additional claims.

6. Special Categories of Protected Employees

Some employees enjoy enhanced statutory protection, including:

pregnant employees
employees on maternity leave
employees on sick leave
union officials
whistle-blowers
employees injured at work (WIBA claims)

Termination of these employees requires exceptional caution and strong evidence.
ELRC frequently awards maximum compensation in such cases.

7. Fixed-Term Contracts, Probation, and Remote Workers

✔ Fixed-term contracts:

Premature termination without an early-exit clause may require paying the full remaining contract period.

✔ Probation:

Termination still requires:

valid reasons
limited but fair procedure

✔ Remote workers:

Termination notices must be delivered using verifiable electronic methods, not informal texts.
The employer must document receipt and acknowledgment.

Conclusion: Termination in Kenya Requires Legal Strategy, Not Guesswork

The 2025 legal landscape is more employee-protective, evidence-driven, and procedure-sensitive than ever. Employers who follow the law strictly and maintain excellent documentation avoid expensive litigation, reputational damage, and ELRC penalties.

Engaging specialised employment lawyers like WKA Advocates ensures:

proper documentation
lawful process
HR compliance
risk mitigation
defensible decisions

WKA Advocates continues to support employers across Kenya in managing terminations, redundancy, performance management, workplace investigations, disciplinary hearings, and employment contract audits.

WKA Advocates – Contact Information (Employer Support)

For confidential legal guidance on termination, summary dismissal, redundancy, misconduct investigations, and HR compliance, contact:

📞 +254 798 035 580
📧 info@wka.co.ke
📍 Valley View Business Park, 6th Floor, Suite 35, City Park Drive, Parklands, Nairobi
🌐 https://www.wka.co.ke/

Termination of Employment in Kenya