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<blockquote><div class="quotetitle">Quote from <a class="profile-link highlight-moderator" href="https://lawguide.co.ke/understanding-law/legal-forum/profile/lawyer/">Lawyer</a> on July 1, 2025, 7:00 am</div><div id="pl-6689"  class="panel-layout" ><div id="pg-6689-0"  class="panel-grid panel-no-style" ><div id="pgc-6689-0-0"  class="panel-grid-cell"  data-weight="1" ><div id="panel-6689-0-0-0" class="so-panel widget widget_sow-editor panel-first-child panel-last-child" data-index="0" data-style="{&quot;background_image_attachment&quot;:false,&quot;background_display&quot;:&quot;tile&quot;,&quot;background_image_size&quot;:&quot;full&quot;,&quot;background_image_opacity&quot;:&quot;100&quot;,&quot;border_thickness&quot;:&quot;1px&quot;}" ><div
			
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	<p dir="ltr" data-pm-slice="0 0 []">Kenya’s economic landscape has faced significant challenges in recent years, driven by global economic shifts, International Monetary Fund (IMF) policies, and rising living costs. These pressures have led to increased layoffs across various sectors, leaving many employees vulnerable to job loss. For workers facing dismissal, understanding their legal protections under Kenya’s Employment Act, 2007, is crucial. This article explores the rights employees have against unfair dismissal, the legal framework governing terminations, and how these protections apply in the context of economic hardship.</p>
<p dir="ltr">Unfair dismissal occurs when an employer terminates an employee’s contract without a valid reason or without following due process as outlined in the law. In Kenya, the Employment Act, 2007, provides a robust framework to protect employees from such practices, ensuring that terminations are justified and procedurally fair. During an economic downturn, when companies may resort to layoffs to cut costs, these protections become even more critical.</p>
<p dir="ltr">The Employment Act applies to all employees under a contract of service, whether written, oral, or implied, and covers both public and private sectors. It sets out clear guidelines on the reasons for termination, the procedures employers must follow, and the remedies available to employees who are unfairly dismissed.</p>
<h3 dir="ltr"><em><strong>Key Provisions of the Employment Act, 2007</strong></em></h3>
<p dir="ltr">The Employment Act, 2007, is the cornerstone of labor law in Kenya, providing safeguards against arbitrary dismissals. Below are the key provisions that protect employees during layoffs, particularly in the context of economic pressures.</p>
<h4 dir="ltr"><strong>Valid Reasons for Termination</strong></h4>
<p dir="ltr">Under Section 43 of the Employment Act, an employer must prove that the reason for termination is valid and related to the employee’s conduct, capacity, or compatibility, or based on the operational requirements of the employer. In the case of economic downturns, employers may cite operational requirements, such as financial difficulties or restructuring, as grounds for layoffs. However, the law requires that such reasons be substantiated with evidence. For example, an employer claiming financial distress must demonstrate genuine economic challenges, such as declining revenues or insolvency, to justify redundancies.</p>
<p dir="ltr">Section 45 further stipulates that a termination is unfair if the employer fails to prove that the reason was valid or that the dismissal was conducted fairly. This means that even in an economic downturn, employers cannot use financial pressures as a blanket excuse to terminate employees without proper justification.</p>
<h4 dir="ltr"><strong>Procedural Fairness</strong></h4>
<p dir="ltr">The Employment Act emphasizes procedural fairness in all terminations. Section 41 mandates that before terminating an employee for reasons related to misconduct, performance, or physical incapacity, the employer must:</p>
<ul class="tight" dir="ltr" data-tight="true">
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<p dir="ltr">Explain the reason for the proposed termination to the employee in a language they understand.</p>
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<p dir="ltr">Allow the employee to be accompanied by a colleague or union representative during the disciplinary hearing.</p>
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<p dir="ltr">Provide the employee an opportunity to respond to the allegations.</p>
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</ul>
<p dir="ltr">For redundancies due to economic reasons, Section 40 outlines specific procedures employers must follow:</p>
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<p dir="ltr"><strong>Notification</strong>: The employer must notify the employee or their trade union (if applicable) in writing at least one month before the redundancy. The notice must explain the reasons for and extent of the redundancy.</p>
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<p dir="ltr"><strong>Selection Criteria</strong>: The employer must use fair and objective criteria to select employees for redundancy, such as seniority, skills, or performance. Arbitrary or discriminatory selection (e.g., based on gender, ethnicity, or union membership) is unlawful.</p>
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<p dir="ltr"><strong>Consultation</strong>: Employers are required to consult with employees or their representatives to explore alternatives to redundancy, such as reduced working hours or redeployment.</p>
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<p dir="ltr"><strong>Severance Pay</strong>: Employees declared redundant are entitled to severance pay at a rate of not less than 15 days’ wages for each completed year of service, in addition to any other accrued benefits like unpaid leave or notice pay.</p>
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<p dir="ltr">Failure to adhere to these procedures renders a dismissal unfair, giving the employee grounds to seek legal redress.</p>
<h4 dir="ltr"><strong>Protection Against Discrimination</strong></h4>
<p dir="ltr">The Employment Act prohibits termination based on discriminatory grounds, as outlined in Section 5. These include race, color, sex, religion, political opinion, national extraction, social origin, marital status, pregnancy, disability, or HIV status. In an economic downturn, employers may attempt to target specific groups for layoffs, but such actions are unlawful and can be challenged in court.</p>
<h4 dir="ltr"><strong>Special Protections for Vulnerable Groups</strong></h4>
<p dir="ltr">Certain employees enjoy enhanced protections under the Act. For instance, pregnant women and employees on maternity leave cannot be dismissed for reasons related to their pregnancy or leave (Section 46). Similarly, employees cannot be terminated for participating in trade union activities or for whistleblowing on workplace malpractices.</p>
<h3 dir="ltr"><em><strong>Economic Downturn and IMF Policies</strong></em></h3>
<p dir="ltr">Kenya’s economic challenges, including high inflation, increased taxation, and currency depreciation, have been exacerbated by IMF-backed policies aimed at fiscal consolidation. These policies, such as subsidy cuts and tax hikes, have driven up living costs, putting pressure on businesses and leading to widespread layoffs. While employers may argue that economic necessity justifies redundancies, the Employment Act ensures that such terminations are not arbitrary.</p>
<p dir="ltr">For example, if a company cites IMF-related austerity measures as the basis for layoffs, it must still comply with the redundancy procedures under Section 40. This includes providing evidence of financial distress and engaging in fair consultation with employees. Employees can challenge dismissals if the employer fails to demonstrate genuine economic need or skips procedural steps.</p>
<h3 dir="ltr"><em><strong>Remedies for Unfair Dismissal</strong></em></h3>
<p dir="ltr">If an employee believes they have been unfairly dismissed, they can seek redress through several avenues:</p>
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<p dir="ltr"><strong>Internal Grievance Procedures</strong>: Employees should first attempt to resolve the issue through their employer’s internal grievance mechanisms, as outlined in their contract or company policy.</p>
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<p dir="ltr"><strong>Labour Officer</strong>: If internal resolution fails, the employee can report the matter to a Labour Officer under the Ministry of Labour, who may mediate the dispute.</p>
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<p dir="ltr"><strong>Employment and Labour Relations Court</strong>: Employees can file a claim in the Employment and Labour Relations Court, which has jurisdiction over unfair dismissal cases. The court can order remedies such as:</p>
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<p dir="ltr"><strong>Reinstatement</strong>: The employee is restored to their position without loss of benefits.</p>
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<p dir="ltr"><strong>Re-engagement</strong>: The employee is rehired in a different role.</p>
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<p dir="ltr"><strong>Compensation</strong>: The court may award compensation of up to 12 months’ gross wages for unfair dismissal, in addition to any unpaid dues like severance or notice pay.</p>
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</ul>
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</ol>
<p dir="ltr">The court considers factors such as the employee’s length of service, the employer’s conduct, and the employee’s efforts to mitigate their loss (e.g., seeking alternative employment) when determining remedies.</p>
<h3 dir="ltr"><em><strong>Practical Steps for Employees</strong></em></h3>
<p dir="ltr">To protect themselves during an economic downturn, employees should take the following steps:</p>
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<p dir="ltr"><strong>Know Your Contract</strong>: Review your employment contract to understand your rights, notice period, and entitlements.</p>
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<p dir="ltr"><strong>Document Everything</strong>: Keep records of all communications related to your employment, including performance reviews, warning letters, or redundancy notices.</p>
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<p dir="ltr"><strong>Seek Union Support</strong>: If you are a member of a trade union, consult them for advice and representation during redundancy or dismissal proceedings.</p>
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<p dir="ltr"><strong>Challenge Unfair Treatment</strong>: If you suspect your dismissal is unfair or discriminatory, contact a Labour Officer or seek legal advice promptly. Claims for unfair dismissal must be filed within three months of termination.</p>
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<p dir="ltr"><strong>Stay Informed</strong>: Be aware of your rights under the Employment Act and monitor any changes in labor laws that may affect you.</p>
</li>
</ul>
<h3 dir="ltr"><em><strong>Challenges in Enforcement</strong></em></h3>
<p dir="ltr">While the Employment Act provides robust protections, enforcement can be challenging, particularly for low-income workers. Many employees lack access to legal resources or fear retaliation for challenging their employers. Additionally, small and medium-sized enterprises may lack the capacity to comply fully with redundancy procedures, leading to disputes. The government and labor unions play a critical role in raising awareness and supporting workers in navigating these challenges.</p>
<h3 dir="ltr"><em><strong>Conclusion</strong></em></h3>
<p dir="ltr">Kenya’s Employment Act, 2007, offers significant protections against unfair dismissal, even in the face of economic pressures driven by IMF policies and rising living costs. Employees have the right to valid reasons for termination, procedural fairness, and protection against discrimination. By understanding these rights and taking proactive steps, workers can safeguard their livelihoods and seek redress when unfairly dismissed. As Kenya navigates its economic challenges, ensuring compliance with labor laws remains essential to balancing business needs with employee rights.</p>
<p dir="ltr"><strong>Contact us today at +254 716 808 104 or <a href="mailto:info@lawguide.co.ke">info@lawguide.co.ke</a> for expert advice.</strong></p>
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