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Employment Laws In Kenya

Updated on:
16 Jan, 2024
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Kenya’s economy is a mix of traditional and emerging industries, with agriculture, manufacturing, and tourism playing key roles in driving growth and development. As of 2023, the GDP of this country was estimated at $278 billion

Kenya’s flourishing ICT sector, often called the ‘Silicon Savannah,’ offers numerous opportunities for investment in IT-enabled services, e-commerce platforms, fintech solutions, and more. 

With the increasing demand for remote work, companies worldwide are actively seeking opportunities for global expansion in this country. But first, it is imperative to be familiar with the employment laws in Kenya to avoid legal pitfalls and compliance issues. 

This guide delves into the employment laws in Kenya that set out the rights and obligations of both employers and employees.

Contractual Agreements

Contractual agreements in Kenya may be written or oral. For a service contract to be written, it must meet either of the following conditions:

  • The contract is for three months or more
  • The contract involves performing a specified work that could not reasonably be completed within three months

The contract employment law in Kenya also mentions particulars of employment that must be included in the contract, such as:

  • Name, age, sex, and permanent address of the employee
  • Name of the employer
  • Job description
  • Place and hours of work and
  • Rate of remuneration, among others.

Types of employment contracts 

Labor laws of Kenya have provisions for various forms of employment contracts, depending on factors such as the nature of work or duration of employment. Some of the most common types include:

Fixed-term contracts

  • Employment contracts may be for fixed periods, where the contractual relationship automatically terminates at the end of the specified period. 
  • Under Section 15 of the Employment Act, an extension of a fixed-term contract is allowed for a service period of up to one month if the employee is engaged in a journey.

Unlimited contracts

  • Employment contracts that do not specify a fixed duration are considered to be for an unlimited time.

Casual employment contracts

  • Under section 2 of the Employment Act, a ‘casual employee’ is an individual who gets paid at the end of each day and is not hired for more than 24 hours at a time.

Piecework employment contracts

  • Piece-rate work is when employees get paid based on the amount of work they perform instead of the duration of employment. 

Apprenticeship contracts

  • These are training programs designed to provide work experience and skills development to individuals. 

Obligations and rights for both parties

In Kenya, employees and employers have rights and obligations outlined in the Employment Act. It includes:

Obligations of employers

  • Providing a safe and healthy workplace for employees
  • Paying employees their wages and salaries following the labor law in Kenya and
  • Informing employees of their rights, among others.

Employers are also advised to stay aware of the common global HR compliance mistakes to avoid any serious legal consequences.

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Working Hours and Overtime

The Ministry of Labor and Social Protection lays down labor laws of Kenya related to working hours and overtime. 

Regular working hours

  • The standard working hours are 40 hours per week. 

Overtime regulations and compensation

  • Overtime work is permitted under the employment laws in Kenya.
  • For weekday overtime work, the compensation rate is 150% of the regular hourly rate.
  • The compensation rate for overtime work on holidays is 200% of the regular hourly rate.
  • The regular hourly rate is fixed at KES 980.06 per hour.

Minimum wage and compensation

The Regulations of Wages and Conditions of Employment Act and the Regulations of Wages Order primarily address wage-related matters in Kenya.

Section 4 of the Employment Act stipulates that wages must be paid directly to the employee or an authorized representative in the official currency of Kenya, the Kenyan Shilling (Ksh). While wages may be paid in kind, this payment cannot include alcohol or drugs. 

The minimum wage rate in 2024

  • Under the Kenya labor law, the minimum wage rates may vary depending on the area of the country. The current minimum wage rates are as follows:
  • Cities (Nairobi, Mombasa, and Kisumu)
Monthly Daily Hourly
15,120 KES 731.50 KES 135.90 KES
  • Municipalities and Town Councils (Mavoko, Ruiru, Limuru)
Monthly Daily Hourly
14,025.40 KES 672 KES 124.20 KES
  • All other areas (not classified as cities, municipalities, or town councils)
Monthly Daily Hourly
8,109.90 KES 411 KES 75.95 KES

Factors affecting wage determination

When determining the minimum wage, the National Wage Council in Kenya must consider several factors to ensure fair and equitable remuneration for workers. These include:

  • Needs of workers and their families
  • Cost of living and
  • Economic factors include productivity levels and economic development requirements, among others.

Employee Benefits and Social Security

In Kenya, employee benefits and social security play crucial roles in providing workers with financial protection, healthcare coverage, and other forms of support. 

Statutory benefits

National Social Security Fund (NSSF)

  • The National Social Security Fund is a statutory requirement benefits scheme mandated to provide basic financial assistance to Kenyan workers upon retirement.
  • The NSSF ACT, No. 45 of 2013, establishes two separate funds: the Pension fund and the Provident fund.
  • In the case of a pension fund, members can receive up to one-third of their retirement benefits as a lump sum payment, while the remaining two-thirds are distributed as monthly payments.
  • Provident fund members have the flexibility to receive their entire retirement benefit as a lump sum. While a portion of this lump sum may be tax-free, the remaining portion is subject to taxation.

National Health Insurance Fund (NHIF)

  • NHIF aims to ensure that all Kenyan citizens can access essential healthcare services when needed.
  • Membership in NHIF is compulsory for individuals working in the formal sector, while it remains open and voluntary for those in the informal sector and retirees.
  • Some of the many healthcare services covered under the NHIF include maternity care, outpatient care, and inpatient care, among others.

Work Injury Benefits Act (WiBA)

  • The Work Injury Benefits Act 2007 compensates employees who sustain work-related injuries or contract occupational diseases. 

Group Personal Accident Cover

  • The Group Personal Accident Unit is responsible for overseeing and managing insurance coverage for specific groups of individuals, such as civil servants, police officers, prison wardens, and personnel of the National Youth Service.

Additional perks and benefits

  • Old-age benefits 
  • Permanent disability benefits
  • Survivor benefits
  • Sickness benefits
  • Maternity benefits
  • Paternity benefits
  • Dependents’ benefits 

Social security contributions and requirements 

  • Under the updated NSSF rates that took effect on February 1, 2024, employers must deduct a maximum of KES 2,160 from employees’ salaries and match this amount.
  • These contributions must be paid on or before the 9th day of the following month.
  • As for NHIF contributions, Kenyan employees are obligated to contribute, with no corresponding contribution required from employers.
  • NHIF contributions are tiered, with the maximum set at KES 1,700 per employee for those earning over KES 100,000 monthly.

Vacations and Paid Time-Off

Let’s look at the annual and unpaid leave policies mandated under the labor laws of Kenya.

Annual leave entitlement

  • According to the Kenya labor law, employees are entitled to 21 days of annual leave. 
  • Any accrued but unused leave must be compensated if not used within one year. 

Public holidays and special leaves

The labor laws of Kenya mandate 14 public holidays

  • New Year’s Day
  • Good Friday
  • Easter Sunday
  • Easter Monday
  • End of Ramadan
  • Labor Day
  • Madaraka Day
  • Feast of the Sacrifice
  • Moi Day
  • Mashujaa Day
  • Mashujaa Day (Substitute Day)
  • Jamhuri Day
  • Christmas Day
  • Boring Day

Sick leave

  • Following two consecutive months of service, employees are granted sick leave, consisting of a minimum of seven days at 100% of their regular salary.
  • They are entitled to an additional seven days of sick leave annually, compensated at 50% of their typical salary rate.
  • To avail of these benefits, employees must provide a professional medical certificate verifying their incapacity to work.

Maternity leave

  • Under the labor law in Kenya, employers must provide three months of paid maternity leave to female employees.
  • Female employees must provide a written notice of seven days before commencing maternity leave and specify the return day.
  • Employers might also ask employees for a medical certificate confirming childbirth.
  • Similar maternity and paternity leave rules are applicable in the case of adoption. However, a 14-day notice to the employer is required instead of a seven-day notice.

Paternity leave

  • The labor laws of Kenya grant 14 calendar days of paternity leave to employees.

Termination and Severance

Here’s a rundown of the key elements of Kenya’s termination and severance laws:

Grounds for termination

In Kenya, termination of employment can occur due to various reasons.

During the probationary period

  • Role misfit
  • Persistent absence from work
  • Poor performance
  • Bad behavior

Due to poor performance

  • Unsatisfactory performance
  • Absconding
  • Employee's performance risks the safety of others at work
  • Employee’s performance leads to significant disruption of the employer’s business

Termination with cause

  • Substance abuse
  • Dishonesty
  • Gross negligence
  • Serious misconduct
  • Absconding
  • A material breach of obligations under the contract of employment

Termination with business redundancy

  • Economic reasons
  • Cash crunch
  • Reorganization
  • Shutting down operations in the region.

Notice period and severance pay

  • During the probation period, the statutory notice period consists of seven days.
  • After the probation period, a statutory notice period of thirty days is provided to the employees. 
  • Employees affected by redundancy are entitled to certain rights, including severance pay and notice period.
  • Severance pay is calculated based on the employee’s length of service, with rates ranging from fifteen to thirty days of basic wage for every completed year of service.

Discrimination and Equal Opportunity

Article 27 in the Constitution of Kenya states that every individual is equal before the law and is entitled to the same benefits and protections. Employers must ensure compliance with the labor laws of Kenya related to discrimination and equal opportunity to promote fair and inclusive workplaces.

Prohibitions against workplace discrimination

  • Section 5 of the Employment Act prohibits discrimination based on race, color, language, sex, religion, political or other opinion, nationality, pregnancy, disability, mental status, or HIV status.

Health and Safety Regulations

  • The Occupational Safety and Health Act (No. 15 of 2007) is the primary legislation governing safe and healthful working conditions for working individuals.

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From streamlined payments to automated hiring, our team of experts is here to help you in every step of your international hiring journey. Whether you are a small startup or a multinational corporation, Skuad has the solutions you need to thrive in today’s interconnected world. 

Get started today and unlock a world of opportunities for your business.

FAQs

Q1: What is the Employment Act 2023 in Kenya?

A1: The Employment (Amendment) Bill 2023 added a new section related to the transfer of employees to the Employment Act, 2007.

Q2: What are the working conditions in Kenya?

A2: The Employment Act of 2007 governs working conditions in Kenya. It includes various key aspects related to employment, such as standard working hours, overtime compensation, and leave entitlements, among others.

Q3: What is Section 37 of the Employment Act in Kenya?

A3: Section 37 of the Employment addresses the conversion of casual employment to a term contract under specific conditions. 

Q4: What are the obligations of employers in Kenya?

A4: Employers in Kenya have various obligations as outlined in the Employment Act. It includes key aspects, such as compliance with employment laws, employment contracts, payment of wages, and workplace health and safety, among others.

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EOR in 
Kenya
Monthly
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Annually
Pay monthly at a discounted rate with a 12-month commitment
$
269
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limited-offer-banner
EOR in 
Kenya
Monthly
$
299
/month
(billed annually)
Annually
Pay monthly at a discounted rate with a 12-month commitment
$
269
/month
(billed monthly)
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Employ contractors and employees in 160+ countries

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Table of Content

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