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Published by KNK Advocates | knkadvocates.co.ke Practice Area: Employment & Labour Law

When a Nairobi-based tech company received its first Employment and Labour Relations Court claim in 2022, the CEO assumed it would be straightforward — a disgruntled former employee, a weak case, a quick dismissal. Six months later the company was defending four separate ELRC claims simultaneously: one for unfair termination, one for unpaid overtime, one for failure to issue a written contract, and one for maternity leave interference. Each claim was filed by a different employee. None of the four claims had anything to do with the others. All four were meritorious. The total exposure exceeded KES 4 million.

Employment law in Kenya is not a single obligation — it is a comprehensive regulatory framework that governs every stage of the employer-employee relationship, from the moment a person is hired to the moment they leave. Every employer operating in Kenya — from a sole trader with one employee to a multinational with thousands — must comply with every layer of this framework at all times.

This guide covers the 7 critical rules of employment law in Kenya that every employer and HR professional must understand in 2026 — and what each rule costs you when it is violated.

📅 Book a Free Employment Law Consultation with KNK Advocates

The Legal Framework Governing Employment Law in Kenya

Employment law in Kenya is built on three principal statutes enacted as part of Kenya’s comprehensive 2007 labour law reforms — the most significant overhaul of the Kenyan employment framework in decades:

Employment Act, 2007 (No. 11 of 2007) — the primary legislation governing employment law in Kenya. It regulates contracts of employment, wages, working hours, leave entitlements, termination, dismissal, redundancy, and the rights and obligations of both employers and employees. Every employer in Kenya is bound by the Employment Act, 2007 regardless of the size or nature of their business.

Labour Relations Act, 2007 — governs collective bargaining, trade union recognition, collective bargaining agreements (CBAs), and the resolution of collective labour disputes. Where a CBA applies to employees in a specific sector or workplace, its terms on wages, benefits, and working conditions prevail over the general provisions of the Employment Act to the extent they are more favourable to employees.

Work Injury Benefits Act, 2007 — governs the compensation of employees for work-related injuries and occupational diseases. Employers are required to insure all employees against work injury under this Act, and failure to do so is both a criminal offence and a source of direct civil liability.

National Social Security Fund Act, 2013 — requires all employers to register with the NSSF and remit monthly contributions for all employees. NSSF provides retirement and social security benefits.

Employment and Labour Relations Court Act, 2011 — established the Employment and Labour Relations Court (ELRC) as the exclusive forum for all employment disputes in Kenya. The ELRC has original and appellate jurisdiction over all matters arising from employment law in Kenya. More information is available at the Kenya Judiciary website.

Constitution of Kenya, 2010, Article 41 — guarantees every person in Kenya the right to fair labour practices, including protection against unfair dismissal, the right to form and join trade unions, and the right to go on strike.

Understanding this framework is the starting point for compliance with employment law in Kenya.

Rule 1: Every Employee Must Have a Written Employment Contract

The first and most foundational rule of employment law in Kenya is that every employee must have a written contract of employment. Under Section 9 of the Employment Act, 2007, an employer must provide each employee with a written statement of the particulars of their employment within two months of engagement.

The written contract under employment law in Kenya must include:

• The full names of the employer and employee
• The date of commencement of employment
• The nature and description of the work to be performed
• The place of work
• The remuneration, allowances, and benefits payable — and the intervals at which they are paid
• The hours of work
• The leave entitlement
• The notice period required to terminate the contract
• Any probationary period — its duration and the conditions that apply during probation

An employer who fails to provide a written contract as required by employment law in Kenya is committing a criminal offence under the Employment Act, 2007 and simultaneously creating serious evidentiary problems for any future disciplinary or termination process. Without a written contract, the terms of employment are disputed — and the ELRC will tend to resolve ambiguity in favour of the employee.

For businesses building their first employment framework or updating existing contracts to comply with current employment law in Kenya, KNK Advocates’ Employment & Labour Law team drafts employment contracts, HR policies, and staff handbooks that are fully compliant with the Employment Act, 2007 and current ELRC jurisprudence.

Rule 2: Wages, Deductions, and Statutory Contributions Must Comply with Employment Law in Kenya

Employment law in Kenya imposes specific obligations on employers in relation to the payment of wages, permissible deductions, and mandatory statutory contributions:

Minimum Wage

Kenya’s minimum wage is set by the government through a Regulation of Wages Order and varies by sector, occupation, and geographic location. Employers must pay at least the applicable minimum wage under employment law in Kenya — and must review their payroll whenever a new Wages Order is gazetted.

Permissible Deductions

Under Section 19 of the Employment Act, 2007, deductions from an employee’s wages are only permissible under employment law in Kenya where they are:

• Authorised by the employee in writing
• Required by law — such as PAYE income tax remitted to the Kenya Revenue Authority (KRA), NSSF contributions, and NHIF/SHA contributions
• Ordered by a court
• Applied to recover an overpayment of wages

Unauthorised deductions from wages — including deductions for alleged losses, fines, or uniform costs made without the employee’s written consent — are unlawful under employment law in Kenya and give rise to ELRC claims.

Statutory Remittances

Every employer in Kenya is required by employment law in Kenya to:

• Deduct and remit PAYE income tax to KRA by the 9th of the following month
• Deduct and remit NSSF contributions by the 15th of the following month
• Deduct and remit SHA (Social Health Authority) contributions — the successor to NHIF — as required by current health insurance regulations
• Deduct and remit HELB loan repayments for employees who are registered HELB borrowers

Failure to remit statutory deductions exposes employers to penalties, interest, and prosecution under the relevant Acts — independently of any employment law in Kenya claims from employees.

Rule 3: Leave Entitlements Are Non-Negotiable Under Employment Law in Kenya

Employment law in Kenya guarantees minimum leave entitlements to every employee. These entitlements cannot be waived, contracted out of, or reduced by agreement — any clause in an employment contract purporting to provide less than the statutory minimum is void.

Annual Leave

Under Section 28 of the Employment Act, 2007, every employee who has worked continuously for their employer for at least two months is entitled to 21 days of paid annual leave per year. Leave must be taken — or paid out on termination — and cannot be permanently forfeited.

Sick Leave

Under Section 30 of the Employment Act, 2007, every employee is entitled to 7 days of fully paid sick leave and 7 days of half-paid sick leave per year, upon production of a certificate from a recognised medical practitioner.

Maternity Leave

Under Section 29 of the Employment Act, 2007, every female employee is entitled to 3 months of fully paid maternity leave. Maternity leave is a non-negotiable right under employment law in Kenya — an employer who reduces, interferes with, or penalises an employee for taking maternity leave is committing a serious violation. Terminating or demoting an employee on the basis of pregnancy or maternity leave is automatically unfair termination under the Employment Act.

Paternity Leave

Under Section 29(5) of the Employment Act, 2007, every male employee is entitled to 2 weeks of fully paid paternity leave on the birth of a child.

Public Holidays

Under employment law in Kenya, employees are entitled to all gazetted public holidays as paid days off. Employees required to work on a public holiday are entitled to an additional day off in lieu or an enhanced rate of pay.

Rule 4: Employee Termination in Kenya Must Be Both Substantively and Procedurally Fair

Employee termination is the area of employment law in Kenya that generates the greatest volume of ELRC claims — and the most significant financial exposure for employers. Under Section 45 of the Employment Act, 2007, a termination is unfair unless the employer proves both:

1. That there is a valid reason for the termination; and
2. That the termination was procedurally fair

A valid reason without a fair procedure, or a fair procedure applied to an invalid reason, are both unfair termination under employment law in Kenya.

Valid Grounds for Termination Under Employment Law in Kenya

The Employment Act, 2007 recognises the following as valid grounds for termination:

• Misconduct — including theft, dishonesty, insubordination, violence, or breach of a lawful company policy
• Poor performance or incapacity — where the employee cannot perform the role, having been given notice of the gap, support to improve, and a reasonable time to do so
• Redundancy — where the employer’s operational requirements genuinely require the elimination of one or more positions
• Expiry of a fixed-term contract — subject to the terms of the contract and the employee’s history

The Mandatory Procedure Under Employment Law in Kenya

Before terminating any employee for misconduct or performance, employment law in Kenya requires the employer to:

1. Issue a written show cause notice setting out the specific allegations
2. Hold a formal disciplinary hearing at which the employee may be represented by a fellow employee or shop steward
3. Issue a written decision with full reasons
4. Pay all terminal dues — notice pay, outstanding salary, accrued leave, and any applicable gratuity or severance
5. Issue a certificate of service under Section 51 of the Employment Act, 2007

What Unfair Termination Costs Under Employment Law in Kenya

Where the ELRC finds that a termination was unfair, it may award:

For an employee earning KES 150,000 per month, a 12-month compensation award equals KES 1,800,000 — before legal costs. Employment law in Kenya on termination is not a technicality — it is a material business risk.

Rule 5: Redundancy in Kenya Has Its Own Strict Legal Process

Redundancy — the elimination of a position due to the employer’s operational requirements — is one of the most regulated areas of employment law in Kenya. Section 40 of the Employment Act, 2007 requires the employer to follow a specific process that is distinct from the general termination procedure:

• Notice to employees and trade union — at least one month’s written notice to the affected employees and any recognised trade union representing them
• Notice to the Ministry of Labour — written notification to the Ministry of Labour and Social Protection within the same timeframe
• Objective selection criteria — the employees selected for redundancy must be chosen on fair, objective, and documented criteria such as seniority, skill, or performance — not arbitrarily
• Redundancy pay — at least 15 days’ gross pay for each completed year of service, payable in addition to notice pay and accrued leave

Using redundancy as a pretext to remove a specific employee — without genuine operational justification and objective selection criteria — is treated by the ELRC as unfair termination under employment law in Kenya, with the same financial exposure as an unlawful dismissal.

Rule 6: Discrimination and Harassment Are Prohibited Under Employment Law in Kenya

Employment law in Kenya prohibits discrimination in employment on the grounds of race, sex, pregnancy, marital status, health status, ethnic or social origin, colour, age, disability, religion, conscience, belief, culture, dress, language, or birth.

Under Section 5 of the Employment Act, 2007, an employer must not discriminate against any employee or prospective employee in relation to:

• Recruitment and selection
• Remuneration and benefits
• Training and development
• Promotion
• Terms and conditions of employment
• Termination

Sexual harassment in the workplace is specifically addressed in Section 6 of the Employment Act, 2007, which requires every employer to take all reasonably practicable steps to ensure that no employee is sexually harassed. An employer who fails to address sexual harassment — including by managers or supervisors — is directly liable under employment law in Kenya.

Discrimination and harassment claims at the ELRC can result in compensation awards, reinstatement, and mandatory corrective action orders. Every employer should have a documented anti-discrimination and anti-harassment policy as a minimum compliance measure under employment law in Kenya.

Rule 7: All Employment Disputes Go to the ELRC — Not the Civil Courts

One of the most misunderstood aspects of employment law in Kenya is the exclusive jurisdiction of the Employment and Labour Relations Court (ELRC). The ELRC was established under the Employment and Labour Relations Court Act, 2011 as the sole forum for all disputes arising from employment law in Kenya — including claims for unfair termination, unpaid wages, breach of contract, discrimination, and trade union matters.

The civil courts — the Magistrate’s Court and the High Court — have no jurisdiction over employment disputes in Kenya. Any employment claim filed in a civil court will be struck out. This is a critical point for both employers and employees navigating employment law in Kenya.

Key Features of the ELRC Under Employment Law in Kenya

• Exclusive jurisdiction — all employment disputes from across Kenya are heard by the ELRC
• Mediation first — the ELRC requires parties to attempt mediation before proceeding to a full hearing; many employment disputes under employment law in Kenya settle at this stage
• Speed — the ELRC was designed to resolve employment disputes faster than general civil courts, with strict case management timelines
• Costs — the ELRC has a broad discretion on costs and may award costs against an employer who acted unreasonably or in bad faith
• Appeals — ELRC decisions are appealed to the Court of Appeal

More information about the ELRC, its locations, and its filing procedures is available at the Kenya Judiciary website. The Law Society of Kenya (LSK) maintains a directory of qualified employment law advocates who practise before the ELRC.

Common HR Compliance Failures Under Employment Law in Kenya

The most frequent violations of employment law in Kenya that generate ELRC claims involve:

• No written employment contracts — creating disputes about terms, notice periods, and benefits
• Failing to follow the Section 41 hearing procedure before termination — the single most common ground of unfair termination claims
• Withholding terminal dues — particularly accrued leave pay and notice pay — after termination
• Misusing probationary periods — extending probation indefinitely or using it to avoid the termination procedure
• No documented disciplinary process — verbal warnings without written records leave employers defenceless at the ELRC
• Ignoring the redundancy process — treating a redundancy as a simple termination without following Section 40 of the Employment Act, 2007
• Non-remittance of statutory deductions — particularly NSSF and SHA contributions

The National Industrial Training Authority (NITA) provides resources on workforce training and skills development that support broader HR compliance under employment law in Kenya.

Why You Need an Employment Lawyer Under Employment Law in Kenya

Employment law in Kenya is a specialised, rapidly evolving field shaped by a growing body of ELRC jurisprudence that goes beyond the text of the Employment Act, 2007. Here is how KNK Advocates supports employers and employees across every dimension of employment law in Kenya:

Employment contract drafting and review — we draft employment contracts, HR policies, and staff handbooks that are fully compliant with employment law in Kenya and defensible at the ELRC.

Pre-termination advice — we advise employers on the correct procedure before any dismissal, redundancy, or disciplinary action — preventing the procedural failures that generate claims under employment law in Kenya.

ELRC representation — we represent both employers and employees at every stage of ELRC proceedings — from mediation through to judgment and appeal. Our General Litigation team handles the most complex employment disputes.

Employment law compliance audits — we conduct full HR compliance audits for businesses operating in Kenya, identifying and remediating gaps before they become ELRC claims.

Collective bargaining and trade union matters — we advise employers on trade union recognition, CBA negotiation, and collective dispute resolution under the Labour Relations Act, 2007.

For businesses structuring their entire HR and people framework from the ground up, our Commercial & Corporate Law team works alongside our employment law team to build legally sound employment structures at the corporate level.

Employment law in Kenya is governed primarily by the Employment Act, 2007, the Labour Relations Act, 2007, and the Work Injury Benefits Act, 2007. It regulates every aspect of the employer-employee relationship — from contracts and wages to termination, redundancy, and dispute resolution. All employment disputes in Kenya are heard exclusively by the Employment and Labour Relations Court (ELRC). Non-compliance with employment law in Kenya exposes employers to compensation awards of up to 12 months’ gross salary per employee, in addition to reinstatement orders and legal costs.

Frequently Asked Questions About Employment Law in Kenya

What is the main law governing employment in Kenya?

The primary legislation governing employment law in Kenya is the Employment Act, 2007, supplemented by the Labour Relations Act, 2007, the Work Injury Benefits Act, 2007, the National Social Security Fund Act, 2013, and the Constitution of Kenya, 2010. All employment disputes are heard exclusively by the Employment and Labour Relations Court (ELRC).

Does every employee in Kenya need a written contract?

Yes. Under Section 9 of the Employment Act, 2007, every employer must provide a written statement of employment particulars within two months of engagement. Failure to do so is a criminal offence under employment law in Kenya and creates significant evidentiary risk in any future disciplinary or termination process.

What are the minimum leave entitlements under employment law in Kenya?

Under the Employment Act, 2007, minimum leave entitlements under employment law in Kenya are: 21 days of paid annual leave per year, 7 days of fully paid sick leave plus 7 days of half-paid sick leave per year, 3 months of fully paid maternity leave, and 2 weeks of fully paid paternity leave. These entitlements cannot be reduced by contract.

How does employee termination work under employment law in Kenya?

Under employment law in Kenya, a lawful termination requires both a valid reason — misconduct, poor performance, or genuine redundancy — and a fair procedure including a written show cause notice, a formal hearing, a written decision, and full payment of terminal dues. Failure to satisfy both requirements results in a finding of unfair termination at the ELRC, with compensation of up to 12 months’ gross salary.

What is the ELRC and how does it relate to employment law in Kenya?

The Employment and Labour Relations Court (ELRC) is the exclusive forum for all employment disputes in Kenya. Established under the Employment and Labour Relations Court Act, 2011, it has jurisdiction over all claims arising from employment law in Kenya — including unfair termination, unpaid wages, discrimination, and trade union matters. Civil courts have no jurisdiction over employment disputes.

What is redundancy pay under employment law in Kenya?

Under Section 40 of the Employment Act, 2007, redundancy pay is a minimum of 15 days’ gross pay for each completed year of service. It is payable in addition to notice pay and accrued leave. The redundancy process under employment law in Kenya also requires prior notice to the affected employees, any recognised trade union, and the Ministry of Labour.

Can an employer deduct money from an employee’s salary in Kenya?

Under employment law in Kenya, salary deductions are only permissible where they are authorised in writing by the employee, required by law — such as PAYE, NSSF, and SHA contributions — ordered by a court, or used to recover an overpayment. Unauthorised deductions are unlawful and give rise to ELRC claims.

What is the maternity leave entitlement under employment law in Kenya?

Under Section 29 of the Employment Act, 2007, every female employee is entitled to 3 months of fully paid maternity leave. Interfering with, reducing, or penalising an employee for taking maternity leave is a direct violation of employment law in Kenya and constitutes automatic unfair termination if the employee is dismissed in connection with pregnancy or maternity.

How do I resolve an employment dispute in Kenya?

All employment disputes under employment law in Kenya are resolved through the Employment and Labour Relations Court (ELRC). The ELRC requires parties to attempt mediation before proceeding to a full hearing. KNK Advocates represents both employers and employees in ELRC proceedings — from mediation and pre-trial conferences through to judgment and enforcement.

⚠️ Legal Disclaimer

The content of this article is published by Khayesi & Khayesi Advocates LLP for general informational and educational purposes only. It does not constitute legal advice and must not be relied upon as such. Reading this article does not create an advocate-client relationship between you and Khayesi & Khayesi Advocates LLP.

Legal advice is fact-specific. To receive formal legal advice on an employment matter, you must formally engage Khayesi & Khayesi Advocates LLP by entering into a signed Letter of Engagement.

Contact us at [email protected], call +254 711 472 518, or book a free consultation.

Need Employment Law Advice in Kenya? Talk to KNK Advocates.

Khayesi & Khayesi Advocates LLP (KNK Advocates) is a full-service law firm based in Nairobi, Kenya, with more than 25 years of combined experience in employment law in Kenya, HR compliance, ELRC litigation, redundancy management, and collective bargaining.

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Whether you are an employer building a legally compliant HR framework, navigating a termination or redundancy, or defending an ELRC claim, our Employment & Labour Law team is here to protect your business and your people.

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