How to Terminate an Employee Legally in Kenya (Step-by-Step)

In Kenya, an employer cannot simply fire a confirmed employee "at will" or by paying notice. For a termination to be held legal by the courts, it must pass a two-tier test:

Fair Termination = Valid Substantive Reason (Sec 43) + Fair Procedure Followed (Sec 41)

The Mandatory 4-Step Disciplinary & Termination Procedure

To ensure procedural fairness under Section 41 of the Employment Act, follow this process:

1.Issue a Written Show-Cause Letter:

Documenting the Cause.

Issue a formal written letter detailing the specific allegations (e.g., poor performance, absenteeism, gross misconduct).

Give the employee at least 2 to 3 working days to submit a written response.

2.Issue Notice of Disciplinary Hearing:

Right to Representation.

If the response is unsatisfactory, invite the employee in writing to a formal disciplinary hearing.

State their statutory right to be accompanied by a fellow employee or a union representative of their choice.

3.Conduct the Hearing & Record Minutes:

Natural Justice.

Hold the hearing.

Present the evidence, allow the employee (and their representative) to state their case, cross-examine witnesses, and respond.

Take detailed, written minutes signed by attendees.

4.Issue Outcome Letter & Pay Final Terminal Dues:

Decision & Dues.

Communicate the panel's decision in writing.

If terminating, issue contractual notice (or pay in lieu of notice), calculate terminal dues, and issue a Certificate of Service.

Calculating Final Terminal Dues

Upon separation, an employer must issue a itemized final payslip containing:

Earned Salary: Pay for days worked up to the date of termination.
Notice Pay: Payment for contractual notice period (if terminating immediately).
Accrued Untaken Leave: Cash equivalent of earned annual leave days not taken.
Service Pay / Severance: 15 days' salary for every completed year of service (required if the employee was not enrolled in a pension/NSSF scheme or in cases of redundancy).