Redundancy termination is a sensitive and highly regulated process under Kenyan employment law. It occurs when an employer needs to terminate an employee’s contract due to operational requirements rather than individual misconduct or poor performance. The Employment Act 2007 provides a clear framework that must be followed to ensure fairness and compliance with the law.

In this blog, we will explore the legal definition of redundancy, the step-by-step process of redundancy termination, the rights of affected employees, and best practices for employers.

What is Redundancy Under Kenyan Law?

According to Section 2 of the Employment Act 2007, redundancy refers to:

“The loss of employment, occupation, job or career by involuntary means through no fault of an employee, involving termination of employment at the initiative of the employer, where the services of an employee are superfluous and the practices commonly known as abolition of office, job or occupation and loss of employment.”

This means redundancy occurs when an employee’s position is no longer required due to business restructuring, downsizing, or closure of a company. It is not related to an employee’s performance or conduct.

Legal Process of Redundancy Termination in Kenya

Employers must strictly follow the Employment Act 2007 and other related labour laws to avoid wrongful termination claims. Below are the essential steps in the redundancy termination process:

1. Justification for Redundancy

Before declaring redundancy, an employer must have a valid and justifiable reason for declaring redundancy. Common reasons include:

• Business restructuring
• Economic downturn or financial distress
• Technological advancements replacing human labour
• Mergers and acquisitions
• Closure of a department or entire business

The reason must be genuine, fair, and unavoidable to be legally recognized.

2. Notification to the Employee and Labor Office

Under Section 40(1)(a) of the Employment Act 2007, an employer must issue a written redundancy notice at least one month in advance to:

• The affected employee(s)
• The local labour office
• The relevant trade union (if the employee is a union member)

The notification should state the reason for redundancy and the number of employees affected.

3. Consultation and Fair Selection Criteria

To ensure fairness, the employer should engage in consultations with employees or their representatives. The selection process for redundancy should be based on:

• Last in, first out (LIFO) principle
• Skills and qualifications
• Employee performance and disciplinary records

Discriminatory practices such as redundancy based on gender, race, or pregnancy are illegal under Kenyan labour laws.

4. Payment of Redundancy Benefits

Affected employees are entitled to severance pay, which is regulated under Section 40(1)(g) of the Employment Act. The employer must pay:

• Severance pay – At least 15 days’ salary for every completed year of service
• Notice pay – Equivalent to one month’s salary if notice was not given
• Accrued leave pay – Payment for any unused leave days
• Any other contractual dues – Such as bonuses or overtime, if applicable

Employers who fail to pay redundancy benefits may face legal action.

5. Issuance of a Certificate of Service

As per Section 51 of the Employment Act, an employer must issue a Certificate of Service to the affected employee. This document is important for future job opportunities.

6. Compliance with Legal and Union Requirements

If employees are members of a trade union, the redundancy process must comply with the provisions of the collective bargaining agreement (CBA). Employers must also comply with any industry-specific labour laws.

Employee Rights During Redundancy

Employees affected by redundancy in Kenya have the following rights:

1. Fair Selection Process – Employers must use objective and non-discriminatory criteria.
2. Adequate Notice – Employees should receive a one-month written notice.
3. Severance Pay – A minimum of 15 days’ salary per year worked.
4. Right to Appeal – Employees can challenge unfair redundancy through the Employment and Labour Relations Court.
5. Certificate of Service – A legally mandated document for future employment.

Consequences of Unlawful Redundancy

Employers who fail to comply with the redundancy procedure risk:

• Legal suits for unfair termination;
• Financial penalties and compensation orders by the Employment and Labour Relations Court; and
• Reinstatement orders from the court.

Best Practices for Employers

To avoid legal disputes, employers should:

✔️ Conduct redundancy fairly and transparently
✔️ Communicate with employees early and openly
✔️ Ensure compliance with the Employment Act 2007
✔️ Offer outplacement support where possible
✔️ Keep detailed records of the redundancy process

Conclusion

Redundancy termination in Kenya is a structured legal process that requires careful adherence to the Employment Act 2007. Employers must justify redundancy, give notice, consult employees, and provide redundancy benefits. Failure to comply may result in legal consequences and financial penalties.

For both employers and employees, understanding redundancy rights and obligations helps in ensuring a fair and lawful termination process.

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Disclaimer!

This article provides general information for educational purposes only and should not be construed as legal advice.