Introduction

Many employers face legal trouble and hefty penalties from the Employment and Labour Relations Court (ELRC) for unlawfully terminating employees even when there was a valid reason for dismissal. As a result, many are discovering the hard way that there is much to consider before saying the infamous words, “You’re fired!”. To lawfully terminate an employee, an employer must adhere to the procedural requirements for fair termination outlined in the Employment Act, 2007, while also upholding employees' rights.

This article provides an overview of the grounds for termination, procedural requirements and relevant case law.

Grounds for termination

For an employer to terminate an employee, the employer must have valid reasons to terminate the said employee. According to Section 43 of the Employment Act, an employer must give a valid and reasonable justification for terminating an employee. In Itebete v. Econet Media Kenya Limited t/a Kwese [2023] eKLR, the learned judge provided a summary of the grounds for termination. To justify a fair termination, the court held that an employer must demonstrate the reasons for ending an employee’s contract by ensuring that these reasons are valid, fair, and connected to the employee’s conduct, capability, compatibility, or the employer’s operational needs. If the employer fails to do so, the termination is considered unfair.

Under the Employment Act, an employee may be terminated for the following reasons:

i. Misconduct

An employee may be terminated for serious misconduct such as fraud, theft, bribery, insubordination or any other misconduct stipulated in the employee’s employment contract. Where an employee is being terminated for his/her misconduct, it is important that the employer follow a fair disciplinary process which includes conducting a proper investigation and giving the employee the opportunity to defend themselves.

ii. Poor performance

If an employee keeps performing poorly, the employer may decide to terminate them. However, before doing so, the employer must show evidence of performance issues and give the employee a chance to improve. The court pronounced itself in the case of Jane Simba Mukala v Ol Tukai Lodge Limited [2013]eKLR noting that an employer is placed at a higher level to show that in arriving at the decision that an employee has been terminated for poor performance, the employer must have put in place an employment policy or practice on how to measure good performance as against poor performance.

iii. Redundancy

Redundancy occurs when an employer reduces their workforce due to economic reasons, technological changes, or organizational restructuring. Employers must follow the legal procedures for redundancy, including consultation and compensation. To read more about the redundancy procedure please find the procedure here.

Legal procedure and requirements

The Employment Act mandates employers to follow a fair disciplinary process before terminating an employee. Fair procedure requires that before terminating an employee on the grounds of misconduct, poor performance, or physical incapacity, the employer must explain the reason for the intended termination in a language the employee understands. Additionally, the employee has the right to have a colleague or a shop floor union representative of their choice present during this explanation. A termination of employment by an employer is unfair in terms of Section 45 (2), if the employer fails to prove;

a) “That the reason for the termination is valid;

b) that the reason for the termination is a fair reason –

(i) related to the employee’s conduct, capacity or compatibility; or

(ii) based on the operational requirements of the employer; and

c) that the employment was terminated in accordance with fair procedure.”

Apart from giving an employee the reason(s) for termination, an employer must ensure that the termination process is procedurally fair. Section 45(2) (c) of the Act provides that for termination to be fair, it ought to be in line with fair procedure. Procedural fairness was summarized in the case of Itebete v. Econet Media Kenya Limited t/a Kwese [2023] eKLR as entailing notifying the employee of the allegations he or she is required to respond to and thereafter granting him or her the opportunity to make representations in response to the said allegations. The employee is also entitled to be accompanied by a fellow employee or a shop floor union representative of his or her own choice in making such a representation. The importance of a fair disciplinary process cannot be overstated, as it has the potential to take away an employee’s source of livelihood, thus, it must be conducted in a manner that is visibly fair.

The importance of following a fair and just process during termination was emphasized in the case of Kenfreight (EA) Limited v Benson K Nguti [2016] eKLR where despite Kenfreight issuing Benson with a termination letter, the learned judge determined that Kenfreight failed to establish a valid reason for terminating Benson’s employment. The claims of negligence and inefficiency, which allegedly led to losses for Kenfreight, were never presented to Benson for a response. Furthermore, Benson was neither given a disciplinary hearing nor informed of the reasons for his dismissal. This case emphasizes

that beyond providing the required notice as per the contract or offering payment in lieu of notice, an employer is obligated to clearly explain to the employee, in the presence of a colleague or union representative and in a language they understand, the reasons for considering termination. Additionally, the employee has the right to be heard, and any representations they make must be taken into account before a final decision on termination is made.

Conclusion

Kenya’s employment laws offer strong protections for employees, acknowledging their typically weaker bargaining position compared to employers. To guarantee a fair and lawful termination, employers are required to follow due process.

Key considerations include:

1. Maintaining records of performance reviews, warnings and disciplinary hearings;

2. Ensuring internal policies and procedures align with the Employment Act;

3. Always giving employees a chance to be heard; and

4. Conducting terminations in a substantive and procedurally fair manner.

The best practice for employers is to provide a clear, written termination notice outlining the reasons for termination. This should only be done after the employee has been given an opportunity to be heard and to respond to any allegations made against them.

How we can assist you

At CM SME Club, we can guide you through the complex procedures to ensure that your employment procedures are compliant.

Contact us today (law@cmsmeclub.com) for all your employment matters.

Written by: Magdaline Njeru (mnjeru@cmadvocates.com)

Published on April 7, 2025, 2:49 p.m.