Severance Pay in Kenya. How Much Should I Receive? Losing your job can be stressful enough without having to figure out what payments you are legally entitled to receive. One of the questions employees frequently ask is: How much severance pay should I receive in Kenya?
The answer depends on why your employment ended. Severance pay is not automatically payable every time an employee leaves a job. Under Kenyan employment law, statutory severance pay is principally associated with termination on account of redundancy.
If you have been declared redundant, it is important to understand how severance is calculated, what other payments may be due to you, and what steps you can take if you believe your employer has not complied with the law.
What Is Severance Pay in Kenya?
Severance pay is a payment made to an employee whose employment has been terminated on account of redundancy, subject to the requirements of Kenyan employment law.
The Employment Act, 2007 provides that an employee declared redundant is entitled to severance pay at a rate of not less than 15 days’ pay for each completed year of service.
This means that severance should not simply be calculated as a fixed percentage of your final salary. The calculation takes into account your applicable daily pay and your completed years of service.
How Is Severance Pay Calculated in Kenya?
The statutory minimum can generally be expressed as:
15 days’ pay × each completed year of service
For example, suppose an employee’s applicable monthly wage is KES 60,000 and they have completed 5 years of service.
Using a 30-day monthly calculation for illustration:
Daily rate = KES 60,000 ÷ 30 = KES 2,000
15 days’ pay = KES 2,000 × 15 = KES 30,000
For 5 completed years:
KES 30,000 × 5 = KES 150,000
This is an illustration of the statutory minimum calculation. The actual amount payable in an individual case can depend on the employee’s terms of employment, applicable collective agreements, the circumstances of termination, and the precise remuneration used for the calculation.
Does Everyone Who Loses Their Job Get Severance Pay?
No.
This is one of the most important distinctions employees should understand.
Statutory severance pay is associated with redundancy, rather than being an automatic payment whenever an employment relationship ends.
For example, an employee who resigns voluntarily is not automatically entitled to statutory severance pay simply because they have worked for the employer for several years.
Similarly, an employee who is dismissed for misconduct does not automatically become entitled to severance merely because their employment has ended.
However, other payments or remedies may arise depending on the circumstances of the termination.
What Is Redundancy?
Redundancy generally concerns termination arising from the employer’s operational requirements rather than misconduct or poor performance by the employee.
An employer undertaking redundancy must comply with the statutory requirements governing the process. These requirements include matters concerning notification, selection, leave, notice or payment in lieu of notice, and severance pay.
The legality of a redundancy therefore involves more than simply calculating the final payment.
What Other Payments May I Be Entitled To?
Severance pay may be only one part of the amounts due when employment ends.
Depending on the circumstances, an employee may also have claims relating to:
- Salary earned but not yet paid
- Notice pay
- Accrued leave
- Severance pay where legally applicable
- Contractual benefits
- Other amounts arising under the employment contract or applicable law
The exact entitlement depends on the facts of the employment relationship.
What If My Employer Has Not Paid My Severance?
If you believe you were declared redundant but your employer has failed to pay the severance due, start by gathering your employment records.
These may include:
- Your employment contract
- Payslips
- Redundancy or termination letter
- Notices received from your employer
- Leave records
- Bank statements showing salary payments
- Relevant correspondence
- Any collective bargaining agreement that applies to your employment
You can then seek legal advice on whether the employer complied with the redundancy requirements and whether there are outstanding amounts that can be claimed.
What If I Was Dismissed and the Employer Called It Redundancy?
The label used by an employer does not necessarily determine the legal character of the termination.
Where an employee believes the stated reason for termination was not genuine or that the statutory redundancy process was not followed, the circumstances should be examined carefully.
Kenyan employment law distinguishes between the reason for termination and the procedure followed. The Employment Act places requirements on employers concerning valid reasons and fair procedure in cases of termination, while redundancy has its own statutory framework.
Can I Claim More Than Severance Pay?
Potentially, yes.
Severance is only one possible component of an employment claim. Where a termination is found to be unfair, the Employment Act provides for remedies that may include compensation, subject to the circumstances of the case and the statutory factors that guide the award.
For example, section 49 allows compensation for unfair termination of up to 12 months’ gross wages or salary, depending on the circumstances and the factors considered by the court.
This does not mean every employee who succeeds in an unfair termination claim receives 12 months’ salary. Compensation is assessed based on the circumstances of the individual case.
What Should I Do If I Think My Termination Was Unfair and want to understand Severance Pay in Kenya?
Do not immediately discard your employment documents or communications.
Keep copies of your:
- Employment contract
- Termination or redundancy letter
- Payslips
- Emails and messages concerning the termination
- Disciplinary notices, if applicable
- Performance records
- Leave records
- Any correspondence with HR or management
You should also seek legal advice promptly so that you can understand whether the termination was lawful, whether the redundancy process was properly followed, and what remedies may be available.
When Should I Speak to an Employment Lawyer for Issues with Severance Pay in Kenya?
You do not have to wait until a dispute reaches court before speaking to an Employment Lawyer in Kenya.
Early legal advice can help you understand your rights, assess documents, calculate potential claims, communicate with your employer, and determine whether negotiation, a labour dispute process, or litigation is appropriate.
For employers, obtaining advice before implementing redundancy or terminating an employee can also help reduce the risk of non-compliance and employment disputes.
How Marilyn Law & Associates Can Help With Severance Pay in Kenya
Employment disputes can affect both an individual’s financial security and a business’s operations. Marilyn Law & Associates assists employees and employers with employment law matters, including redundancy, termination, employment contracts, workplace disputes, and employment litigation.
Whether you are an employee trying to understand your entitlements or an employer seeking to carry out a lawful employment process, our team can help you understand the applicable legal requirements and identify the appropriate next steps.
Need advice about a redundancy or employment dispute?
Speak to Marilyn Law & Associates for professional guidance tailored to your circumstances.
Important Legal Note
This article provides general information about employment law in Kenya and should not be treated as legal advice for a particular matter. Employment entitlements depend on the facts of each case, the applicable contract, and the law in force at the relevant time.
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