Terminating an Employee in Kenya: The Procedure That Survives the ELRC

An employer with overwhelming evidence of misconduct can still lose at the Employment and Labour Relations Court. Section 41 of the Employment Act makes the procedure mandatory, and Kenyan courts treat it as a substantive right rather than a formality.

This article sets out the sequence that defends a termination, the documents that have to exist, and the shortcuts that convert a defensible decision into a compensable one.

What the law actually requires

Two independent tests, both of which must be satisfied.

Substantive fairness — a valid and fair reason relating to the employee's conduct, capacity, compatibility, or the operational requirements of the employer.

Procedural fairness — the process in section 41: explaining the reason to the employee, in a language they understand, in the presence of a fellow employee or union representative of their choosing, and hearing and considering their representations before the decision is taken.

The word "before" is doing considerable work. A hearing convened after the decision has been made is not a hearing, and boards that resolve to dismiss and then run a process to document it produce records that make the sequence obvious.

Step one: investigate before you accuse

Gather the evidence first — documents, system records, statements from witnesses taken while recollections are fresh. Where the allegation involves financial impropriety, secure the records before the employee knows an investigation is under way, because access can be used to alter them.

Decide at this stage whether suspension is warranted. Suspension pending investigation should be on full pay, for a defined period, and expressed as a neutral act rather than a sanction. Suspension without pay, before any finding, is itself a breach.

Where the allegation is serious and the investigation will take time, an interim measure short of suspension — reassignment away from the relevant systems or team — is often more proportionate.

Step two: the show-cause letter

This document frames everything that follows and is the one most often drafted poorly.

It must set out the specific allegations with enough particularity that the employee can answer them. "Gross misconduct" is a conclusion, not an allegation. "On 14 March you approved supplier invoice 4417 for KES 380,000 without the second signature required under clause 6 of the procurement policy" is an allegation.

The letter should attach or identify the evidence relied on, state the date, time and place of the hearing, confirm the right to be accompanied by a fellow employee or union representative, allow a reasonable period to prepare — commonly 48 to 72 hours — and state the potential consequences, including that dismissal is a possible outcome.

An employee who is not told dismissal is possible cannot meaningfully prepare for a hearing at which they are dismissed.

Step three: the hearing

The hearing should be chaired by someone who was not the investigator and, ideally, is not the employee's direct line manager. Where the organisation is too small for that separation, record why.

Put each allegation, present the evidence, allow the employee to respond to each, allow them to ask questions and to put forward their own evidence or witnesses. Take minutes contemporaneously, and have them signed by those present at the close.

Adjourn before deciding. A decision announced in the room, immediately after the employee has spoken, invites the inference that the response was not considered. A short adjournment and a written outcome the following day is materially more defensible.

Step four: the decision and the letter

Consider the response genuinely. Where the employee raises a factual dispute or an explanation that has not been investigated, investigate it before deciding. Consider mitigation — length of service, prior record, whether the conduct was deliberate or careless, and consistency with how comparable cases were handled.

Consistency is a recurring vulnerability. An employer who dismissed one employee for conduct another was warned for will be asked why, and the answer needs to be something other than seniority or personality.

The outcome letter states the decision, the reasons, the effective date, the terminal dues payable, and the right of internal appeal where one exists.

Step five: terminal dues

On termination the employer must pay accrued salary to the date of termination, accrued but untaken leave, notice or payment in lieu unless the dismissal is summary for gross misconduct, and any contractual entitlements such as bonus or gratuity.

Service pay is payable where the employee is not covered by NSSF or another qualifying scheme — a point frequently missed by employers who assume it never applies.

Withholding terminal dues to pressure an employee into signing a release is a poor tactic. It is unlawful and it converts a defensible dismissal into an obvious claim.

Performance dismissals need a different process

Poor performance is not misconduct, and applying a disciplinary process to a capability problem produces an unfair dismissal even where the performance was genuinely inadequate.

A capability process requires the employer to set clear standards, tell the employee where they fall short, provide support and training, allow a reasonable period to improve, and review. Only where improvement does not follow does dismissal become defensible.

The failures we see are consistent: standards never communicated in writing, "informal chats" that the employee did not understand as warnings, improvement periods of two weeks for a role that takes three months to learn, and no record of the support actually provided. An employer who cannot produce a documented improvement plan is asking the court to accept that the employee knew what was required, and the employee will say they did not.

Where the underlying issue is ill health rather than capability, further obligations arise. Medical evidence should be obtained, adjustments considered, and the employee consulted about their own prognosis before any decision.

Summary dismissal for gross misconduct

Section 44 permits summary dismissal — without notice — for defined categories of gross misconduct including absence without leave or reasonable excuse, intoxication rendering the employee unable to work, wilful neglect of duty, insulting behaviour, and conduct rendering the employee criminally liable.

Summary dismissal removes the notice requirement. It does not remove the hearing requirement. Employers who dismiss an employee on the spot for theft, without any process, lose claims they would otherwise have won comfortably.

What about resignation and constructive dismissal?

An employee who resigns in response to the employer's repudiatory conduct may claim as though dismissed. Conduct that has founded such claims includes unilateral reduction of pay, demotion without agreement, unilateral relocation, failure to address a grievance about harassment, and sustained conduct destroying the relationship of trust.

Employers under cost pressure sometimes prefer to make conditions difficult rather than run a redundancy process. That approach carries greater exposure than the redundancy would have.

Fixed-term contracts and probation

Employers use fixed-term contracts believing expiry avoids the termination rules. It does not, reliably.

Where a fixed-term contract is repeatedly renewed over years, the ELRC may treat the arrangement as having created a legitimate expectation of continued employment, and non-renewal is then examined as a termination. The factors are the number of renewals, the total duration, whether the role is genuinely temporary, and whether the employee was treated as permanent in practice.

The safer position is to use fixed terms only where the work is genuinely finite — a defined project, a maternity cover, a seasonal peak — and to say so in the contract. Where the role is in fact permanent, employ permanently and manage performance properly.

Probation shortens notice to seven days but confers no licence to dismiss arbitrarily. It may run for six months and be extended once by a further six with the employee's written consent. An employer terminating during probation for misconduct should still put the allegation and consider the response.

Settlement and mutual separation

Where the relationship has broken down and the procedural position is weak, a negotiated separation is frequently the better commercial outcome.

A mutual separation agreement should record the terms, the payment, a full and final settlement of all claims, confidentiality where appropriate, and an agreed reference. It should recite that the employee has had the opportunity to take independent advice, which strengthens its enforceability.

Settling is not an admission that the dismissal was unfair. It is a decision that a defined cost now is preferable to an uncertain cost in two years. Our employment and labour law practice takes a view on the procedural position first, because that determines whether settlement or defence is the better route.

What an ELRC claim looks like from the employer's side

The employee files a claim; the employer files a memorandum of response within the time allowed. Missing that deadline risks judgment in default, and applications to set aside consume time and costs.

The employer bears the burden of proving the reason for termination and that a fair procedure was followed. That allocation is why documentation matters so much: an employer without a contemporaneous record is being asked to prove something with nothing.

Remedies include compensation of up to twelve months' gross pay, terminal dues, and — rarely — reinstatement. Where in that range an award lands depends heavily on service, the employee's conduct, and whether any process was followed at all. Our dispute resolution team handles the defended claims, and the pattern is consistent: the file that was properly kept at the time is the file that wins.

What employers should do now

Confirm every employee has a signed written contract. Put the disciplinary and grievance procedures in writing and follow them. Train the managers who will chair hearings, because an untrained chair produces an unusable record. Keep every warning, appraisal and hearing minute for at least five years after termination, as section 74 requires. And take advice before the dismissal rather than after the claim, when the options are still open.