Kenyan law has never recognised “at-will” employment. Every dismissal, however serious the underlying misconduct, must be justified on substantive grounds and carried out through a fair process. What has changed is how strictly the Employment and Labour Relations Court (ELRC) is now enforcing that second requirement. Employers who get the outcome right but the process wrong are increasingly finding themselves on the losing end of costly awards and 2026 has brought several reminders of just how expensive that mistake can be.

The Twin Pillars: Substance and Procedure

Section 45 of the Employment Act, 2007 requires that a termination be both substantively justified (a valid, fair reason exists) and procedurally fair (the correct process was followed). Kenyan courts treat these as independent requirements. A valid reason for dismissal (even gross misconduct such as theft or fraud) does not cure a defective process, and a defective process can, on its own, render an otherwise justified dismissal unlawful.

In practice, procedural fairness in a disciplinary case means, at minimum, that the employer:

  • •      Issues a written notice to show cause, clearly stating the allegations against the employee;

  • •      Gives the employee a reasonable opportunity to respond, in writing and/or at a hearing;

  • •      Allows the employee to be accompanied by a colleague or a shop-floor union representative;

  • •      Holds a hearing before an impartial decision-maker who did not initiate the complaint; and

  • •      Communicates the outcome, and the reasons for it, in writing.

Courts have continued to award compensation (sometimes up to the statutory maximum of twelve months’ gross salary) in cases where an employee was demonstrably guilty of misconduct but was not properly heard before being dismissed. The lesson for employers is simple: the disciplinary hearing is not a formality to be rushed through once a decision has already been made internally. It has to be a genuine opportunity for the employee to respond.

Redundancy: A Higher Evidentiary Bar

Redundancy dismissals attract their own procedural regime under Section 40 of the Employment Act, and recent ELRC decisions have tightened what employers must show to rely on it. It is no longer enough to assert that a role has become redundant as part of a restructuring; employers are increasingly expected to produce documentary evidence (e.g. a revised organogram, board or management resolution, or a business case) demonstrating that the position, not merely the individual, is genuinely superfluous.

Where a redundancy is contemplated, the law requires:

  • •      At least thirty days’ written notice to both the affected employee and the relevant County Labour Officer;

  • •      Notice to, and consultation with, any recognised trade union, where applicable;

  • •      A fair and objective selection criterion, applied consistently across similarly placed employees; and

  • •      Severance pay of not less than fifteen days’ pay for each completed year of service, in addition to notice pay and any accrued leave.

Where an employer cannot substantiate the business rationale behind a redundancy, courts have been willing to treat the exercise as a disguised unfair termination — with the compensation consequences that follow from an ordinary wrongful dismissal finding.

Why This Matters Beyond the Courtroom

Compliance failures in this area rarely stay contained to a single dispute. A poorly documented termination can expose an employer to reputational damage, embolden other claims from the same restructuring round, and complicate future fundraising or M&A due diligence, where employment litigation history is now a standard disclosure item. Getting the process right the first time remains far cheaper than defending it after the fact.

Practical Steps for Employers

  • Audit disciplinary and redundancy procedures against Sections 41, 43 and 45 of the Employment Act before, not after, a dispute arises.

  • Maintain a documentary trail for every redundancy decision, including the business case and selection matrix.

  • Train line managers and HR personnel to run ‘show cause’ and hearing processes correctly, including the right to be accompanied.

  • Issue certificates of service promptly on separation, as required by law, regardless of the circumstances of departure.

  • Seek legal advice before finalizing any termination involving a senior employee, a protected category, or a group redundancy.

How We Can Help

Our Employment & Labour practice regularly advises employers on disciplinary processes, redundancy programmes, and contested terminations before the ELRC. If you are planning a restructuring, facing an employee dispute, or simply want a compliance health-check of your termination procedures, we would be glad to assist.

This briefing is provided for general informational purposes only and does not constitute legal advice. For advice on your specific circumstances, please contact our Employment & Labour team.

Alvin Muhandick Law Advocates · Employment & Labour Practice · Nairobi, Kenya