With the negative impact COVID-19 has had on businesses, several employers have been forced to consider all the options available to them to help sustain their businesses with the current financial resources obtainable which has directly impacted employment in Kenya.

While we recommend that it be the very last option, it goes without saying that many employers are currently having a moral battle debating which employees they will be able to keep on board and which employees they will have to let go for their survival of the present financial hardship.

Bearing the aforesaid in mind, we note that the following considerations are available to employers:

1. Termination of Fixed-Term Contracts

These are employment contracts entered into for a specified period. Once the specified period lapses, then the contract terminates subject to the conditions in the employment contract, most of which expressly state that the renewal of a contract is at the discretion of the employer. Based on Kenyan precedent, it has been determined by the Courts that the renewal of fixed-term contracts is at the discretion of the employer and that the employer has no obligation to provide reasons for the non-renewal of the contract.

2. Termination of Probationary Contract

According to the Employment Act, the definition of a probationary contract is, “a contract of employment which is of not more than twelve months’ duration or part thereof, which is in writing and expressly states that it is for a probationary period.”

For this type of contract, termination by the employer may be by:

  • 2.1 Issuing seven (7) days’ notice to terminate; or by
  • 2.2 Paying seven (7) days’ salary instead of termination.

It is worth noting that this option only applies where the contract given was probationary. This is not to be mistaken with a normal employment contract with a probationary period at the commencement of the employment. The normal contract with a probationary period at the commencement of the employment cannot be lawfully terminated by issuing seven (7) days’ notice or paying seven (7) days’ salary instead of notice.

3. Voluntary Early Retirement

The employer may offer the employees the option for voluntary early retirement regardless of whether they attain the legal retirement age or not. It is considered as an alternative to redundancy.

This type of termination is not proposed by the employer but a consensual termination is reached at by both the employer and employee. Therefore, it should strictly be voluntary, whereby the employee is given the option to accept or decline the proposal for Voluntary Early Retirement, without any undue influence and/or coercion.

4. Redundancy

Redundancy under the Employment Act is defined as, “the loss of employment, occupation, job or career by involuntary means through no fault of the employee”. In this particular circumstance, the position of the employee becomes superfluous.
The employer must have an actual justification for the redundancy and must exercise procedural fairness.
It is required that when determining which employees will be declared redundant, the employer must apply an objective test and regard must be had on the following:

  • 4.1.1 Seniority of the Employee; and
  • 4.1.2 Skill, Ability, and Reliability of each Employee depending on the category of employees affected.
    The employer is expected to adhere to the following conditions:
  • 4.2.1 If the employee is a member of a trade union, the employer is expected to notify the union and the labor office in charge of the area where the employee is employed.
    The notification should include the reasons for the redundancy and the extent of it. Furthermore, this notice of redundancy should be issued to the union and the labor office not less than a month before the intended date of termination.
  • 4.2.2 If the employee is not a member of a trade union, the employer is expected to notify the employee personally in writing and the labor office;
  • 4.2.3 The employer is expected to pay the employee for the leave days not taken as of the date of redundancy;
  • 4.2.4 The employer should give the employee not less than one (1) month’s notice or one (1) month’s pay instead of notice;
  • 4.2.5 Severance pay is expected to be settled at the rate of not less than fifteen (15) days’ pay for each completed year of service; and
  • 4.2.6 In the instance where there is a Collective Bargaining Agreement or if the contract of employment stipulates a longer notice period or payment terms, the employer is required to adhere to those specific stipulations.
5. Outsourcing Employees

In the instance where the employer cannot afford to have a permanent and pensionable workforce on board. It is recommended that the employer outsources the employees based on their current need. Therefore, the number of outsourced employees will depend on the amount of traffic that your business has at a particular time, depending on the agreement reached with the outsourcing company.

Conclusion

Every employer needs to ensure that if they choose to terminate their employees due to the impact of COVID-19 on their business, they must adhere to all the legal procedures to avoid any instances of unfair dismissal. It is recommended that any exercise of the above ought to be undertaken in consultation with a legal practitioner. The intern or researcher shall remain in Kenya for a period not exceeding twelve (12) months.

Please note that this legal article is for information purposes only and should not be relied upon without legal consultation. Should you have any questions, please feel free to contact us.