Kenya Employment Law for Foreign Employers: What You Must Know

Kenya's employment law framework is comprehensive and strictly enforced. Foreign employers must understand these requirements to avoid penalties, disputes, and reputational damage.

Overview of the Employment Act 2007

The Employment Act 2007 is the primary legislation governing employment relationships in Kenya. It applies to all employees working in Kenya, regardless of the employer's location or nationality. This means foreign companies employing Kenyan staff — whether directly or through an EOR — must comply with its provisions.

The Act covers fundamental areas including contracts of service, wages, leave entitlements, termination procedures, and the rights of employees. It also establishes the Employment and Labour Relations Court, which has jurisdiction over employment disputes.

Contract Requirements

Kenyan law mandates specific contract requirements that differ from many Western jurisdictions:

Written contracts: Required for employment lasting more than three months
Language: Contracts must be in English or Swahili — a language the employee understands
Currency: Wages must be specified in Kenyan Shillings (KES)
Statement of particulars: Must include job description, remuneration, working hours, and leave entitlements
Probationary periods: Maximum of six months (can be extended to one year with employee consent)

Statutory Deductions Summary

Employers in Kenya must calculate and remit several statutory deductions monthly. Here is the current breakdown:

Deduction	Employee Rate	Employer Rate	Due Date
PAYE	10% - 35%	N/A	9th of following month
NSSF Tier I	6%	6%	9th of following month
NSSF Tier II	6%	6%	9th of following month
SHIF	2.75%	N/A	9th of following month
Housing Levy	1.5%	1.5%	9th of following month
NITA Levy	N/A	KES 50/employee	Annual

Working Hours and Overtime

The standard workweek in Kenya is 52 hours, typically spread over five or six days. Any work beyond this attracts overtime pay:

Weekday overtime: 150% of normal hourly rate
Sunday/rest day overtime: 200% of normal hourly rate
Public holiday work: 200% of normal hourly rate

Night work (between 6:30 PM and 6:30 AM) requires special arrangements and typically attracts premium pay. Employers must provide transport or transport allowances for night workers.

Leave Entitlements

Annual Leave

Every employee is entitled to 21 working days of paid annual leave after 12 consecutive months of service. Leave cannot be forfeited — it must be taken or compensated if the contract ends.

Maternity Leave

Female employees are entitled to three calendar months (90 days) of fully paid maternity leave. This applies regardless of employment duration. Employers cannot terminate employment during maternity leave or on account of pregnancy.

Paternity Leave

Male employees are entitled to two weeks (14 calendar days) of paid paternity leave. This can be taken at any time within the period of the partner's maternity leave.

Sick Leave

Employees are entitled to sick leave upon completion of two months of continuous service. The standard provision is 30 days with full pay and thereafter 15 days with half pay per year, subject to medical certification.

Termination: Notice Periods and Severance

Termination procedures in Kenya are strictly regulated. The required notice periods are:

Daily wage workers or less than one month: No notice required (or payment in lieu)
Weekly contracts: One week's notice
Monthly contracts or over one month: One month's notice

Redundancy/Severance Pay

When terminating for redundancy (not individual performance), employers must pay severance at the rate of at least 15 days' pay for each completed year of service. This is in addition to the notice period or pay in lieu.

Unfair Dismissal

Kenyan law strongly protects employees from unfair dismissal. Valid reasons for termination include:

Poor performance (after fair process)
Misconduct (following disciplinary procedure)
Redundancy
Mutual agreement

Dismissal without valid reason or proper process can result in reinstatement orders or compensation up to 12 months' wages.

Disciplinary Procedures

Before terminating for misconduct or poor performance, employers must follow fair procedure:

Issue a show cause letter outlining the allegations
Allow the employee reasonable time to respond
Hold a disciplinary hearing if required
Consider the employee's defense before deciding
Communicate the decision in writing with reasons
Allow the employee to appeal

How EOR Removes the Compliance Burden

For foreign employers, navigating these requirements can be complex. An Employer of Record like BaseKenya assumes full legal responsibility for:

Drafting compliant employment contracts
Calculating and remitting all statutory deductions on time
Maintaining employment records as required by law
Managing leave administration
Executing termination processes in compliance with the Act
Handling employment disputes and Labour Court matters

BaseKenya's EOR service at $199/employee/month includes complete compliance management, allowing you to focus on managing your team while we handle Kenyan employment law requirements.

Questions about employment compliance in Kenya? Contact us for a free consultation with our legal team.