3.1 Meaning of contract of service/Contract of employment

Employment contract means an agreement, whether oral or written to employ an employee for a period of time

Laws governing contract of employment include:

In Kenya employment is governed by the general law of contract . Thus employment is basically seen as an individual relationship negotiated by the employee and the employer according to their special needs. A number of laws have been passed specifically dealing with different aspects of the employer-employee relationship. These laws defined the terms and conditions of employment and consist mainly of four Acts of parliament:

  1. The employment Act (cap.226)
  2. The regulation of wages and conditions of employment Act(cap.229)-Makes rules governing wages, leaves and rest, health and safety and special position of children and women and termination of employment)
  3. The Factories Act(cap 514)-Deals with the health, safety and welfare of an employee who works in a factory.
  4. The work injury benefit Act(cap.253)

3.2 Types of employment contract

  1. Contract of an unspecified period of time

An employment contract which does not specify a fixed period of duration, but can be terminated by notice of either party.

  1. Contract for specified period of time.

Here the contract term is specified. The contractual relationship is automatically terminated at the end of the term, without being considered ad resignation or dismissal.

  1. Contract for a specified task (piece employment)

Once the task is completed the contract comes to an end.

  1. Contract for casual employment

Here are individual is paid at the end of everyday and who is not engaged for a longer than 24hours at a time.

Note: An employer should within two months after the beginning of employment contract furnish the worker with a written statement of the particulars of the main terms of the contract of employment. (Employment Act, section.10)

3.3 Formation of contract of employment

A contract of service is formed for a period or a number of working days which amount in the aggregated to the equivalent of 3 months or more. It provides for the performance of nay specified work which could not reasonably be expected to be completed within a period or a number of working days and should be in writing. An employer shall be responsible for drawing up the contract stating particulars of employment and ensuring that the contract is signed by the employee. Where an employee is illiterate or cannot understand the language in which the contract is written, the employer shall have the contract explained to the employee in a language that the employee understands.

3.4 Content of contract of employment

A written contract of employment should have the following:

  1. Name, age, permanent address, sex of the employee.
  2. Name of the employer
  3. Job description of the employment
  4. The form and duration of contract.
  5. The place of work
  6. Hours of work
  7. Remuneration benefits
  8. The scale of remuneration, the method of calculating the remuneration and details of intervals at which remuneration is paid.
  9. Any other prescribed matter e.g. annual leave, holiday pay, Pension schemes, sick leaves, termination basis e.t.c.

3.4 Content of Employment Act

The employment Act cap 226 is divided into 6 parts:

  1. i) Preliminary – part 1
  2. ii) Conditions of employment – part 2

iii) Foreign contracts of services – part 3

  1. iv) Employment of women and juveniles – part 4
  2. v) General – part 5
  3. vi) Supplementary – part 6


This Act may be acted as the Employment Act.  The provisions of this Act shall not apply to

  1. a) The armed forces or the reserve as respectively defined in the Armed Forces Act.
  2. b) The Kenya Police, The Kenya Prisons Service or the Administration Police Force.
  3. c) The National Youth Service

Labour Advisory Board – There shall be a Labour Advisory Board whose duty it shall be to advise the Minister upon such matters connected with employment and labour, and answer any question referred to it by the minister. – The members of the Board shall be appointed by the Minister.  Out of the members, the Minister shall appoint a chairman and an officer of the labour department to be the Secretary. – The following provisions shall have effect with respect to the constitution and proceedings of the Board:

  1. a) The Minister may at any time cancel the appointment of a member of the Board. Unless his appointment is so cancelled, each member of the Board shall hold office for three years.
  2. b) If the chairman of the Board ceases to be a member of the Board, he shall also cease to be the Chairman of the Board.
  3. c) There shall be paid out of moneys provided by Parliament to the members of the Board, including the chairman, in respect of their office as such, and other reasonable allowances in respect of expenses properly incurred in the performance of their duties as may be determined by the Minister with the consent of Minister for the time being responsible for finance.


1) Protection of Wages

Subject to this Act, the entire amount of the wages earned by or payable to an employee in respect of work done by him in pursuance of a contract of service shall be paid to him directly in the currency of Kenya.

-If an employee requests in writing  incase of an agreement made between a trade union and an employer, payment may be made:

  1. a) Into an account at a bank , in his name whether alone or jointly with any other individual.
  2. b) By cheques, postal order or money order
  3. c) In the absence of an employee, to a person other than the employee, if the person is duly authorized by him writing to receive the wages on his behalf.
  4. d) Payment of wages shall be made on a working day and during working hours, at or near to the place of employment or at such other place as may be agreed to between the employer and the employee.
  5. e) Payment of wages shall not be made in any place wherein intoxicating liquor is sold or readily available for supply, except in the case of employees employment to work therein.

– When wages are due – an employee shall be entitled:

  1. a) When a task has not been completed, at the option of his employer to be paid by his employer at the end of the day in proportion to the amount of the task which has been performed, or to complete the task on the following day.
  2. b) In the case of casual employee, at the end of the day.
  3. c) In the case of an employee employed for a period of more than a day but not exceeding month, at the end of that period.
  4. d) In the case of an employee employed for a period exceeding one month, at the end of each month.
  5. e) Where an employee is summarily dismissed for lawful cause, he shall be paid on dismissal all moneys, allowances and benefits due to him up to the date of his dismissal.
  6. Deductions from Wages

An employer may deduct from the wages of his employee:

  1. a) Any amount due from the employee as a contribution to any provident or superannuation scheme or any other scheme approved by the labour commissioner to which an employee has agreed to contribute.
  2. b) A reasonable amount for any damage done to or loss of, any property lawfully in the possession or custody of the employer occasioned by the willful default of the employee.
  3. c) Any amount paid to the employee in error as wages in excess amount of wages due to him.
  4. d) Any amount the deduction of which is authorized by any written law for the time being in force
  5. e) Any amount in which the employer has no beneficial interest, whether direct or indirect.

3. Leave, Housing, Health and Welfare

 Every employee shall be entitled:

a) After every 12 consecutive months of service with his employer to not less than twenty-one working days of leave with full pay.

– A woman employee shall be entitled to two months maternity leave with full pay.  Provided that a woman has taken two months maternity leave shall forfeit her annual leave in that year.

– The leave referred to in subsection 1 shall be additional to all public holidays, weekly rest days and any sick leave, whether fixed by law or agreement, in respect of which as employee is not required to work.

– Every employee shall be entitled to at least one rest day in every period of 7 days.

– Every employer shall at all times, at his own expense provide reasonable housing accommodation for each of his employees either at or near to the place of employment or shall pay to the employee such sufficient sum, as rent, in addition to his wages or salary, as reasonable accommodation.

– Every employer shall provide a sufficient supply of wholesome water for the use of his employees at the place of employment.

– Every employer shall, where provision of food has been expressly agreed to in or at the time of entering into a contract of service, ensure that every employee is properly fed and supplied with sufficient proper cooking utensils and means of cooking at the employer’s expense.

  1. Summary Dismissal

Any of the following constitute justifiable or lawful grounds for the dismissal:

  1. a) If, without leave or other lawful cause, an employee absents himself from the place of proper and appointed for the performance of his work.
  2. b) If an employee becomes intoxicated during working hours and renders himself unwilling to perform his work.
  3. c) If an employee uses abusive or insulting language or behaves in a manner insulting to his employer or to a person placed in authority over him by his employer. d) If an employee knowingly fails or refuses to obey a lawful and proper command which it was within the scope of his duty to obey, issued by his employer or a person placed in authority over him by his employer.
  4. Certificate of Service Every employee shall be given a certificate of service by his employer upon the termination of his employment.“`

PART III  FOREIGN CONTRACTS  This part shall apply in respect of every foreign contract of service, that is to say, a contract of service made within Kenya and  to be performed in all or part outside Kenya. – Every contract of service with a foreign state, except a contract for service entered into with or by behalf of the Government.

 – A foreign contract of service shall not be attested unless the labour officer is satisfied:

a) that the employee’s consent on the contract has been obtained

 b) that the contract is in a prescribed form

c) that the employee is medically fit for the performance of his duties under the contract


– No person shall employee a child whether gainfully or otherwise, in an industrial undertaking.  The provisions of this section shall not apply to the employment of a child in an industrial undertaking under a deed of apprenticeship or indentured learnership lawfully entered into under the provisions of the industrial training Act.

– Subject to sect 29, no woman or juvenile shall be employed between the hours of 6.30 pm and 6.30 am in an industrial undertaking.

– Expect in the following situations:

  1. i) Women may be so employed in cases where their work is concerned with raw materials, or materials in the course of treatment.
  2. ii) Women holding responsible positions of a managerial or engaged in health and welfare services

– No female shall be employed on underground work in a mine except in the following circumstances:

  1. i) A woman holding a position of management who does not perform manual works.
  2. ii) A woman engaged in health or welfare services

iii) A woman who in the course for her studies spends a period of training in the underground parts of a mine

– Every employer who employs any Juvenile shall keep and maintain a register containing the following particulars of every Juvenile employed:

  1. i) Age or date of birth
  2. ii) Date of entry into and of learning the employment

iii) Such other particulars a may be prescribed


– Every employer shall keep a written record of all employees employed by him with whom he has entered into contracts under this Act.

– This shall contain such particulars as may be prescribed and the employer shall permit the record to be examined by an authorized officer who may require an employer to produce for inspection that record for any period relating to the preceding twelve months.


– Every authorized officer shall be furnished by the Labour Commissioner with a certificate of his appointment. – With the issuance and production of the certificate to the employer the Labour Officer has the following duties:

  1. i) Enter, inspect and examine all reasonable times by day and night any land or building or other structure whether permanent or temporary on or in which he has reasonable ground for believing that an employee is living, residing or employed and may make such inquiries and inspection or examination as may be necessary to enable him to determine whether the provisions of this Act are being compiled with.
  2. ii) At all reasonable times require an employer to produce an employee employed by him and a document relating to the employment of any employee and may require an employee to produce any document elating to his employment.

iii) Examine and take copies of a register, record, book or other document relating or appearing to relate to employment, whether produced to him or not, and take possession of that register, record, book or other ground for believing to be or to contain evidence of an offence under this Act.

  1. iv) Enter, inspect and examine all latrines and other sanitary arrangements or water supply.
  2. v) Order that all buildings and premises where employees are housed or employed be kept in a clean and sanitary condition.

3.5 Termination of contract of employment.

Before any termination a notice should be offered depending on the policy of the organization. an employee who does not understand the notice shall be explained the whole notice to him orally, in a language the employee understands. Each and every employee is entitled to lawful and fair termination.

  1. a) Expiry of contract

A contract is terminated when the period expressed in it expires, if the employee is engaged on a journey, the employer may extend the period of service for a sufficient period, which shall not exceed one month, to enable the employee to complete the journey.

  1. b) Termination on account of redundancy

An employer shall not terminate a contract of service on account of redundancy unless the employer complies with the following conditions;

-Where the employee is a member of a trade union, the employer notifies the union and the labour officer in charge of the area of the reasons for, and the extent of, the intended redundancy not less than a month prior to the date of the intended date of termination.

-Where the employee is not a member of a trade union, the employer notifies the employee personally in writing and labour officer.

-The employer has to pay off in cash any leave due to an employee who is declared redundant.

  1. c) Termination on grounds of misconduct

An employer shall before terminating the employment of an employee, on grounds of misconduct, poor performance or physical incapability explain to the employee, in a language the employee understands, the reason for termination in presence of another employee or a union representative of his own. Before terminating the employment of an employee or summarily dismissing an employee, an employer shall hear and consider any representation which the employee and the person chosen but the employee may make on grounds of misconduct or poor performance.

Procedure for handling a termination in case of displinary:

  1. Informal warming-A verbal/informal warming is given to the employee in the 1st instance of a minor offence the warning is administered by the employees supervisor.
  2. Formal warming-A written formal warning is given to the employee in the 1st instance of more serious offence or after repeated instance of minor offences. It is done by the immediate manager.

-It should state the extent nature of offence and indicate any future displinary action which will be taken against the employee if the offence is repeated within a specified time limit.

– A copy of the written warning is placed in the employee’s personal file but it is destroyed 12 months after the date of when it was given if no other offence has been committed.

-The employee is expected to read and sign the formal warming and has the right to appeal to the higher management if he/she thinks that the warning is unjustified.

-The H.R managers should be asked to advise on the text of the written warming.

  1. Further displinary action

If despite previous warnings an employee fails to reach the required standards in a reasonable period of time it may be adequate to consider further displinary action. The action may be suspension or dismissal.

  1. d) Termination of probationary contract

No employer shall employee under probationary contract for more than a period of twelve months. The employer should issue a 7 days notice prior termination.

  1. e) Summary dismissal

This is when an employer terminates the employment without any notice or with less notice than the employee is entitled to. The following are some of the matters that may amount to gross misconduct so as to justify the summary dismissal of an employee. But this does not prevent an employer or employee from respectively disputing whether the facts giving rise to the dismissal are justifiable or of lawful grounds:

  1. Without leave or lawful cause an employee absents himself from his/her appointed work place.
  2. During working hours an employee becomes intoxicated hence rendering himself incapable to perform his duties.
  3. An employee willfully neglects to perform any work which it was his duty to perform or carelessly or improperly performs it.
  4. An employee uses abusive or insulting language to his employer or to a person placed in authority over him/her.
  5. An employee commits or on sufficient grounds is suspected of having committed a criminal offence against his employer of his employer’s property.

Unfair reasons for termination:

  1. A female worker’s pregnancy or any person connected within her pregnancy.
  2. An employee’s refusal to join or withdrawal from a trade union.
  3. An employee’s membership of a trade union.
  4. An employee seeking of a office in a trade union.
  5. An employee’s participation in a lawful strike.
  6. An employee’s race, tribe, sex, religion, political, nationality, social origin, marital status, HIV status.

Remedies for wrongful dismissal and unfair termination:

When in the opinion of a labour officer the termination of a contract is unjustified, the labour officer may recommend to the employer to pay the employee the following:

  1. The wages which the employee would have earned had the employee been given the period of notice to which he was entitled under his contract of service.

When in the opinion of a labour officer an employee’s dismissal or termination of employment was unfair, the labour officer may recommend to the employer to:

  • Reinstate the employee and treat the employee as if the employee’s employment had not been terminated.
  • Re-engage the employee in work compatible to that in which the employee was employed prior to his dismissal or other suitable work, at the same wage.

3.6 Certificate of service

An employer shall issue to an employee a certificate of service upon termination of employment unless the employment has continued for a period of less than four consecutive weeks.

A certificate of service issued shall address:

  • Name of the employer and his postal address.
  • Name of the employee
  • Date when the employment of the employee commenced.
  • Nature and usual place of employment of the employee
  • Date when the employment of the employee ceased and any other particulars e.g. position held.

Note: An employer who by neglect fails to give an employee a certificate of service or who knowingly includes a false statement in a certificate of service, commits an offence and shall be on conviction be liable to a fine not exceeding ksh.100,000 or to imprisonment for a term not exceeding 6 months or both.

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