CONTRACT OF EMPLOYMENT NOTES

4.1 Introduction
In Kenya, employment is governed by the general law of contract, as much as by the principles of common law. Thus, employment is basically seen as an individual relationship negotiated by the employee and the employer according to their special needs. Parliament has passed laws specifically dealing with different aspects of the employer-employee relationship. These laws define the terms and conditions of employment, and consist mainly of four Acts of Parliament: The Employment Act (Cap. 226) and the regulation of Wages and Conditions of Employment Act (Cap. 229) make rules governing wages, housing, leave and rest, health and safety, the special position of juveniles and women and termination of employment. The latter Act, in addition, sets up a process through which wages and conditions of employment can be regulated by the Minister. The Factories Act (Cap. 514) deals with the health, safety and welfare of an employee who works in a factory. The Workmen’s Compensation Act (Cap. 236) provides for ways through which an employee who is injured when on duty may be compensated by the employer. The Employment Act does not make any provisions for wages in general. The minimum wage is dealt with by the Regulations of Wages and Conditions of Employment Act.

4.2 Unlimited and fixed-term contracts of employment
Employment contracts may be for fixed or unlimited periods of time. If an employment contract specifies a fixed period of employment, the contractual relationship is automatically terminated at the end of this period, without being considered a resignation or a dismissal. Under section 15 of the Employment Act, such a contract may be prolonged for a period of service up to 1 month, if the employee is engaged in any journey. Until the very recent past most female civil servants and parastatals staff were employed on fixed term contract. In general, temporarily and fixed term employed workers enjoy all the rights of an employee working on permanent terms, except those that are excluded explicitly (such as entitlement to pensions) or by the nature of a short term assignment (such as annual leave).

An employment contract, which does not specify a fixed period of duration, is considered to be for an unlimited period of time, but can be terminated by notice of either party. However, in the organized sector collective agreements which give workers tenure limit the employers’ ability to discharge and end the employment contract. Other limitations on terminating an individual labour contract are the principle of good faith and the requirement of non-discriminatory reasons.

Under section 14 (1) of the Employment Act it is a legal requirement that certain contracts of service be made in writing. These are contracts:

  • For a continuous period of 6 months;
  • Which are not continuous, but for which the periods still add up to six months; and
  • In which the task to be performed may last for six months.

Where a contract is in writing, it must carry a signature or a fingerprint of the employee showing that she or he has agreed to its terms. There must also be a witness who is not the employer. It is the duty of the employer to make sure that the contract is written when this is required by the law.

4.3 Special Contracts of Employment

4.3.1 Casual Employment and Piecework employment
Both types of employment are defined under section 2 of the Employment Act. The “casual employee” is “an individual the terms of whose engagement provide for his payment at the end of each day and who is not engaged for a longer period than twenty-four hours at a time”, and Piece-rate “means any work the pay for which is estimated by the amount of work irrespective of the time occupied in its performance”. Basically these categories of workers enjoy to a large extent the same rights as other employees, but may be excluded from many benefits, such as leave, medical cover or housing.

4.3.2 Apprenticeship Contracts
Apprenticeship contracts that primarily intend to train young people in a profession are considered contracts of employment. The apprentice therefore enjoys all the rights and suffers all the obligations of an employee, subject to the terms of the contract. The only distinction between an apprentice and an employee is that the ‘full’ employment of an apprentice depends on his or her successful completion of the training. Apprenticeships in the industrial sector are governed by the Industrial Training Act, which provides that the rules and principles governing the must be applied, unless the Act expressly states an exception, or when the application of labour law would not be compatible with the nature and aim of the vocational training being undertaken. The minimum period of an apprenticeship contract under the Industrial Training Act, section 2, is four years of service.

4.3.3 Probation
Kenyan statutes do not relate to trial periods for individual labour contracts. However, collective agreements generally establish a trial period, after which the worker receives tenure. Trial periods range between 3 weeks (under the Regulation of Wages (Tailoring Garment Making and Associated Trades) Order) and 3 years (the latter in the civil service). Government workers receive tenure according to the requirements set out in the Civil Servants Law (Appointments) and the Civil Service Rules, which are determined by the Civil Service Department of the Government. An employer may dismiss the worker during the trial period or at its conclusion, depending on the contract terms. Nevertheless, this termination of contract must be done in good faith. When the dismissal is unfair or causes the worker unusual injury, the court may award him damages.

4.4 Suspension of the contract of employment
Under the Trade Disputes Act the labour contract is suspended if a worker participates in a lawful strike or is affected by a lawful locked out. Therefore, the employee does not violate his or her contractual obligations to his or her employer when he or she participates in a strike. Likewise, lockouts do not terminate the employment relationship. When the labour contract is suspended by worker participation in a strike, the employer is not required to pay wages, since no work has been performed. Industrial Court judgements have held that an employer is not required to pay wages when the labour contract is suspended because of a strike.

4.5 Termination of the Contract of Employment

4.5.1 Termination by Notice

1. Statutory regulations
Under the Employment Act, section 14 (5) “every contract of service not being a contract to perform some specific work, be deemed to be

  • Where the contract is to pay wages daily, a contract terminable by either party at the close of any day without notice;
  • where the contract is to pay wages or salaries periodically at intervals of or exceeding one month, a contract terminable by either party at the end of the period of twenty-eight days next following the given of notice in writing.” This sub-section does not apply in cases when the contract itself, or a given collective agreement, requires a longer period of notice. If an employer does not give notice, he or she should pay to the employee an amount equal to his or her wages for that period.
  • Rules of the Industrial Court Practice in the Industrial Court has produced some rules, thereby modifying the strict regulations of the Act. The period of advance notice for employees who have worked for five years or less has generally been adjusted to a minimum of one month. When the employee has worked for more than five years, however, it is at least two months. And the notice must be in writing. Collective agreements normally contain these rules too.

4.5.2 Summary Dismissal

1. Statutory regulations
Under section 17 of the Employment Act, a summary dismissal is justified after “gross misconduct”, when a very serious wrong has been proved. The employee is guilty of such misconduct if he or she (section 17 (a)-(g)):

  • Is absent from work without permission or good excuse;
  • Is so intoxicated that cannot do their work properly;
  • Deliberately neglects or ignores the work, or carries it out improperly;
  • Uses abusive or insulting language;
  • Disobeys orders from persons with authority;
  • Is lawfully arrested for an offence punishable by imprisonment, and is not within 10 days either released on bail or otherwise lawfully set at liberty;
  • Commits a criminal offence against the employer or his or her property.

2. Rules of the Industrial Court
Certain procedures have to be followed when such dismissal is being contemplated. First, the employee has to be informed of the claims of gross misconduct. Secondly, the employee has to be called upon and given the opportunity to defend himself or herself against them. Finally, he or she must be informed in reasonable detail of the decision once it is made, and the grounds upon
which this is done. The decision should be made honestly and in good faith. There should be no victimization or any unfair labour practices.

4.5.3 General rules concerning termination

1. Statutory regulations
Under section 18 (1) every employer is bound to give to an employee a certificate of service upon any termination, but no reference or certificate relating to the character or performance (Sub-section 2).

2. Rules of the Industrial Court: Unfair Dismissals
It has now been accepted that adherence to all the requirements of the law in giving notice is not enough. Serious conflicts have been generated when an employee’s services have been terminated by the employer, on the grounds which appear to the general body of the work force to be spurious in order to get rid of the person.

The Court will intervene where there is a lack of good faith. At times, an employer may give notice to an employee when in fact she or he is dismissing him or her for some reason that may not constitute adequate grounds for summary dismissal. Under these circumstances the Court may investigate whether there is any victimization, bias or unfair labour practice. Disregard of principles of natural justice may also cause the Court to intervene. It is considered to be unfair to base termination on the race, tribe or belief of an employee. The sex of an employee should be considered only to the extent permitted by the law, and in favour of the employee.
Applying these principles, dismissal may be based on other grounds apart from those mentioned in the Employment Act. An employee may be dismissed on medical grounds. But in cases where the ill health affects only a particular type of work, the employee may be given another type of work which is appropriate in the circumstances. (See among others: Industrial Court, Cause No. 11 of 1996 –Kenya Union of Journalists and Nation Newspapers; Cause No. 23of 1972- Kenya Union of Commercial Food & Allied Workers and Kenya Co-operative Creameries Ltd.)

3.Restrictions imposed by collective agreements
Collective agreements regulate and limit the employers’ ability to discharge workers. Grievance procedures and special dismissal procedures enable the union to represent the workers’ interest and negotiate the employers’ intent to make an individual or collective dismissal. When agreement is not reached the dispute is often settled in arbitration. Some collective agreements grant the employer the prerogative to dismiss a worker after the consultation and negotiation requirements have been met.

4. Other contractual rights
There are many rights that an employee may have by virtue of the contract, such as leave (annual, maternity, sick or study), allowances (leave, travelling, acting, duty or any other), medical and overtime payments, bonuses and many others. They become relevant when the employment ceases. Their equivalent in money will be calculated and paid to the employee as part of the termination rights.

4.6 Redundancy and severance pay
In the understanding of the Industrial Court the basic principles that would apply in the event of redundancy were already laid down in the first version of the tripartite Industrial Relations Charter. In addition, “redundancy” is defined under the Trade Disputes Act, section 2, as “loss of employment, occupation, job or career by involuntary means through no fault of an employee involving termination of employment”. Moreover, redundancy and severance pay on redundancy are common features in collective agreements, defining the length of notice to be given to the union, and the notice period in respect of the employees to be declared redundant.

The individual employee is entitled to two basic rights, severance pay and payment in lieu of notice. The rates of payment may depend on the agreement, but many range from fifteen to thirty days basic wage or salary for every completed year of service. Following the jurisprudence of the Industrial Court it has been accepted that an employer whose position improves, and wishes to employ after a financial crisis, must give priority to the employees formerly declared redundant.

4.7 Remedies in case of unjustified dismissal
Under Kenyan legislation there are two basic rights of a dismissed employee where the dismissal is wrongful: the right to reinstatement and the right to compensation. These rights can be granted separately or together. Reinstatement can only be ordered by the Industrial Court under section 15 (1) of the Trade Disputes Act. In rectifying the jurisdiction of the Industrial Court, the power
of reinstatement had been given to the Court in the amendment of the Act in 1971. The Court normally considers all the relevant circumstances applying the principles of good faith, to decide whether reinstatement is justified, such as the length of time since dismissal, whether an employee has been employed elsewhere since dismissal, and the willingness of both the employer and the employee to reinstate and to be reinstated.

Under the law of contract, the general remedy for breach of contract is compensation, but the Court may also grant specific performance or rescission. The amount paid will depend on the circumstances of the case, but is generally based on the monthly or annual earnings of the dismissed person. Under the Trade Disputes Act, section 15 (2), the amount awarded must not exceed the actual financial loss suffered by the employee as a result of the wrongful dismissal, or an amount equal to his or her wages for twelve months. In computing the amount of compensation any earning which the employee has received since the dismissal is being taken
into account.

4.8 Resignation
Under the Employment Act, sections 14 (5) and 16, the conditions for termination by notice by the employer apply here. Employees who receive monthly payments must inform the employer one month before they intend to stop working. The contract may provide for a shorter or longer period. If employees do not give notice, they should pay to the employer the equivalent of the wages for the period of notice.

If, in addition, the workers’ resignation violates a contractual obligation to work for a specified period they may be liable for damages that the resignation caused the employer. Such cases are few though, and difficult to prove. Courts will not grant the specific performance remedy to an employer, i.e., they will not compel an employee to work, the employers’ only remedy being damages. In general, when an employee resigns he or she is not entitled to severance pay.

4.9 Working Time and Rest Time

4.9.1 Hours of work
Under the Regulation of Wages (General) Order, subsidiary to the Regulations of Wages and Conditions of Employment Act, the general working hours are 52 per week, but the normal working hours usually consist of 45 hours of work per week, Monday to Friday 8 hours each, 5 hours on Saturday under the special Orders for different sectors subsidiary to the Regulations of Wages and Conditions of Employment Act. Collective agreements may modify the working hours, but generally provide for weekly working hours of 40 up to 52 hours per week. Under the Employment Act, section 8, every employee is entitled to at least one rest day in every
period of seven days. In many sectors the regular rest-day may not be the Sunday, but another day of the week.

4.9.2 Overtime
Under these statutory regulations overtime shall be payable at the rates of one and one-half time hourly rate on weekdays, and at the rate of twice the basic hourly rate on Sundays and public holidays. There are different Regulations of Wages Orders in force, covering different sectors of the economy.

4.9.3 Annual paid leave
Under section 7 of the Employment Act, every employee shall be entitled to no less than twentyone working days of annual leave with full pay. Where the employee works for less than a year, the number of days will be reduced accordingly. This is a minimum and many contracts and collective agreements provide for annual leave of between thirty to forty-five days. In average Kenyan employees enjoy annual leave of 24 days. For a woman who has taken maternity leave (2 months) in a given year, the maternity leave forfeits her annual leave under section 7 (2) of the Employment Act.

4.9.4 Public Holidays
Kenya has currently 10 public holidays – New Year’s Day, Good Friday, Easter Monday, Labour Day, Madaraka Day, Mashujaa Day, Eid-ul-Fitr-Day, Christmas Day and Boxing Day – described by the Public Holidays Act. Where any of these holidays fall on a Sunday, the next working day will be a holiday.

4.10 Maternity Leave and Maternity Protection
Under section 7 (2) of the Employment Act, maternity leave is two months with full pay, provided that a women who has taken two months maternity leave forfeits her annual leave in that year. The Regulation of Wages (General) Order, subsidiary to the Regulations of Wages and Conditions of Employment Act, specifies the provision under paragraph 13 (ii) and (iii) which read:
(ii) child birth shall not be deemed to be sickness as provided for under paragraph 12, and the employer shall not be inquired to meet medical costs incurred thereon;
(iii) A female employee who takes maternity leave shall not incur any loss of privileges during such period.

Cash benefits and other entitlements during pregnancy, and breaks for breastfeeding are provided in selective collective agreements, without representing a general trend.

4.11 Other Leave Entitlements
4.11.1 Sick Leave
Under the Employment Act, section 7 (3), an employee is entitled to paid sick leave after a period of two consecutive months of service. Thus, the Employment Act, provides the minimum period of entitlement while the Regulation of Wages Order, subsidiary to the Regulations of Wages and Conditions of Employment Act, section 12, provides the longest period granted by law.

The minimum period of entitlement is seven days with full pay and seven days with half-pay for every twelve months. The longest period of entitlement is thirty days with full pay and fifteen days with half-pay. The employee is however expected to produce a certificate of incapacity to work signed by a duly qualified medical practitioner.

4.11.2 Compassionate Leave
Under the Regulation of Wages (General) Order, subsidiary to the Regulations of Wages and Conditions of Employment Act, compassionate leave is granted to allow an employee to attend to personal misfortunes such as death, accidents or sickness concerning relatives and friends. The number of days he or she gets are deducted from the annual leave entitlement for the year.

4.11.3 Study Leave
Under the Civil Service Code of Regulations public employees are entitled to study leave. Neither the Employment Act, nor the Regulations of Wages and Conditions of Employment Act provide for an equivalent. But in practice, many companies and employers grant employees time off to go for courses, or to prepare for examinations.

4.12 Minimum Age and Protection of Young Workers
The Employment Act, in part IV, accords special protection to juveniles. Under section 2 “juveniles” is defined as a “child or young person”; and “’child’ means an individual who has not attained the age of sixteen years”, whereas “young person” means a person who has not attained the age of 18 years.

With the adoption of the Children Act, 2001, a new and conflicting definition has been established of which defines “child” as any human being under the age of 18 years. The regulations for juveniles, minors under 18, under the Employment Act, are as follows:
Children under 16 should not be employed in any industrial undertaking or to attend machinery, unless they are apprentices or learners. “Industrial undertaking” means any of the following: any activity which relates to surface or underground extraction (like mines and quarries), any factory and any form of construction and installation (like buildings, railways, roads, tunnels, bridges,
canals, sewers, drains, gas work, telegraphic, telephonic or electrical installations, or water works), and to transportation and handling of passengers or goods by road, rail or inland waterway. Section 24 (2) (a)-(d) thereby covers most of the potentially hazardous working conditions.

Young persons under 18 must not be employed in any industrial undertaking at night except in cases of emergencies. “Night” means the time from six-thirty p.m. to six-thirty a.m. (section 28). Employers engaging juveniles (under the age of 18) are required to keep a register (section 31): the labour officer may cancel or prohibit the employment (section 34), or order the medical examination of the juvenile (section 32).

Section 3(1) of the Employment (Children) Rules, 1977, allows the employment of children with the prior written permission of an authorized officer, and that the only restrictions are that such employment should not cause the children to reside away from parents without their approval, that permission for work in a bar, hotel, restaurant, etc., needs the consent of the Labour Commissioner and that such permit should be renewed annually.

4.13 Equality
4.13.1 Gender Equality
The Constitution guarantees the right to equality in Art 82(3): “the expression ‘discriminatory’ means affording different treatment to different persons attributable wholly or mainly to their respective descriptions by race, tribe, place of origin or residence or other local connection, political opinions, colour, creed or sex whereby persons of one such description are subjected to disabilities or restrictions to which persons of another such description are not made subject or are accorded privileges or advantages which are not accorded to persons of another such description”.

In the tripartite Industrial Relations Charter (1980) the parties agree on abolishing all discrimination among workers on the grounds of race, colour, sex, belief, tribal association or trade union affiliation including discrimination in respect of: Admission to Public or private employment; Labour legislation and agreements which shall afford equitable economic treatment to all those lawfully resident or working in the country; Conditions of engagement and promotions; Opportunities for vocational training; Conditions of work; Health, safety and welfare measures; Discipline:  Participation in the negotiation of collective agreements; Wage rates; which shall be fixed according to the principle of equal pay for work of equal value in the same operation and undertaking.

Yet, the Employment Act, Part IV imposes similar restrictions to the employment of women and the employment of juveniles. Under section 28 women must not be employed in any industrial undertaking at night (the time from six-thirty p.m. to six-thirty a.m.) except in cases of emergencies, and in cases where their work is connected with raw materials which are subject to rapid deterioration, and their work is necessary to preserve the material. Another exception exists for women in responsible positions of managerial and technical nature, or employed in health and welfare services, and not normally employed in manual work. The latter categories of
women employees can even be employed on underground work, like women in course of their studies and women who have to enter the underground parts of a mine for any other reason than manual work.

4.13.2Workers with disabilities and persons living with HIV/AIDS
Workers with disabilities are mentioned only in the Regulations of Wages and Conditions of Employment Act, section 18 (1), which allows employment below the minimum wage for persons with disabilities. Further regulations to prevent these groups from suffering discrimination do not exist. As the Anti-discriminatory clauses in the current Constitution are enumerative unlike many other constitutions, not prohibiting discrimination on “any other ground” in Art 82 (3) of the Constitution, these groups are not legally protected against discrimination.

4.14 Pay Issues
4.14.3 Minimum wage
The Employment Act does not make any provisions for wages in general. The Minimum Wage is dealt with by the Regulations of Wages and Conditions of Employment Act and in the Regulation of Wages Order subsidiary to Chapter 229. A tradition has been established according to which the Minister of Labour and Human Resource Development, in exercise of his or her powers conferred to by section 11 of the Regulation of Wages and Conditions of Employment Act, would order the increment of minimum wages to come into effect May 1st of every year.

4.14.2 Protection of wages
Under the Employment Act, section 4, wages should be paid in Kenyan currency to the employee or to an authorized person. The wages may be paid in kind but this must not be in the form of alcohol or drugs. Also, the Act requires that wages be paid in full, except authorized deductions, permitted by the law (under section 6 of the Employment Act).

4.14.3 Housing
Under the Employment Act, section 9, specified under the Regulation of Wages (General) Order, subsidiary to the Regulations of Wages and Conditions of Employment Act, section 4, an employee is either entitled to reasonable housing accommodation, or to housing allowances that enable the employee to obtain reasonable accommodation. The Employment Act does not say what reasonable housing accommodation is, but gives power to the labour officer to enter into any house in which an employee is living and inspect it.

Summary for the topic

  1. Nature and types of the contracts of employment
  2. Termination of contract of employment
  3. Working hours and rest
  4. Types of leaves
  5. Gender equality
  6. Pay issues
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