Termination vs Redundancy in Kenya: 7 Key Legal Differences ⚖️
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⚖️ Termination vs Redundancy in Kenya: A Legal Distinction
Termination vs redundancy in Kenya are often treated as the same thing in everyday HR conversations. Courts strongly disagree.
Imagine this: an employer wants to “release” one problematic employee and calls it redundancy, or an entire department is being shut down but staff are simply “terminated with notice”. On paper it may look neat, but in court it can quickly turn into a very expensive lesson.
Under the Employment Act, both termination and redundancy are lawful ways to end employment, but they follow different legal tests, different procedures, and carry different risks. In 2025, with recent decisions tightening how judges view these cases, understanding termination vs redundancy in Kenya has become a survival skill for HR, business owners, in-house counsel, and employees.
This guide explains the distinction in plain English, grounded in Kenyan legislation and recent case law.
🎯 Why termination vs redundancy in Kenya matters in 2025
Why this distinction matters now
Employee rights: For employees, knowing whether a decision is really termination vs redundancy in Kenya helps you quickly spot red flags and decide whether to challenge it.
Courts are stricter: Recent Employment and Labour Relations Court (ELRC) and Court of Appeal decisions have tightened expectations on valid reasons, consultation, and documentation, especially where redundancy is alleged.
Awards are getting higher: Where employers mix up termination vs redundancy in Kenya, courts often award compensation plus unpaid dues such as severance pay and notice.
Reputational risk: A badly handled termination or redundancy can damage the employer brand and union relations, and can be used against the company in future disputes.
💡 Key takeaway: Getting termination vs redundancy in Kenya wrong is no longer a technicality – it is a real financial and reputational risk.
📕 What is “termination” under Kenyan law?
The Employment Act does not use one single definition of “termination”, but in practice termination covers:
- Ordinary termination with notice (section 35),
- Summary dismissal for gross misconduct (section 44),
- Termination for poor performance, misconduct, or incapacity, and
- Broadly, any ending of the contract at the employer’s initiative that is not resignation or expiry of a fixed term. Kenya Law
📌 Substantive fairness – a valid and fair reason
Sections 43 and 45 of the Employment Act require the employer to:
- Prove the reason for termination (for example misconduct, poor performance, incapacity, or genuine operational needs), and
- Show that, in the circumstances, a reasonable employer would consider that reason fair.
If the employer cannot prove a valid reason, the termination is presumed unfair. The courts repeat this in many decisions, and in unfair termination claims the first question is always: “What reason did you give in the letter, and can you prove it?”
📌 Procedural fairness – following a fair process
Section 41 sets out the minimum procedural steps before terminating for misconduct or poor performance:
- Inform the employee, in a language they understand, of the specific allegations,
- Allow the employee to respond at a hearing,
- Allow the employee to be accompanied by a colleague or union representative, and
- Consider their response in good faith before making a decision.
Courts also increasingly expect some form of documented engagement even where the reason is “operational” but not framed as redundancy, to show the decision was not arbitrary.
Termination – core legal tests
- There must be a clear, provable reason (section 43).
- The reason must be fair and proportionate in the circumstances (section 45).
- The employer must follow a fair hearing process (section 41).
- The employee is usually entitled to:
- Accrued but unused leave,
- Notice or pay in lieu (unless lawfully summarily dismissed), and
- Any contractual or CBA benefits due on exit.
💡 Key takeaway: Termination lives or dies on two pillars – valid reason and fair procedure. If either is missing, the court will usually find unfair termination.
🧩 What is “redundancy” – and why is it different?
Section 2 of the Employment Act defines redundancy as the loss of employment, occupation, job or career by involuntary means, through no fault of the employee, involving termination of employment at the initiative of the employer, where the employee’s services have become superfluous.
In simple terms, redundancy is about the job disappearing, not the person misbehaving. Typical scenarios include:
- Business restructuring or closure of a department,
- Automation of tasks,
- Cost-cutting measures, or
- Mergers and acquisitions that eliminate certain roles.
📌 Legal definition of redundancy in Kenya
In key appellate decisions such as Kenya Airways Ltd v Aviation & Allied Workers Union Kenya & 3 Others and The German School Society v Helga Ohany, the courts have confirmed that:
- Redundancy must be grounded in a genuine business need, and
- Employers must strictly follow section 40 of the Employment Act, as well as general fairness under section 45.
More recent cases, such as Mutuse v Proto Energy Limited [2025], have expressly tied redundancy to both valid reasons under section 43 and procedural fairness under section 40.
📌 Section 40 redundancy checklist in plain English
Section 40 of the Employment Act sets mandatory conditions before termination on account of redundancy:
Redundancy – statutory checklist
Advance written notice:
- To the union and the area labour officer (for unionised employees), or
- To the employee and the labour officer (for non-unionised employees),
- Stating the reasons and extent of the redundancy.
Fair selection criteria:
- Having regard to seniority, skill, ability and reliability, and avoiding discrimination or victimisation.
Respecting CBAs:
- Terms should not be less favourable than those in any applicable collective bargaining agreement.
Payment of dues:
- Accrued leave,
- Notice or pay in lieu,
- Severance pay of not less than 15 days’ pay for each completed year of service, and
- Any additional contractual or CBA redundancy benefits.
Consultation and engagement:
The Court of Appeal has held that consultation is implied in section 40, meaning employers should meaningfully engage affected employees about the proposed redundancy and alternatives.
💡 Key takeaway: Redundancy is not just a label – it is a tightly regulated statutory process with specific notices, criteria and payments.
🔍 Termination vs redundancy in Kenya at a glance
Because tables are easy to mis-scan, here is the comparison in plain text.
Comparing termination vs redundancy in Kenya
Basis of decision:
- Termination: Focuses on the individual employee – their misconduct, poor performance, incapacity, or a specific contractual issue.
- Redundancy: Focuses on the role or position – the job itself becomes unnecessary.
Employee fault:
- Termination: Often linked to alleged fault (performance, conduct) or individual circumstances.
- Redundancy: Expressly “no fault” on the employee – it is a business restructuring decision.
Core legal test:
- Termination: Employer must show a valid reason (section 43) and fair procedure (sections 41 and 45).
- Redundancy: Employer must show a genuine redundancy situation (section 2) plus strict compliance with section 40 and overall fairness.
Procedure:
- Termination: Show-cause letter, fair hearing, chance to respond, documented decision.
- Redundancy: Written notices to employees or unions and the labour officer, objective selection criteria, consultation, severance calculation, and proper exit documentation.
Typical payments:
- Termination: Accrued leave, notice or pay in lieu, and any contractual or CBA dues.
- Redundancy: All of the above plus statutory severance and any CBA redundancy benefits.
Legal risks if mishandled:
- Termination: Finding of unfair termination, with remedies including up to 12 months’ salary as compensation, reinstatement in some cases, and costs.
- Redundancy: Same remedies, often with higher awards because the court may add unpaid severance, notice, and other dues on top. Recent ELRC cases on redundancy have awarded several months’ compensation where section 40 was not followed.
💡 Key takeaway: If you are dealing with a role that is disappearing, you are in redundancy territory. If you are dealing with a person’s behaviour or performance, you are in termination territory – and mixing the two is where most litigation starts.
🚨 Common mistakes Kenyan employers make
Courts see the same patterns repeatedly when analysing termination vs redundancy cases in Kenya.
Three common traps
Re-labelling dismissal as redundancy:
- An under-performing or “difficult” employee is declared redundant, yet the job continues or is re-advertised soon after. Courts usually find the redundancy is a sham and award compensation.
Skipping section 40 steps:
- No notice to the labour officer, no written explanation of reasons, no objective selection criteria, or no evidence of consultation.
- The appellate courts are clear: failure to comply with mandatory steps in section 40 makes the redundancy unfair, even if the business genuinely needed to downsize.
Weak documentation:
- No board resolution, no restructuring plan, no consultation minutes, and a short termination letter that simply says “due to redundancy”.
- When challenged, employers try to rebuild the story in court. Judges now expect the paper trail to match the redundancy narrative, and they draw adverse inferences where it does not.
💡 Key takeaway: If it is not written down, it is very hard to prove. Courts are increasingly document-driven in termination vs redundancy disputes.
🧑💼 Practical guidance for employers and HR
📌 If you are considering termination for misconduct or performance
Termination preparation checklist
Clarify the problem: Write down the specific allegations or performance gaps, with dates and examples.
Check the contract and policies: Confirm notice periods, disciplinary procedures, and performance management policies.
Follow section 41:
- Issue a clear show-cause letter,
- Invite the employee to a hearing,
- Allow them to be accompanied, and
- Keep formal minutes of the meeting.
Decide proportionately: A single minor incident rarely justifies summary dismissal. Consider warnings, performance improvement plans, or reassignment where appropriate.
Communicate clearly: The termination letter should state the reason, effective date, and what dues are being paid.
💡 Key takeaway: For termination, your biggest shield is a clean, documented disciplinary process.
📌 If you are considering redundancy
Redundancy planning roadmap
Ask the core question: Is it the role that is disappearing, or the person you are unhappy with? If it is the person, redundancy is the wrong path.
Prepare a short business case: Document why the role has become superfluous – for example, budget cuts, duplication of roles, restructuring, or technology.
Identify the pool: Who is potentially affected? One person, a team, or a whole department?
Map the section 40 steps:
- Draft and issue notices (including to the area labour officer),
- Agree and apply objective selection criteria,
- Plan consultation meetings and keep minutes,
- Calculate severance pay and other dues.
Check CBAs and internal policies: Ensure you are not offering less than what the CBA or company policy provides.
Time your communication: Avoid surprises – explain the process to employees early and honestly.
💡 Key takeaway: A lawful redundancy is a project, not a memo. Treat it like one with a clear plan, timeline, and documentation.
📌 When to involve an employment lawyer
- If you are unsure whether your situation is termination vs redundancy in Kenya,
- If more than one employee is affected,
- If unions are involved, or
- If you have already received a demand letter or claim.
Early advice often costs less than the cost of one avoidable judgement.
💡 Key takeaway: Involve counsel before you press “send” on that termination or redundancy letter, not after the claim is filed.
👥 Practical guidance for employees
Employee self-check after termination or redundancy
Read the letter carefully:
- Does it say termination, summary dismissal, or redundancy?
- What reason is stated? That is the reason the employer will have to defend later – they are not allowed to invent a brand-new one in court. new.kenyalaw.org+1
If it is redundancy:
- Were you or your union notified in advance?
- Was the labour officer notified?
- Were there any consultation meetings?
- Did you receive severance pay plus notice and accrued leave?
If it is termination for misconduct or performance:
- Did you receive a show-cause letter?
- Were you invited to a hearing and allowed to bring someone with you?
- Did you get a written decision setting out the findings?
Compare with the reality on the ground:
- If you were declared redundant but the same or similar role is quickly re-advertised or filled, that is a strong red flag.
- If you were singled out when others in the same position were retained, ask how the selection criteria were applied.
Act within time:
- Employment claims in Kenya are subject to strict limitation periods (generally three years under section 90 of the Employment Act). Do not wait too long to seek advice.
💡 Key takeaway: Your termination or redundancy letter, and what actually happened in the workplace, are the starting point for any legal challenge.
✅ Quick compliance checklist: termination vs redundancy in Kenya
10-second checklist before ending employment
- Are you ending employment because of behaviour or performance?
- → You are probably in termination territory.
- Are you ending employment because the role has genuinely disappeared for business reasons?
- → You are probably in redundancy territory.
- Have you identified and documented a valid reason under section 43?
- Have you followed section 41 (for misconduct or performance cases)?
- If redundancy: have you complied with all section 40 steps, including labour officer notice and severance?
- Have you checked the Employment Act, any CBA, and company policy for extra requirements?
- Do your documents (board resolutions, notices, minutes, and letters) tell the same story?
💡 Key takeaway: Before you let anyone go, pause and ask: “Is this termination or redundancy – and can we prove we did it properly?”
🧾 Glossary of Key Legal Terms
- Termination: Ending an employee’s contract at the employer’s initiative, usually for misconduct, performance, incapacity, or other individual reasons.
- Summary dismissal: Immediate termination without notice because of serious misconduct, as allowed under section 44 of the Employment Act.
- Redundancy: Involuntary loss of employment through no fault of the employee where the job becomes unnecessary due to restructuring or similar business reasons.
- Severance pay: Statutory payment of at least 15 days’ pay per completed year of service, payable only in redundancy situations.
- Substantive fairness: The requirement that the reason for termination or redundancy is valid, fair, and supported by evidence.
- Procedural fairness: The requirement that the employer follows the correct steps and process, such as hearings and notices.
- Labour officer: An officer from the Ministry of Labour who must be notified of redundancies under section 40 of the Employment Act.
- Collective bargaining agreement (CBA): A negotiated agreement between an employer (or employers’ association) and a trade union setting out terms and conditions of employment.
- Unfair termination: A court finding that an employer did not have a valid reason, did not follow fair procedure, or both, when ending employment.
- Consultation: Good-faith engagement between employer and affected employees (or their representatives) before implementing redundancy, now recognised by the Court of Appeal as implied in section 40.
Need help with a tricky termination vs redundancy in Kenya, or planning a restructuring? Reach out through our website and we will be happy to assist.