Redundancy in Kenya

Redundancy in Kenya: What Employees and Employers Need to Know

Redundancy is one of the most frequently misunderstood processes in Kenyan employment law, and one of the most frequently mishandled. Employers often assume that a genuine business reason for cutting a role is enough on its own. It is not. Kenyan courts have repeatedly held that even where a redundancy is entirely genuine, an employer can still be found liable for unfair termination if the process used to select who loses their job was not fair, objective, and properly documented. This guide covers what redundancy actually means under Kenyan law, what employees are entitled to, what employers must do to get it right, and what recent case law reveals about where employers most often go wrong.

What Redundancy Actually Means

Redundancy occurs when a position, not a person, becomes unnecessary to an employer's operations. Common lawful triggers include business restructuring or reorganization that eliminates or merges roles, the introduction of new technology or automation that makes a role obsolete, a genuine decline in business, revenue, or a lost major contract, closure of a department, branch, or the entire business, and outsourcing of functions previously performed in house. The defining legal test is that the job itself has become unnecessary, not that an employer wants to remove a specific individual while keeping the role. Where an employer uses "redundancy" as cover to remove a particular employee while the underlying position continues to exist in substance, courts treat this as a disguised unfair termination, not a genuine redundancy.

The Legal Framework

Redundancy in Kenya is governed primarily by Section 40 of the Employment Act, 2007, which sets out both the procedural steps an employer must follow and the payments an affected employee is entitled to. Kenya is also a state party to the International Labour Organization and bound by ILO Convention No. 158 on Termination of Employment, which requires consultation between employer and employee, or their representatives, before a redundancy takes effect. Kenyan courts have held that this consultation requirement is implicit in the principle of fair play embedded in Section 40 itself, meaning it applies even though the Employment Act does not spell out consultation in as many words.

What Employees Are Entitled To

Under Section 40(1), an employee declared redundant is entitled to several distinct payments. Severance pay, calculated at a minimum of fifteen days' basic pay for each completed year of service. Notice pay, generally one month's wages in lieu of notice where the employee is not required to work through the notice period, which Section 36 of the Act separately allows either party to satisfy by payment rather than actual notice. Payment for all accrued but untaken annual leave, in cash. Full payment of wages owed up to the date of termination. And a certificate of service, a mandatory document confirming the nature and duration of the employment relationship, which affected employees are entitled to regardless of the circumstances of their departure.

What Employers Must Do

Written notice. The employer must issue written notice explaining the reasons for and the extent of the intended redundancy, generally at least one month in advance. Where the affected employee is a trade union member, the relevant union and the labour office must also be notified.

Genuine consultation. Before finalizing the decision, the employer must engage in meaningful consultation with affected employees or their representatives, explaining the reasoning and genuinely exploring alternatives such as redeployment or reduced working hours, not simply informing employees of a decision already made.

Fair, objective, and documented selection criteria. This is the single area where Kenyan employers most often fail, even when the underlying redundancy itself is entirely genuine. Section 40(1)(c) of the Employment Act references the principle of seniority in time, commonly known as last in, first out or LIFO, but explicitly qualifies it against skill, ability, and reliability. LIFO is not an absolute rule. An employer must weigh all of these factors together, objectively, and be able to demonstrate exactly how each affected employee was scored and ranked against the others in their category.

Settlement without delay. Once a redundancy takes effect, all outstanding dues, severance pay, notice pay, accrued leave, and final wages, must be settled promptly.

Why Fair Selection Is Where Redundancy Cases Are Actually Won or Lost

Kenyan case law makes clear that following the procedural steps, notice, consultation, severance, is necessary but not sufficient on its own. In Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others, the Court of Appeal found that the airline had unlawfully terminated 447 employees because it failed to demonstrate how a fair selection procedure had actually been applied, offering no evidence of how the affected employees were identified. The court specifically addressed the LIFO principle in that case, noting that applying seniority in time as the sole criterion, without weighing skill and ability, could itself be detrimental to an employer's need for continuity and succession planning, reinforcing that LIFO alone is not a safe harbor either way.

More recently, in Kimathi v Ericsson Kenya Limited, the Court of Appeal again emphasized that employers must be able to produce an objective, evidence based selection process, not simply assert that one occurred. Employment law practitioners increasingly recommend that employers use a formal selection matrix, a scoring tool applied consistently across every employee in the affected category, weighing skill, ability, reliability, and seniority, backed by written records such as performance appraisals and disciplinary history. Courts have indicated that all of the statutory selection factors must genuinely be considered together, an employer cannot rely on one factor while ignoring the others, though the specific weight given to each factor is generally left to the employer's discretion, provided that discretion is exercised in good faith and can be evidenced.

Common Employer Mistakes

The most frequent errors in Kenyan redundancy processes are not usually about whether a genuine business reason existed, but about the process surrounding it: skipping meaningful consultation and treating it as a formality, applying LIFO mechanically without documenting why other factors were or were not weighted differently, failing to retain the underlying documentation, scoring sheets, appraisal records, consultation notes, that would prove a fair process was actually followed, and rushing the notice period or settlement of dues in a way that leaves the employer unable to demonstrate compliance if challenged later.

What Employees Should Do If They Believe a Redundancy Was Unfair

An employee who suspects a redundancy was not genuine, or that the selection process was unfair, discriminatory, or undocumented, has grounds to challenge the termination before the Employment and Labour Relations Court. Relevant evidence includes whether the position genuinely ceased to exist or was simply reassigned to someone else, whether consultation genuinely took place before the decision was finalized, whether the employer can produce objective documentation of how selection criteria were applied, and whether statutory dues, severance, notice pay, and leave payout, were correctly calculated and paid.

Frequently Asked Questions

How is severance pay calculated in Kenya? A minimum of fifteen days' basic pay for each completed year of service, in addition to notice pay, accrued leave payout, and any other outstanding wages.

Is there a set timeline for the redundancy process in Kenya? The Employment Act does not prescribe a fixed overall timeline, though it does require at least one month's written notice before the redundancy takes effect, and the process as a whole should be conducted without undue delay once initiated.

Can an employer choose who to make redundant based purely on seniority? No. While seniority, the LIFO principle, is one legally relevant factor under Section 40(1)(c), courts have held it cannot be applied in isolation, skill, ability, and reliability must also genuinely be weighed.

What happens if my employer does not consult me before a redundancy? Consultation is treated as part of the fair play requirement embedded in Section 40, and its absence can support a finding of unfair termination even where the underlying business reason for the redundancy was genuine.

Can I be made redundant and then see the same role advertised shortly after? This is a significant red flag. If a position is genuinely redundant, it should not continue to exist in substance. A role reappearing shortly after, especially under a different title but the same duties, is strong evidence the redundancy was not genuine and may support an unfair termination claim.

Getting Redundancy Right, From Either Side

Whether you are an employer needing to restructure lawfully and defensibly, or an employee who believes a redundancy was not handled fairly, the details, documented selection criteria, genuine consultation, correctly calculated dues, are what actually determine the outcome if the matter is ever challenged. Our employment and labour law team at Kathurima N Advocates advises employers on building a redundancy process that holds up under scrutiny, and represents employees pursuing a claim where a redundancy was not genuine or not fairly conducted.

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