Kenya Redundancy & Severance Pay Calculator

About the Kenya Redundancy & Severance Pay Calculator

Work out what a Kenyan employer owes you when your job is declared redundant, by section 40 of the Employment Act, 2007: severance pay of at least 15 days’ pay for each completed year of service, at least one month’s notice or a month’s wages in lieu, and the leave you are due, paid in cash.

Enter your monthly pay and your service — as completed years, or as your start and end dates, from which the calculator counts the completed years and the last day your employer had to give notice. Add the leave carried over and the months of the current leave year, at 1.75 days a completed month, and change the contract terms if your contract or collective agreement gives more. Nothing you type leaves your browser.

Without a pass the page shows a free preview of your own result: the severance pay, with the first rows of each table and the conditions your employer must meet, while every other figure stays hidden until you unlock it with a Pro pass.

What the Employment Act gives on redundancy

Redundancy is the loss of a job through no fault of the employee, at the employer’s initiative, where the employee’s services are superfluous. Before terminating a contract on account of redundancy an employer must (section 40(1)):

• notify the union and the labour officer, if the employee is a union member, of the reasons for and the extent of the redundancy, at least a month before the intended date; otherwise notify the employee personally in writing and the labour officer;
• select the employees to be declared redundant with due regard to seniority in time and to the skill, ability and reliability of each employee affected;
• where a collective agreement sets the terminal benefits payable on redundancy, not put an employee at a disadvantage for being, or not being, a member of the union;
• pay off any leave due in cash;
• give at least one month’s notice or pay one month’s wages in lieu;
• pay severance of at least 15 days’ pay for each completed year of service.

These rules do not apply when employment ends because the employer is insolvent: that part of the Act applies instead. The current text is in the Laws of Kenya.

How the severance is worked out

Severance is 15 days’ pay times the completed years of service. The Act does not say how a day’s pay is worked out from a monthly salary: the calculator divides the monthly pay by 30, so 15 days are half a month’s pay for each year, and lets you choose 26 or 22 working days if your contract or collective agreement counts them. Only completed years count by the Act: 7 years and 11 months give 7 years of severance. A contract or collective agreement may give more days a year, and then that figure applies.

Leave pay and notice

You are entitled to at least 21 working days of leave with full pay after every twelve consecutive months, and, when employment ends after two or more completed months of a leave year, to at least 1.75 days for each completed month of it (section 28). On redundancy the leave due is paid in cash. Notice is one month or more as your contract sets, worked or paid in lieu (sections 35, 36 and 40(1)(f)).

Tax on the package

Leave pay and pay in lieu of leave are employment income (Income Tax Act, section 5(2)(a)), and so is compensation for the termination of a contract, whether or not the contract provides for it (section 5(2)(c)): your employer deducts PAYE (KRA). Where a contract for an unspecified term provides no compensation, the Act spreads the compensation evenly over the three years after the termination (Income Tax Act).

If the employer does not follow the Act

A termination that does not follow the Act can be challenged as unfair: an employee may complain to a labour officer within three months of the termination (section 47(1)), besides the right to complain to the Employment and Labour Relations Court (section 47(3)).

Limitations

• For a redundancy under section 40. Dismissal, resignation, the end of a fixed-term contract, probation and insolvency follow other rules.
• Service pay under section 35(5), a gratuity in your contract and pension benefits are not worked out; add amounts you are owed under Other amounts owed.
• Tax on the package is not worked out; your employer deducts PAYE from it.
• An estimate from the Employment Act’s minimums, not legal advice: your contract, a collective agreement or a court may give more. Have a lawyer or a labour officer look at your case.

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