What constitutes termination of employment?
Termination of employment is an employee’s departure from a job. This may be voluntarily, on the employee’s part, or it may be at the hands of the employer, often in the form of dismissal (firing) or a layoff. Dismissal or firing is generally thought to be the fault of the employee, whereas a layoff is generally done for business reasons (for instance a business slowdown or an economic downturn) outside the employee’s performance.
Forms of termination of employment.
Termination of a contract of employment under Kenyan labour laws will usually take the following forms:-
1. Termination of employment by agreement: This happens when the employer and employee agree to bring a contract of employment to an end in accordance with an agreement. This may be in case of terminating a contract of apprenticeship; where the period of training expires then the contract will obviously come to an end.
2. Automatic termination: When a contract of employment is terminated automatically in circumstances such as death or loss of business of the employer.
3. Termination of employment by the employee/resignation: This happens when an employee decided to resign from his or her employment of the contract by the employer, decides to resign from his/her employment.
4. Termination of employment by an employer: An employer may also terminate the employment of an employee but there is a need to comply with the provisions of the law and contract relating to termination.
Lawful termination of employment.
An employer has to have a valid reason for terminating the employment of an employee for it to be considered fair according to the law. Apart from this valid reason of termination, the employer must follow fair procedures for termination as are provided under sections 45 (2) and section 46 of the Employment Act of Kenya, 2007 (“the Employment Act”).
“In any form of termination the employer is required to prove the reasons for the termination, otherwise it will be termed as unfair (section 45 (2))”.
Reasons for Termination.
A contract of employment may be terminated by an employer on either of the following grounds:-
a) By mutual agreement between the employer and the worker (Industrial Training Act, section 13 (1) (a));
b) By the employer when the employee dies before the expiration of the period of employment;
c) By the employer if the worker is found by medical examination to be unfit for employment. Due to sickness or accident the employee becomes unable to carry out his or her work (Employment Act, section 41(1));
d) By the employer on the basis of misconduct of employee Employment Act, section 44 (3);
e) Poor performance;
f) Employer’s operational requirements/retrenchment; and
g) Participation in an illegal strike.
Procedure of Termination.
The procedures for termination are different depending on the reason for termination but, they all have a common strain – the right of an employee to be heard before a termination decision is taken against him or her.
Is it expected that an employer follow the procedure for termination even in cases where an employee is caught red handed committing a serious misconduct, for example stealing? Yes. Notwithstanding the gross misconduct of the employee, and the evidence available, the law requires that procedures outlined under the Employment Act be followed.
An employee is entitled to a fair hearing before an employer’s disciplinary committee to show cause as to why they should not be dismissed from employment (Section 41 (1)). In this case, the employee is entitled to bring with them a witness in form of a colleague or union representative to the hearing. The employer is thereafter required to consider the employees representations after the hearing and consider or respond on the issues raised at the hearing as soon as possible.
Separately, an employer must give the employee a period of notice of termination (e.g. at close of day in case of contract for daily wages, one month or more in case of monthly pay contracts).
While most employees think the employer cannot fire them without due notice, the law actually has a provision for this under Sections 36 and 38 of the Employment Act. The law allows an employer to fire an employee without notice, but the employer will be required to pay the employee the amount that an employee would have received if she/he had worked during the notice period.
This law is also applicable to an employee and protects the employer from a breach of contract. In such a case where the professional resigns without giving proper notice, he/she is required to compensate their employer.
How then should a Termination Notice be effected?
Section 35 (2) and (3) of the Employment Act provides that a termination notice must be in writing. In case the employee does not understand the notice, the employer is responsible to ensure that the notice is explained orally to the worker in a language he/she understands. The acceptable notice periods according to the Employment Act are as follows:-
i. If the employee is employed on a daily wage contract, the notice is given at the close of any day without notice.
ii. If the employee is employed on a weekly pay or two-week basis the notice period shall be one week or two weeks respectively, given in writing or payment of one week’s salary in lieu of notice.
iii. If the employee is employed on a monthly basis the notice period shall be 28 days and in writing or payment of one month’s salary in lieu of notice.
iv. In the case where a contract of employment provides that the notice of termination be given for a greater period than one month, then the agreed notice period shall be of equal duration for both employer and the employee (section 35 (2)).
What happens if an employee is terminated but they have outstanding leave they have not taken?
An employer can have the employee take the number of outstanding leave days during the notice period. Alternatively, the employee can serve the notice period and be compensate for the accrued leave not taken as part of their termination dues.
When is Notice not required to be given in case of termination?
There are forms of termination that do not necessarily require the serving of a notice period. This is primarily in cases of summary dismissal. Summary dismissal arises where the employee has committed an act of gross misconduct and is literally fired without notice but subject of course to a disciplinary hearing. In that case his/her only entitlement is salary up to the date of dismissal and pay for any accrued leave.
Section 44 (4) (a) to (g) outlines what gross misconduct of an employee is constitutes. The same is as follows-
a) Absconding duties without leave or other lawful cause;
b) being intoxicated at work to the extent that the employee renders himself unwilling or incapable to perform his work properly;
c) the wilful neglect to perform any work which it was his duty to perform, or carelessly and improperly performing any work which from its nature it was his duty, under his contract, to have performed carefully and properly;
d) the use of abusive or insulting language by the employee, or behaviour in a manner insulting, to his employer or to a person placed in authority over him by his employer;
e) failing or refusing 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;
f) an employee is arrested for a cognizable offence punishable by imprisonment and is not within fourteen days either released on bail or on bond or otherwise lawfully set at liberty; or
g) an employee commits, or on reasonable and sufficient grounds is suspected of having committed, a criminal offence against or to the substantial detriment of his employer or his employer’s property
Failure to have a valid reason for termination and/or follow the procedure for termination will amount to unfair termination of the employee. In making its determination as to whether an employment contract has been unfairly terminated, the court or labour office is guided by the following:
i. Whether the employer used the proper procedure, communication and appeal mechanisms, that is, under the Employment Act and its policies.
ii. Whether the conduct and capability of employee was actually detrimental as claimed by the employer.
iii. The employer’s previous practice in such matters.
iv. The existence of previous warning letters addressed to the employee.
Sections 47 and 49 (1) of the Employment Act outline the consequences of unfair termination. If a court or labour office makes the decision that the termination of an employment contract amounts to unfair termination, the employer may be subjected to any or a combination of the following:-
1. Pay the wages which the employee would have earned had the employee been given the period of notice to which he was entitled under the Employment Act or his contract of service.
2. Where dismissal terminates the contract before the completion of any service upon which the employee’s wages became due, to pay the proportion of the wage due on a pro-rated basis.
3. Pay the equivalent of a number of months’ wages or salary not exceeding twelve months based on the gross monthly wage or salary of the employee at the time of dismissal.
4. Alternatively, the employer may have to reinstate the employee and treat the employee in all respects as if the employees employment had not been terminated; or
5. Re-engage the employee in work comparable to that in which the employee was employed prior to his/her dismissal, or other reasonably suitable work, at the same wage.
The court or labour office in awarding a remedy considers the:
• Wishes of the employee
• Circumstances of termination & employee’s own conduct
• Reasonable expectation on continued employment
• Practicability of the remedy sought
• Compensation already received
• Length of service
• Opportunities available
• Value of severance pay
• Claims for unpaid wages
• Expenses incurred by the employee
• Failure of the employee to mitigate his loss
Certificate of Service.
To conclude, an employer must ensure that he has issued a certificate of service to the employee when he terminates an employee’s employment. This is regardless of the reason for termination of the employment contract, unless the period of service of employee to employer has lasted less than four weeks, as provided under section 51 (1) of the Employment Act.
A certificate of service issued must contain the following:-
a) the name of the employer and his postal address;
b) the name of the employee;
c) the date when employment of the employee commenced;
d) the nature and usual place of employment of the employee; and
e) the date when the employment of the employee ceased.
An employer that neglects to issue a certificate of service upon the termination of employment of an employee, commits an offence and shall on conviction be liable to a fine not exceeding one hundred thousand shillings or to imprisonment for a term not exceeding six months or to both.