Employment contracts often include clauses that allow either party to terminate the agreement by giving notice. Many employers rely heavily on these provisions, believing they offer a simple and lawful exit from the employment relationship. However, Kenyan labour law does not treat such clauses as absolute. Courts have consistently held that contractual terms must operate within the boundaries set by statute, particularly the Employment Act.
The Court of Appeal has reinforced this principle by clarifying that a termination clause does not exempt an employer from legal scrutiny. Even where a contract permits termination by notice, the employer must still justify the decision and follow a fair process. The existence of a contractual right does not remove the obligation to act lawfully, reasonably, and procedurally. This position reflects the law’s recognition that employment is not merely a private arrangement but a relationship with significant social and economic consequences. This interpretation applies across all sectors and levels of employment. Whether the employee is a junior worker or a senior executive, the same legal standards apply. The law seeks to prevent arbitrary decisions that undermine job security and dignity at work. As a result, employers must approach termination as a regulated process rather than a discretionary action.
Contractual Rights and Statutory Limits
Freedom of contract is a recognised principle in Kenyan law, allowing parties to agree on terms that govern their relationship. Employment contracts commonly specify duration, responsibilities, remuneration, and termination mechanisms. However, this freedom is not unlimited. Labour relations are heavily regulated to protect employees from unfair treatment and power imbalances. The Employment Act establishes minimum standards that no contract can lawfully undermine. Courts have repeatedly held that where a contractual provision conflicts with statutory requirements, the law prevails. Termination clauses must therefore be read together with the Act’s provisions on fairness, justification, and procedure.
Judges often distinguish between the right to terminate and the manner in which termination occurs. While an employer may reserve the right to end a contract, the exercise of that right must comply with the law. This means acting in good faith, providing valid reasons, and respecting due process. A notice clause does not operate as a licence to dismiss without accountability. This approach promotes balance in the workplace. It allows employers flexibility while safeguarding employees against abuse. It also encourages responsible management practices and reduces the risk of disputes that can disrupt operations and damage reputations.
The Legal Duty to Justify Termination
Kenyan law places a clear burden on employers to explain why an employment relationship has ended. Termination cannot occur in a vacuum. An employer must give reasons that are valid, fair, and related to the employee’s conduct, capacity, or operational requirements.
Courts carefully examine the reasons advanced by employers. Allegations of poor performance must be supported by evidence such as appraisals, warnings, or improvement plans. Claims of misconduct require investigation and factual backing. Employers cannot rely on vague assertions or afterthoughts to justify termination. Consistency plays a key role in judicial assessment. Where an employee has received positive evaluations, bonuses, or commendations, courts question sudden claims of incompetence or negligence. Such contradictions often undermine the employer’s case and suggest that the stated reasons may not be genuine. The obligation to give reasons serves an important purpose. It promotes transparency and accountability. It also ensures that employees understand the basis of decisions that affect their livelihoods. For employers, clear justification reduces exposure to legal risk and strengthens their position if disputes arise.
Fair Procedure as a Mandatory Requirement
Beyond justification, the law demands fairness in process. Procedural fairness lies at the heart of lawful termination under the Employment Act. Even where valid reasons exist, an employer must follow a fair and transparent procedure before ending employment. This process includes informing the employee of the allegations or concerns, allowing the employee time to respond, and providing an opportunity to be heard. Disciplinary hearings must be conducted objectively, and decisions should be based on evidence presented during the process. These requirements apply regardless of the employee’s rank or contractual terms.
Courts take a strict view of procedural lapses. Verbal dismissals, abrupt termination letters, or decisions made without hearings often lead to findings of unfair termination. Allegations such as absconding duty or misconduct must be supported by records, timelines, and credible documentation. Fair procedure protects dignity and trust in the workplace. It gives employees a voice and ensures that decisions are not rushed or biased. For employers, it provides a structured framework that supports defensible and lawful outcomes.
Implications for Employers and Employees in Kenya
This legal position carries lasting lessons for Kenya’s labour market. Employers must review their employment contracts and human resource policies to ensure alignment with the Employment Act. Termination clauses should not encourage shortcuts or disregard for due process. Effective performance management, proper documentation, and lawful disciplinary procedures are essential. Managers should receive training on labour law requirements to avoid costly mistakes. Preventive compliance is often less expensive than litigation. Employees, on the other hand, should understand that contractual notice clauses do not remove statutory protection. The law continues to safeguard their right to fairness and justification. Courts remain willing to interrogate termination decisions and provide remedies where unfairness occurs.
Compensation for unfair termination depends on the circumstances of each case. Courts balance the interests of both parties and avoid excessive awards. However, they do not hesitate to intervene where employers act unlawfully. Ultimately, the message is clear and enduring. In Kenya, termination of employment must be lawful, justified, and procedurally fair. Contracts matter, but the law matters more.
