Shifting the Balance: Understanding Unfair Termination in Kenya

Termination of employment is the single most common cause of litigation before the Employment and Labour Relations Court (ELRC). The sudden loss of a job severely impacts an employee's livelihood, personal dignity, and future career prospects. To prevent arbitrary dismissals, the Employment Act, 2007 acts as protective legislation, requiring employers to pass two strict judicial tests before any termination can be declared lawful: a valid substantive reason and a fair procedural track. If either element is missing, the termination is statutorily unfair.

The Legal Pillars of the Employment Act

Three main sections of the Act work in tandem to regulate unfair dismissals:

Section 43 (The Burden of Proof): Unlike ordinary civil cases where the claimant must prove their case, the burden of proof in termination disputes shifts squarely onto the employer. The company must affirmatively demonstrate that the reason for termination actually existed and was legally valid. If the employer fails to prove this, the dismissal is automatically deemed unfair.
Section 45 (The Definition of Unfairness): A termination is legally unfair if the employer cannot prove that the reason was genuine, that it related directly to the worker's conduct, capacity, or operational requirements, and that the termination was handled in accordance with a fair procedure.
Section 41 (The Mandatory Hearing Steps): This section outlines the non-negotiable procedural track required before firing an employee for misconduct, poor performance, or physical incapacity.

The Mandatory Three-Step Disciplinary Track

To achieve procedural fairness under Section 41, an employer must execute three distinct phases sequentially. These steps cannot be skipped under any circumstances:

Clear Written Notification: The employer must explain the specific allegations to the employee in writing, using a language the employee fully understands.
The Right to Accompaniment: The employee must be given a genuine opportunity to respond to the charges, and they must be explicitly informed of their right to have a fellow employee or a union representative present during the discussion.
Objective Deliberation: The employer must physically host a fair hearing, record detailed minutes, and genuinely consider the employee’s defense before arriving at a final decision.

Failure to follow this precise order makes the termination procedurally unfair, regardless of how guilty the employee might be or how strong the employer's underlying reason is.

Substantive Fairness: The Valid Reason

A lawful termination must strictly fit into one of three statutory categories:

Conduct: Covers gross misconduct, insubordination, flagrant dishonesty, and workplace theft.
Capacity: Covers documented poor performance, physical incapacity, or prolonged medical illness.
Operational Requirements: Covers genuine structural redundancy, company restructuring, and technological changes.

Note: Under Section 43(2), an employer must prove they held a genuine belief that the reason existed, backed by reasonable grounds after a thorough investigation. Suspicion, office rumour, or personal dislike will never satisfy the court.

Landmark Jurisprudence: Notice vs. Fair Hearing

A very common trap for corporate employers is assuming that a "notice clause" in an employment contract allows them to fire an employee without giving a reason or hosting a hearing.

In the landmark decision of Middle East Bank Kenya Limited v Hellen Waseka (2026), the Court of Appeal put this issue to rest. The court ruled that an employer must clearly state valid reasons and hold a fair hearing even where a termination notice clause exists. The bank in that case gave the employee three months' notice but lost the suit entirely because it failed to provide a valid reason or conduct a Section 41 hearing.

Constructive Dismissal

An unfair termination does not always arrive in the form of an official termination letter. Constructive dismissal occurs when an employer deliberately makes the workplace environment so hostile, intolerable, or abusive that the employee is left with no option but to resign. The law treats this forced resignation as an active unfair termination.

Fixed-Term Contracts and Legitimate Expectation

While the natural expiry of a fixed-term contract is generally lawful, a critical exception exists under the doctrine of legitimate expectation. If an employer repeatedly renews a short-term contract, makes express verbal or written promises of continuation, or allows an employee to keep working past the calendar end date, a legitimate expectation of renewal is legally created. In such cases, the employer cannot simply let the contract lapse; they must provide valid substantive reasons and follow a fair procedure before declining to renew.

Conclusion

The Employment Act is heavily weighted toward employee protection. For employers, the compliance rule is simple: investigate fairly, document everything, communicate in a language the worker understands, and grant a genuine hearing before issuing a decision. For employees, while the law is firmly on your side, you must track your timelines carefully the three-year limitation period to file an employment claim under Section 90 is strict and absolute.

Disclaimer
The information provided in this article is for general informational and educational purposes only and does not constitute formal legal advice. Reading or relying on this content does not create an advocate-client relationship. For specific case-by-case labour disputes or corporate employment compliance audits, please contact us to obtain professional legal advice with respect to your particular legal matter.

By Ivy Ndirangu