Understanding Employment Contracts in Kenya

Introduction

An employment contract is a legally binding agreement between you and your employer defining the terms and conditions of your employment. In Kenya, employment contracts are governed by the Employment Act, 2007 and must comply with legal requirements to protect both employees and employers.

Understanding your employment contract before signing is crucial - it determines your salary, benefits, working hours, leave entitlements, termination terms, and more. Many employees sign contracts without fully reading or understanding them, only to discover unfavorable terms later.

This comprehensive guide explains employment contracts in Kenya, types of contracts, essential clauses, your rights, red flags to watch for, and what to do if issues arise.

Why Employment Contracts Matter

Legal Protection

Defines relationship: Clarifies roles, responsibilities, expectations
Prevents disputes: Clear terms reduce misunderstandings
Enforceable: Courts can enforce contract terms if violated
Protects your rights: Ensures you get what you’re entitled to

What It Covers

Job title and responsibilities
Salary and payment terms
Working hours
Leave entitlements (annual, sick, maternity/paternity)
Benefits (medical, housing allowance, etc.)
Probation period
Notice period for termination
Confidentiality and non-compete clauses

African professionals reviewing employment contract

Types of Employment Contracts in Kenya

1. Permanent Contract (Indefinite Contract)

What It Is: Open-ended employment with no specified end date

Characteristics:

No fixed end date
Continues until terminated by either party (with notice)
Most common for long-term employees
Full benefits typically included

Advantages:

Job security
Full benefits
Statutory protections apply

Termination: Requires notice period (as per contract or minimum by law)

Best For: Career professionals, long-term employment

2. Fixed-Term Contract (Contract for Specific Period)

What It Is: Employment for a defined period (e.g., 6 months, 1 year, 2 years)

Characteristics:

Clear start and end dates
Contract expires automatically unless renewed
Commonly used for projects, temporary needs, or trial periods
Can be renewed (but see legal limits below)

Typical Duration: 1-3 years (varies)

Legal Limit on Renewals:

Important: Under Kenyan law, if a fixed-term contract is renewed repeatedly and employment exceeds 2 years, the employee is generally considered permanent
Employers cannot use repeated short contracts to avoid giving permanent status

Advantages:

Clear timeframe
Can gain experience
Potential for renewal or conversion to permanent

Disadvantages:

Less job security
May have limited benefits
Uncertainty about renewal

Best For: Project-based work, seasonal jobs, contract roles, gaining experience

3. Casual Employment

What It Is: Employment on a casual or daily basis

Characteristics:

Day-to-day or short-term work
No guaranteed hours
Payment typically daily or weekly
Minimal benefits
Common in agriculture, construction, hospitality

Legal Requirement:

Employer must still provide written contract (even if casual)
Must comply with minimum wage

Advantages:

Flexibility
Immediate income

Disadvantages:

No job security
Limited or no benefits
Irregular income

Best For: Students, those needing flexible work, temporary income

African employee signing employment documents

4. Part-Time Contract

What It Is: Employment for fewer hours than full-time (typically under 40 hours/week)

Characteristics:

Defined hours (e.g., 20 hours/week)
Pro-rated benefits (based on hours worked)
Can be permanent or fixed-term

Payment: Hourly or salary (pro-rated)

Benefits: Should receive pro-rated benefits (leave, etc.)

Best For: Those balancing work with studies, other jobs, or personal commitments

5. Probation Contract

What It Is: Initial period to assess suitability (typically part of permanent contract)

Characteristics:

Usually 3-6 months (sometimes up to 12 months, but 3-6 most common)
Easier termination during probation (shorter notice or none in some cases)
Full benefits may apply or be deferred until probation ends (varies by employer)
Performance assessed at end

After Probation:

Confirmed as permanent employee
Or contract terminated (if performance unsatisfactory)

Legal Note: Some benefits (like statutory leave) still apply during probation

Best For: New hires, career changers, entry-level roles

Essential Contract Clauses

1. Parties to the Contract

What to Check:

Your full name (correct spelling)
Employer’s legal name (company or individual)
Employer’s address

2. Job Title and Description

What to Check:

Accurate job title
Clear description of duties and responsibilities
Reporting structure (who you report to)

Why It Matters: Defines what you’re expected to do; prevents employer from assigning unrelated tasks

3. Start Date

Exact date employment begins

4. Duration (for Fixed-Term Contracts)

Start and end dates
Whether renewable

5. Salary and Payment Terms

What Should Be Specified:

Gross salary (before deductions)
Net salary (after statutory deductions - NSSF, NHIF, PAYE)
Payment frequency (monthly most common in Kenya)
Payment date (e.g., last working day, 27th of month)
Payment method (bank transfer, M-Pesa, etc.)

Important:

Salary should be clearly stated (not vague)
Confirm if salary is monthly or annual
Check if any components (allowances) are included

Deductions:

Employer must deduct:
- PAYE (Pay As You Earn tax to KRA)
- NSSF (National Social Security Fund)
- NHIF (National Hospital Insurance Fund)
- Housing Levy (1.5% of gross salary, recently introduced)

6. Working Hours

What to Check:

Normal working hours (e.g., Monday-Friday, 8 AM - 5 PM)
Total hours per week (standard in Kenya: 40-45 hours/week)
Meal breaks
Overtime terms (how calculated and paid)

Kenyan Law:

Maximum working hours: 52 hours/week (inclusive of overtime)
Overtime: Work beyond contracted hours, paid at time-and-a-half or double time (as per contract or law)

7. Leave Entitlements

Annual Leave:

Kenyan Law Minimum: 21 working days per year (after 12 months of service)
Some employers offer more
How calculated (calendar days or working days)
When can be taken

Sick Leave:

Kenyan Law: Employee entitled to sick leave (with medical certificate)
- Full pay: First week per month (up to 7 days total)
- Half pay: Next week per month (up to 7 days total)
- Unpaid after that within same month
Requires medical certificate from registered medical practitioner

Maternity Leave:

Kenyan Law: 3 months (90 days) paid maternity leave for female employees
Can take up to 2 weeks before due date

Paternity Leave:

Kenyan Law: 2 weeks paid paternity leave for male employees

Compassionate/Emergency Leave:

Some employers offer (not statutory)

Public Holidays:

Kenya has ~12 public holidays annually
Employees entitled to off or paid if working

8. Benefits

What Employers May Offer (not all mandatory):

Medical insurance (NHIF statutory, but employers often add private insurance)
Housing allowance
Transport allowance
Lunch allowance
Airtime allowance
Pension/retirement contribution (NSSF statutory; additional voluntary schemes possible)
Life insurance
Education assistance

Check:

Which benefits are included
Amounts or coverage
When they start (immediately or after probation)

9. Probation Period

Duration (typically 3-6 months)
Terms of probation
Notice period during probation (usually shorter)
What happens after probation (confirmation or termination)

10. Notice Period

For Termination by Either Party:

How much notice required to resign or be terminated
Kenyan law minimum notice periods:
- Contracts 3 years or less: 28 days (about 1 month)
- Contracts over 3 years: 28 days or longer (as per contract)
- During probation: Often shorter (7-14 days) or as per contract

Payment in Lieu of Notice:

Can employer pay you instead of working notice period? (should be specified)

11. Termination Clause

Grounds for Termination:

Notice period termination
Summary dismissal (immediate termination for gross misconduct)
Redundancy
Contract expiry (for fixed-term)

Severance Pay:

Kenyan Law: Employee entitled to severance pay (15 days’ wage per year of service) in cases of redundancy
Check if contract specifies additional severance

12. Confidentiality Clause

What It Means: You agree not to disclose company’s confidential information (trade secrets, client data, etc.)

Duration: Usually extends beyond employment (perpetually or for defined period)

What to Check:

What’s considered confidential (should be reasonable)
Not overly broad (shouldn’t prevent you from working in industry)

13. Non-Compete Clause

What It Means: You agree not to work for competitors or start competing business for a certain period after leaving

Check:

Duration (common: 6 months to 2 years after leaving)
Geographic scope (e.g., within Kenya, within Nairobi)
Industry scope

Legal Note:

Non-compete clauses enforceable in Kenya if reasonable
Courts won’t enforce overly broad clauses (e.g., preventing you from earning livelihood)

Negotiate: If too restrictive, negotiate before signing

14. Intellectual Property (IP) Clause

What It Means: Work you create during employment belongs to employer

Common In: Creative fields, tech, research

Check:

What IP is covered (work created during work hours, or all work even outside?)
If you have any ownership rights

15. Dispute Resolution

What It Means: How disputes will be resolved

Options:

Internal grievance procedure
Mediation
Employment and Labour Relations Court

Check: Process for raising grievances

16. Governing Law

Should state contract governed by Kenyan law

17. Amendments

How contract can be amended (usually requires written agreement by both parties)

18. Entire Agreement Clause

States that the written contract is the complete agreement (verbal promises not binding unless in contract)

What to Do Before Signing

1. Read Thoroughly

Don’t rush: Take time to read entire contract
Don’t sign on the spot: Ask to take it home and review (reasonable employers will allow)
Understand every clause: If you don’t understand something, ask

2. Compare with Job Offer

Ensure contract matches verbal or written offer
Check salary, benefits, title match what was promised

3. Check Legal Compliance

Ensure minimum statutory requirements met (leave, notice period, etc.)
If unsure, consult Ministry of Labour website or lawyer

4. Clarify Ambiguities

If anything unclear, ask employer to clarify or put in writing
Don’t assume

5. Negotiate if Needed

What You Can Negotiate:

Salary (if you believe you’re worth more)
Benefits (allowances, insurance)
Flexible working hours
Probation period duration
Non-compete clause (if too restrictive)

How to Negotiate:

Professional and polite
Provide reasons (market rates, your value, competing offer)
Be willing to compromise
Get final agreement in writing

6. Seek Legal Advice (If Necessary)

For senior positions or complex contracts, consider consulting an employment lawyer
Cost: KES 5,000-20,000 for contract review (worth it for important roles)

7. Keep a Copy

Once signed, keep your own signed copy
Store safely (you’ll need it for reference)

Red Flags to Watch For

1. No Written Contract

Kenyan Law: Employers must provide written contract within 2 months of starting work
Verbal contracts hard to enforce
Action: Insist on written contract; if employer refuses, reconsider the job

2. Salary Below Minimum Wage

Kenya has minimum wage (varies by sector and location)
Check Ministry of Labour website for current minimum wage
Action: Don’t accept below minimum wage (illegal)

3. Excessive Probation Period

Standard: 3-6 months
If employer wants 12+ months, question why
Action: Negotiate shorter period

4. Unreasonable Non-Compete

Prevents you from working in your field
Too long (e.g., 5 years)
Too broad (entire country, entire industry)
Action: Negotiate more reasonable terms or refuse to sign

5. No Leave Entitlement

By law, you’re entitled to annual leave
Action: Ensure contract includes statutory leave

6. Employer Can Terminate Without Notice or Reason

Should have clear termination terms and notice period
Action: Clarify termination clause

7. Vague Job Description

“Other duties as assigned” with no clear primary duties
Action: Ask for specific job description

8. Deductions Not Explained

Contract should specify what will be deducted from salary
Action: Ask for breakdown

9. No Defined Working Hours

Should specify hours
Avoid “work as required” with no limits
Action: Negotiate defined hours

10. Payment “Pending Company Policy”

Salary, benefits should be clearly stated, not vague
Action: Get specifics in writing

Your Rights Under Kenyan Employment Law

Statutory Minimums (Regardless of Contract)

Minimum Wage: As set by government
Annual Leave: 21 days after 12 months
Sick Leave: With medical certificate (full pay first week, half pay second week per month)
Maternity Leave: 3 months paid
Paternity Leave: 2 weeks paid
Notice Period: 28 days minimum (for contracts under 3 years)
Severance Pay: 15 days per year of service (in redundancy)
Safe Working Environment: Employer must provide safe workplace
No Discrimination: Based on gender, age, religion, ethnicity, disability, etc.
Freedom of Association: Right to join trade unions

Important: Contract cannot provide less than legal minimums; if it does, the law prevails

When to Seek Help

Employment and Labour Relations Court:

If your rights violated
Unfair termination
Unpaid wages
Discrimination

Ministry of Labour:

Labour offices in Nairobi and counties
Can mediate disputes
Provide guidance

Federation of Kenya Employers (FKE):

Resources for employment issues

COTU (Central Organization of Trade Unions):

If you’re union member

Lawyer:

For serious disputes or complex cases

Common Contract Issues and How to Address Them

Issue 1: Employer Wants to Change Contract Terms

Your Rights:

Changes require your consent (written agreement)
Employer can’t unilaterally change terms

Action:

Review proposed changes carefully
Negotiate if unfavorable
If you disagree and employer insists, document your objection

Issue 2: Employer Not Honoring Contract

Examples: Not paying agreed salary, not providing benefits, changing job duties significantly

Action:

Document violations
Raise formally with HR or supervisor (in writing)
If not resolved, file complaint with Labour Office
Consider legal action (Employment and Labour Relations Court)

Issue 3: Forced to Resign

Your Rights:

Employer cannot force you to resign
If terminated, entitled to notice or payment in lieu

Action:

Don’t sign resignation letter if being forced
Document coercion
Seek legal advice
Report to Labour Office

Issue 4: Delayed or Unpaid Salary

Your Rights:

Salary must be paid on agreed dates
Withholding wages illegal

Action:

Raise with employer (in writing)
If not resolved, report to Labour Office
Can sue for unpaid wages

Sample Contract Review Checklist

Before signing, confirm:

FAQs

Q: Can I negotiate my contract? A: Yes! Most employers expect some negotiation, especially on salary and benefits. Be professional and reasonable.

Q: What if my employer won’t give me a written contract? A: By law, you’re entitled to written contract within 2 months. If employer refuses, this is a major red flag. Report to Labour Office.

Q: Can my employer change my contract without my consent? A: No. Changes require mutual agreement in writing (amendment).

Q: What if I’m asked to sign a contract in a language I don’t understand? A: Don’t sign! Ask for translation or have someone explain it to you. You should never sign anything you don’t understand.

Q: Can I be fired during probation without notice? A: Probation terms vary by contract. Some contracts allow shorter notice during probation (e.g., 7 days) or immediate termination. Check your contract. However, dismissal should still be fair (not discriminatory).

Q: What if my contract says I work 60 hours/week? A: Kenyan law limits working hours to 52 hours/week (including overtime). A contract requiring more violates the law. You can refuse or report to Labour Office.

Q: Is a verbal contract valid? A: Verbal contracts can be binding, but they’re hard to enforce (proving what was agreed). Always insist on written contract.

Q: What if I already signed a bad contract? A: You’re bound by it unless it violates the law (in which case legal minimums apply) or you can negotiate amendments with employer. If seriously problematic, seek legal advice.

Conclusion

Your employment contract is one of the most important documents you’ll sign - it governs your work life, protects your rights, and defines your relationship with your employer. Never sign without thoroughly reading and understanding every clause.

Ensure your contract complies with Kenyan employment law minimums (leave, notice period, statutory deductions), clearly states salary and benefits, specifies working hours and job duties, and includes reasonable termination and notice provisions. Watch for red flags like no written contract, below minimum wage, excessive probation, or overly restrictive non-compete clauses.

Don’t hesitate to negotiate terms that seem unfair, seek clarification on ambiguities, or consult a lawyer for important contracts. Once signed, keep a copy safe and refer to it whenever questions arise. If your employer violates the contract, document it and seek redress through your company’s HR, the Ministry of Labour, or the Employment and Labour Relations Court.

Understanding your employment contract empowers you to know your rights, advocate for yourself, and build a fair and productive working relationship with your employer.