Unfair Dismissal Kenya: 5 Critical Traps Executives Must Avoid
The Hidden Traps of Termination: What Executives Miss Before Unfair Dismissal Strikes in Kenya For many senior executives in Kenya, the belief persists that a robust employment…
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Downsizing
Many Kenyan employers view downsizing as a convenient “silver bullet” to remove underperforming staff without the friction of a Performance Improvement Plan (PIP). It seems cleaner on paper. You eliminate the role, pay the severance, and move on. However, the Employment and Labour Relations Court (ELRC) is increasingly eagle-eyed about this tactic. When a company uses the redundancy in process Kenya to bypass performance management, they often fall into a “sham redundancy” trap that results in maximum compensation awards for the employee.
The Legal Definition: Role vs. Person
Under Section 2 of the Employment Act 2007, redundancy is defined as the loss of a job because the services of an employee have become “superfluous.” This means the position itself is no longer needed due to restructuring, automation, or financial distress.
In contrast, poor performance is about the person (capacity). When you declare a role redundant but hire a “consultant” or a new staff member to perform the same duties two months later, the court sees a sham. In Agnes Ongadi v Kenya Electricity Transmission Company Limited eKLR, the court held that a redundancy, restructuring, or reorganization commenced solely to lay off specific employees is a sham and is not sanctionable.
Redundancy must target the role’s necessity, not the individual’s lack of results.
The Selection Criteria Landmine
Even if a business has a genuine reason to downsize, the redundancy process in Kenya requires a fair selection method under Section 40(1)(c). Employers often choose the “poor performer” to stay within the headcount limit. However, the law demands you look at seniority (the Last In, First Out or LIFO principle) alongside skill, ability, and reliability.
If you select an employee for redundancy based on performance without having documented PIPs or prior warnings, the ELRC will likely rule the process unfair. In Kimathi v Ericsson Kenya Limited KECA 106 (KLR), the Court of Appeal emphasized that redundancy selection criteria must be objective, transparent, and unsullied by personal prejudice.
You cannot use “reliability” as a selection criterion to exit a poor performer if you have never formally documented their performance failures.
Mandatory Statutory Notices
A common mistake in the redundancy process Kenya is rushing the timeline. Section 40 is strict about two specific notices:
- A written notice to the local Labour Officer.
- A written notice to the employee (or their union) at least one month before the intended date of termination.
In Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others eKLR, the employer’s failure to follow the required redundancy procedures led to serious financial consequences, including damages and redundancy dues. If you issue a redundancy notice on Monday and tell the employee to leave on Friday (even with pay in lieu), you have likely violated the spirit of “meaningful consultation” required by the courts.
Skipping the 30-day notice to the Labour Officer makes the redundancy automatically unfair regardless of your business reasons.
The Cost of Getting it Wrong
The ELRC has the power to award up to 12 months’ gross salary as compensation for unfair termination. If the court finds the redundancy was a “sham” to avoid a performance management process, they often grant the maximum award.
Beyond the 12-month penalty, the employer must still pay:
- Any other contractual dues.
- Severance pay (at least 15 days for every year worked).
- Notice pay (one month).
- Accrued leave days in cash.
A “shortcut” redundancy is often ten times more expensive than a properly managed performance exit.
Justifying the “Superfluous” Role
Recent 2025 and 2026 rulings (such as Cause E1054 [2025] KEELRC 2542) show that the court now demands documentary evidence of restructuring. You cannot simply say “the business is struggling.” You must provide board resolutions, new organograms, or financial statements that prove the role is truly gone.
If the “redundant” employee’s tasks are simply redistributed among other staff members, you must prove that the workload has genuinely diminished. If the court finds the workload is the same but you just wanted a “better” person doing it, you will lose the case.
Always back your restructuring with a Board Resolution and a revised organizational chart before issuing any notices.
Summary: Redundancy is Not a Performance Tool
The redundancy process Kenya is a high-stakes legal procedure designed for business survival, not for weeding out staff. If an employee is failing, use Section 41 (Termination for Capacity). If the role is gone, use Section 40 (Redundancy). Mixing the two creates a “sham” that the ELRC rarely forgives.
Book a Redundancy Procedure Review to ensure your next restructuring survives judicial scrutiny.
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General information, not legal adviceThis article explains the law in general terms and does not create an advocate–client relationship. For advice on your situation, .
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Herman advises founders, businesses and families on company, commercial, property, succession and data protection matters in Kenya, and writes these guides to make the law easier to act on.
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