CONTRACT OF EMPLOYMENT NOTES

4.1 Introduction

In Kenya, employment is governed by the general law of contract, as much
as by the principles of common law. Thus, employment is basically seen
as an individual relationship negotiated by the employee and the
employer according to their special needs. Parliament has passed laws
specifically dealing with different aspects of the employer-employee
relationship. These laws define the terms and conditions of employment,
and consist mainly of four Acts of Parliament: The Employment Act (Cap.
226) and the regulation of Wages and Conditions of Employment Act (Cap.
229) make rules governing wages, housing, leave and rest, health and
safety, the special position of juveniles and women and termination of
employment. The latter Act, in addition, sets up a process through which
wages and conditions of employment can be regulated by the Minister. The
Factories Act (Cap. 514) deals with the health, safety and welfare of an
employee who works in a factory. The Workmen’s Compensation Act (Cap.
236) provides for ways through which an employee who is injured when on
duty may be compensated by the employer. The Employment Act does not
make any provisions for wages in general. The minimum wage is dealt with
by the Regulations of Wages and Conditions of Employment Act.

4.2 Unlimited and fixed-term contracts of employment
Employment contracts may be for fixed or unlimited periods of time. If
an employment contract specifies a fixed period of employment, the
contractual relationship is automatically terminated at the end of this
period, without being considered a resignation or a dismissal. Under
section 15 of the Employment Act, such a contract may be prolonged for a
period of service up to 1 month, if the employee is engaged in any
journey. Until the very recent past most female civil servants and
parastatals staff were employed on fixed term contract
In general, temporarily and fixed term employed workers enjoy all the
rights of an employee working on permanent terms, except those that are
excluded explicitly (such as entitlement to pensions) or by the nature
of a short term assignment (such as annual leave).

An employment contract, which does not specify a fixed period of
duration, is considered to be for an unlimited period of time, but can
be terminated by notice of either party. However, in the organized
sector collective agreements which give workers tenure limit the
employers’ ability to discharge and end the employment contract. Other
limitations on terminating an individual labour contract are the
principle of good faith and the requirement of non-discriminatory reasons.

Under section 14 (1) of the Employment Act it is a legal requirement
that certain contracts of service be made in writing. These are contracts:

• For a continuous period of 6 months;
• Which are not continuous, but for which the periods still add up to
  six months; and
• In which the task to be performed may last for six months.

Where a contract is in writing, it must carry a signature or a
fingerprint of the employee showing that she or he has agreed to its
terms. There must also be a witness who is not the employer. It is the
duty of the employer to make sure that the contract is written when this
is required by the law.

4.3 Special Contracts of Employment

4.3.1 Casual Employment and Piecework employment

Both types of employment are defined under section 2 of the Employment
Act. The “casual employee” is “an individual the terms of whose
engagement provide for his payment at the end of each day and who is not
engaged for a longer period than twenty-four hours at a time”, and
Piece-rate “means any work the pay for which is estimated by the amount
of work irrespective of the time occupied in its performance”. Basically
these categories of workers enjoy to a large extent the same rights as
other employees, but may be excluded from many benefits, such as leave,
medical cover or housing.

4.3.2 Apprenticeship Contracts
Apprenticeship contracts that primarily intend to train young people in
a profession are considered contracts of employment. The apprentice
therefore enjoys all the rights and suffers all the obligations of an
employee, subject to the terms of the contract. The only distinction
between an apprentice and an employee is that the ‘full’ employment of
an apprentice depends on his or her successful completion of the
training. Apprenticeships in the industrial sector are governed by the
Industrial Training Act, which provides that the rules and principles
governing the must be applied, unless the Act expressly states an
exception, or when the application of labour law would not be compatible
with the nature and aim of the vocational training being undertaken. The
minimum period of an apprenticeship contract under the Industrial
Training Act, section 2, is four years of service.

4.3.3 Probation
Kenyan statutes do not relate to trial periods for individual labour
contracts. However, collective agreements generally establish a trial
period, after which the worker receives tenure. Trial periods range
between 3 weeks (under the Regulation of Wages (Tailoring Garment Making
and Associated Trades) Order) and 3 years (the latter in the civil
service). Government workers receive tenure according to the
requirements set out in the Civil Servants Law (Appointments) and the
Civil Service Rules, which are determined by the Civil Service
Department of the Government. An employer may dismiss the worker during
the trial period or at its conclusion, depending on the contract terms.
Nevertheless, this termination of contract must be done in good faith.
When the dismissal is unfair or causes the worker unusual injury, the
court may award him damages.

4.4 Suspension of the Contract of Employment

Under the Trade Disputes Act the labour contract is suspended if a
worker participates in a lawful strike or is affected by a lawful locked
out. Therefore, the employee does not violate his or her contractual
obligations to his or her employer when he or she participates in a
strike. Likewise, lockouts do not terminate the employment relationship.
When the labour contract is suspended by worker participation in a
strike, the employer is not required to pay wages, since no work has
been performed. Industrial Court judgements have held that an employer
is not required to pay wages when the labour contract is suspended
because of a strike.

4.5 Termination of the Contract of Employment

4.5.1 Termination by Notice

1. Statutory regulations
   Under the Employment Act, section 14 (5) “every contract of service not
   being a contract to perform some specific work, be deemed to be

• Where the contract is to pay wages daily, a contract terminable by
  either party at the close of any day without notice;
• where the contract is to pay wages or salaries periodically at
  intervals of or exceeding one month, a contract terminable by either
  party at the end of the period of twenty-eight days next following
  the given of notice in writing.” This sub-section does not apply in
  cases when the contract itself, or a given collective agreement,
  requires a longer period of notice. If an employer does not give
  notice, he or she should pay to the employee an amount equal to his
  or her wages for that period.
• Rules of the Industrial Court Practice in the Industrial Court has
  produced some rules, thereby modifying the strict regulations of the
  Act. The period of advance notice for employees who have worked for
  five years or less has generally been adjusted to a minimum of one
  month. When the employee has worked for more than five years,
  however, it is at least two months. And the notice must be in
  writing. Collective agreements normally contain these rules too.

4.5.2 Summary Dismissal

1. Statutory regulations
   Under section 17 of the Employment Act, a summary dismissal is justified
   after “gross misconduct”, when a very serious wrong has been proved. The
   employee is guilty of such misconduct if he or she (section 17 (a)-(g)):

• Is absent from work without permission or good excuse;
• Is so intoxicated that cannot do their work properly;
• Deliberately neglects or ignores the work, or carries it out improperly;
• Uses abusive or insulting language;
• Disobeys orders from persons with authority;
• Is lawfully arrested for an offence punishable by imprisonment, and
  is not within 10 days either released on bail or otherwise lawfully
  set at liberty;
• Commits a criminal offence against the employer or his or her property.

1. Rules of the Industrial Court
   Certain procedures have to be followed when such dismissal is being
   contemplated. First, the employee has to be informed of the claims of
   gross misconduct. Secondly, the employee has to be called upon and given
   the opportunity to defend himself or herself against them. Finally, he
   or she must be informed in reasonable detail of the decision once it is
   made, and the grounds upon
   which this is done. The decision should be made honestly and in good
   faith. There should be no victimization or any unfair labour practices.

4.5.3 General rules concerning termination

1. Statutory regulations
   Under section 18 (1) every employer is bound to give to an employee a
   certificate of service upon any termination, but no reference or
   certificate relating to the character or performance (Sub-section 2).
2. Rules of the Industrial Court: Unfair Dismissals
   It has now been accepted that adherence to all the requirements of the
   law in giving notice is not enough. Serious conflicts have been
   generated when an employee’s services have been terminated by the
   employer, on the grounds which appear to the general body of the work
   force to be spurious in order to get rid of the person.

The Court will intervene where there is a lack of good faith. At times,
an employer may give notice to an employee when in fact she or he is
dismissing him or her for some reason that may not constitute adequate
grounds for summary dismissal. Under these circumstances the Court may
investigate whether there is any victimization, bias or unfair labour
practice. Disregard of principles of natural justice may also cause the
Court to intervene. It is considered to be unfair to base termination on
the race, tribe or belief of an employee. The sex of an employee should
be considered only to the extent permitted by the law, and in favour of
the employee.
Applying these principles, dismissal may be based on other grounds apart
from those mentioned in the Employment Act. An employee may be dismissed
on medical grounds. But in cases where the ill health affects only a
particular type of work, the employee may be given another type of work
which is appropriate in the circumstances. (See among others: Industrial
Court, Cause No. 11 of 1996 –Kenya Union of Journalists and Nation
Newspapers; Cause No. 23of 1972- Kenya Union of Commercial Food & Allied
Workers and Kenya Co-operative Creameries Ltd.)

3.Restrictions imposed by collective agreements
Collective agreements regulate and limit the employers’ ability to
discharge workers. Grievance procedures and special dismissal procedures
enable the union to represent the workers’ interest and negotiate the
employers’ intent to make an individual or collective dismissal. When
agreement is not reached the dispute is often settled in arbitration.
Some collective agreements grant the employer the prerogative to dismiss
a worker after the consultation and negotiation requirements have been met.

4. Other contractual rights
   There are many rights that an employee may have by virtue of the
   contract, such as leave (annual, maternity, sick or study), allowances
   (leave, travelling, acting, duty or any other), medical and overtime
   payments, bonuses and many others. They become relevant when the
   employment ceases. Their equivalent in money will be calculated and paid
   to the employee as part of the termination rights.

4.6 Redundancy and Severance Pay

In the understanding of the Industrial Court the basic principles that
would apply in the event of redundancy were already laid down in the
first version of the tripartite Industrial Relations Charter. In
addition, “redundancy” is defined under the Trade Disputes Act, section
2, as “loss of employment, occupation, job or career by involuntary
means through no fault of an employee involving termination of
employment”. Moreover, redundancy and severance pay on redundancy are
common features in collective agreements, defining the length of notice
to be given to the union, and the notice period in respect of the
employees to be declared redundant.

The individual employee is entitled to two basic rights, severance pay
and payment in lieu of notice. The rates of payment may depend on the
agreement, but many range from fifteen to thirty days basic wage or
salary for every completed year of service. Following the jurisprudence
of the Industrial Court it has been accepted that an employer whose
position improves, and wishes to employ after a financial crisis, must
give priority to the employees formerly declared redundant.

4.7 Remedies in case of Unjustified Dismissal

Under Kenyan legislation there are two basic rights of a dismissed
employee where the dismissal is wrongful: the right to reinstatement and
the right to compensation. These rights can be granted separately or
together. Reinstatement can only be ordered by the Industrial Court
under section 15 (1) of the Trade Disputes Act. In rectifying the
jurisdiction of the Industrial Court, the power
of reinstatement had been given to the Court in the amendment of the Act
in 1971. The Court normally considers all the relevant circumstances
applying the principles of good faith, to decide whether reinstatement
is justified, such as the length of time since dismissal, whether an
employee has been employed elsewhere since dismissal, and the
willingness of both the employer and the employee to reinstate and to be
reinstated.

Under the law of contract, the general remedy for breach of contract is
compensation, but the Court may also grant specific performance or
rescission. The amount paid will depend on the circumstances of the
case, but is generally based on the monthly or annual earnings of the
dismissed person. Under the Trade Disputes Act, section 15 (2), the
amount awarded must not exceed the actual financial loss suffered by the
employee as a result of the wrongful dismissal, or an amount equal to
his or her wages for twelve months. In computing the amount of
compensation any earning which the employee has received since the
dismissal is being taken
into account.

4.8 Resignation

Under the Employment Act, sections 14 (5) and 16, the conditions for
termination by notice by the employer apply here. Employees who receive
monthly payments must inform the employer one month before they intend
to stop working. The contract may provide for a shorter or longer
period. If employees do not give notice, they should pay to the employer
the equivalent of the wages for the period of notice.

If, in addition, the workers’ resignation violates a contractual
obligation to work for a specified period they may be liable for damages
that the resignation caused the employer. Such cases are few though, and
difficult to prove. Courts will not grant the specific performance
remedy to an employer, i.e., they will not compel an employee to work,
the employers’ only remedy being damages. In general, when an employee
resigns he or she is not entitled to severance pay.

4.9 Working Time and Rest Time

4.9.1 Hours of work
Under the Regulation of Wages (General) Order, subsidiary to the
Regulations of Wages and Conditions of Employment Act, the general
working hours are 52 per week, but the normal working hours usually
consist of 45 hours of work per week, Monday to Friday 8 hours each, 5
hours on Saturday under the special Orders for different sectors
subsidiary to the Regulations of Wages and Conditions of Employment Act.
Collective agreements may modify the working hours, but generally
provide for weekly working hours of 40 up to 52 hours per week. Under
the Employment Act, section 8, every employee is entitled to at least
one rest day in every
period of seven days. In many sectors the regular rest-day may not be
the Sunday, but another day of the week.

4.9.2 Overtime
Under these statutory regulations overtime shall be payable at the rates
of one and one-half time hourly rate on weekdays, and at the rate of
twice the basic hourly rate on Sundays and public holidays. There are
different Regulations of Wages Orders in force, covering different
sectors of the economy.

4.9.3 Annual paid leave
Under section 7 of the Employment Act, every employee shall be entitled
to no less than twentyone working days of annual leave with full pay.
Where the employee works for less than a year, the number of days will
be reduced accordingly. This is a minimum and many contracts and
collective agreements provide for annual leave of between thirty to
forty-five days. In average Kenyan employees enjoy annual leave of 24
days. For a woman who has taken maternity leave (2 months) in a given
year, the maternity leave forfeits her annual leave under section 7 (2)
of the Employment Act.

4.9.4 Public Holidays
Kenya has currently 10 public holidays – New Year’s Day, Good Friday,
Easter Monday, Labour Day, Madaraka Day, Mashujaa Day, Eid-ul-Fitr-Day,
Christmas Day and Boxing Day – described by the Public Holidays Act.
Where any of these holidays fall on a Sunday, the next working day will
be a holiday.

4.10 Maternity Leave and Maternity Protection

Under section 7 (2) of the Employment Act, maternity leave is two months
with full pay, provided that a women who has taken two months maternity
leave forfeits her annual leave in that year. The Regulation of Wages
(General) Order, subsidiary to the Regulations of Wages and Conditions
of Employment Act, specifies the provision under paragraph 13 (ii) and
(iii) which read:
(ii) child birth shall not be deemed to be sickness as provided for
under paragraph 12, and the employer shall not be inquired to meet
medical costs incurred thereon;
(iii) A female employee who takes maternity leave shall not incur any
loss of privileges during such period.

Cash benefits and other entitlements during pregnancy, and breaks for
breastfeeding are provided in selective collective agreements, without
representing a general trend.

4.11 Other Leave Entitlements

4.11.1 Sick Leave

Under the Employment Act, section 7 (3), an employee is entitled to paid
sick leave after a period of two consecutive months of service. Thus,
the Employment Act, provides the minimum period of entitlement while the
Regulation of Wages Order, subsidiary to the Regulations of Wages and
Conditions of Employment Act, section 12, provides the longest period
granted by law.

The minimum period of entitlement is seven days with full pay and seven
days with half-pay for every twelve months. The longest period of
entitlement is thirty days with full pay and fifteen days with half-pay.
The employee is however expected to produce a certificate of incapacity
to work signed by a duly qualified medical practitioner.

4.11.2 Compassionate Leave
Under the Regulation of Wages (General) Order, subsidiary to the
Regulations of Wages and Conditions of Employment Act, compassionate
leave is granted to allow an employee to attend to personal misfortunes
such as death, accidents or sickness concerning relatives and friends.
The number of days he or she gets are deducted from the annual leave
entitlement for the year.

4.11.3 Study Leave
Under the Civil Service Code of Regulations public employees are
entitled to study leave. Neither the Employment Act, nor the Regulations
of Wages and Conditions of Employment Act
provide for an equivalent. But in practice, many companies and employers
grant employees time off to go for courses, or to prepare for examinations.

4.12 Minimum Age and Protection of Young Workers

The Employment Act, in part IV, accords special protection to juveniles.
Under section 2 “juveniles” is defined as a “child or young person”; and
“’child’ means an individual who has not attained the age of sixteen
years”, whereas “young person” means a person who has not attained the
age of 18 years.

With the adoption of the Children Act, 2001, a new and conflicting
definition has been established of which defines “child” as any human
being under the age of 18 years. The regulations for juveniles, minors
under 18, under the Employment Act, are as follows:
Children under 16 should not be employed in any industrial undertaking
or to attend machinery, unless they are apprentices or learners.
“Industrial undertaking” means any of the following: any activity which
relates to surface or underground extraction (like mines and quarries),
any factory and any form of construction and installation (like
buildings, railways, roads, tunnels, bridges,
canals, sewers, drains, gas work, telegraphic, telephonic or electrical
installations, or water works), and to transportation and handling of
passengers or goods by road, rail or inland waterway. Section 24 (2)
(a)-(d) thereby covers most of the potentially hazardous working conditions.

Young persons under 18 must not be employed in any industrial
undertaking at night except in cases of emergencies. “Night” means the
time from six-thirty p.m. to six-thirty a.m. (section 28). Employers
engaging juveniles (under the age of 18) are required to keep a register
(section 31): the labour officer may cancel or prohibit the employment
(section 34), or order the medical examination of the juvenile (section 32).

Section 3(1) of the Employment (Children) Rules, 1977, allows the
employment of children with the prior written permission of an
authorized officer, and that the only restrictions are that such
employment should not cause the children to reside away from parents
without their approval, that permission for work in a bar, hotel,
restaurant, etc., needs the consent of the Labour Commissioner and that
such permit should be renewed annually.

4.13 Equality

4.13.1 Gender Equality
The Constitution guarantees the right to equality in Art 82(3): “the
expression ‘discriminatory’ means affording different treatment to
different persons attributable wholly or mainly to their respective
descriptions by race, tribe, place of origin or residence or other local
connection, political opinions, colour, creed or sex whereby persons of
one such description are subjected to disabilities or restrictions to
which persons of another such description are not made subject or are
accorded privileges or advantages which are not accorded to persons of
another such description”.

In the tripartite Industrial Relations Charter (1980) the parties agree
on abolishing all discrimination among workers on the grounds of race,
colour, sex, belief, tribal association or trade union affiliation
including discrimination in respect of: Admission to Public or private
employment; Labour legislation and agreements which shall afford
equitable economic treatment to all those lawfully resident or working
in the country; Conditions of engagement and promotions; Opportunities
for vocational training; Conditions of work; Health, safety and welfare
measures; Discipline: Participation in the negotiation of collective
agreements; Wage rates; which shall be fixed according to the principle
of equal pay for work of equal value in the same operation and undertaking.

Yet, the Employment Act, Part IV imposes similar restrictions to the
employment of women and the employment of juveniles. Under section 28
women must not be employed in any industrial undertaking at night (the
time from six-thirty p.m. to six-thirty a.m.) except in cases of
emergencies, and in cases where their work is connected with raw
materials which are subject to rapid deterioration, and their work is
necessary to preserve the material. Another exception exists for women
in responsible positions of managerial and technical nature, or employed
in health and welfare services, and not normally employed in manual
work. The latter categories of
women employees can even be employed on underground work, like women in course of their studies and women who have to enter the underground parts of a mine for any other reason than manual work.

4.13.2Workers with disabilities and persons living with HIV/AIDS
Workers with disabilities are mentioned only in the Regulations of Wages
and Conditions of Employment Act, section 18 (1), which allows
employment below the minimum wage for persons with disabilities. Further
regulations to prevent these groups from suffering discrimination do not
exist. As the Anti-discriminatory clauses in the current Constitution
are enumerative unlike many other constitutions, not prohibiting
discrimination on “any other ground” in Art 82 (3) of the Constitution,
these groups are not legally protected against discrimination.

4.14 Pay Issues

4.14.3 Minimum wage
The Employment Act does not make any provisions for wages in general.
The Minimum Wage is dealt with by the Regulations of Wages and
Conditions of Employment Act and in the Regulation of Wages Order
subsidiary to Chapter 229. A tradition has been established according to
which the Minister of Labour and Human Resource Development, in exercise
of his or her powers conferred to by section 11 of the Regulation of
Wages and Conditions of Employment Act, would order the increment of
minimum wages to come into effect May 1st of every year.

4.14.2 Protection of wages
Under the Employment Act, section 4, wages should be paid in Kenyan
currency to the employee or to an authorized person. The wages may be
paid in kind but this must not be in the form of alcohol or drugs. Also,
the Act requires that wages be paid in full, except authorized
deductions, permitted by the law (under section 6 of the Employment Act).

4.14.3 Housing
Under the Employment Act, section 9, specified under the Regulation of
Wages (General) Order, subsidiary to the Regulations of Wages and
Conditions of Employment Act, section 4, an employee is either entitled
to reasonable housing accommodation, or to housing allowances that
enable the employee to obtain reasonable accommodation. The Employment
Act does not say what reasonable housing accommodation is, but gives
power to the labour officer to enter into any house in which an employee
is living and inspect it.

Summary for the topic

1. Nature and types of the contracts of employment
2. Termination of contract of employment
3. Working hours and rest
4. Types of leaves
5. Gender equality
6. Pay issues

CONTRACT OF EMPLOYMENT NOTES-Business Law