If you’re running a business in Kenya, you’re probably already aware that employment law isn’t just a single piece of legislation you can master over a weekend.
Between the Employment Act, the new Social Health Insurance requirements, and occupational safety regulations, you’re looking at over eight major legal frameworks that directly influence how you hire and compensate your team.
Miss a compliance deadline, and you’re looking at penalties ranging from KES 100,000 to KES 500,000, not to mention potential imprisonment terms.
Today’s guide cuts through the complexity of Kenyan employment laws. You’ll get the must-know requirements and walk away with steps to help you remain compliant moving forward.
But before we get into all that, let’s look at recent reforms to Kenya labour laws.
Recent Employment Act updates
While the Employment Act of 2007 still forms the backbone of labour law, several reforms now sit alongside it, quietly (and not-so-quietly) influencing your responsibilities as an employer.
Here’s what changed:
NHIF Replaced by SHIF
In 2024, the government replaced the National Health Insurance Fund with the Social Health Insurance Fund.
This change requires employers to deduct 2.75% of each employee’s gross monthly income. The minimum is KES 300 per month.
Payments must be remitted by the 9th of the following month, with late payments attracting a 3% monthly penalty.
Not sure how to process SHIF alongside other statutory deductions?
We’ve broken it down in our payroll processing guide.
Affordable Housing Levy Introduction
The Affordable Housing Act 2024 introduced a new levy requiring employers to deduct 1.5% from employee salaries and match this contribution with an equal employer contribution.
The same 3% monthly penalty applies for late remittance after the 9th.
Persons with Disabilities Act 2025 (Act)
As of May 2025, employers with 20 or more employees must reserve at least 5% of their roles for persons with disabilities (PwDs). This applies to both public and private sector organizations.
Here’s what’s expected of you:
- Create inclusive hiring policies
- Ensure your workplace is accessible and safe for PwDs
- Make reasonable adjustments to roles or workspaces
- Consider investing in programs that actively support disability inclusion.
In return, employers who comply may access tax incentives.
Key Employment Laws to Know in 2025
Most employment laws in Kenya are set in the Employment Act of 2007 and the Employment (General) Rules, 2014.
These two set the standard for how employment relationships are formed, what must be included in a contract, and the obligations on both sides.
Note that an employment relationship can be created via oral or written means.
However, if someone has worked for more than two months, you’re legally required to provide a written contract.
This contract should be signed by both you and the employee and include all the necessary details that define the job and the working relationship.
Typically, this information includes:
- Employee information
- Employer details
- Job title and description
- Start date
- Type and length of contract
- Work location and hours
- Pay and benefits
- The grounds for termination
- Employee leave entitlements
Employee Rights Under Kenya Labour Law
These laws protect workers, and by extension, your business, so it’s worth getting familiar with the basics.
- Employees have the right to work without being subjected to forced labour.
- Employees must not be discriminated against based on race, sex, religion, disability, pregnancy, or other protected grounds.
- Every employee has the right to equal pay for equal work.
- Wages must be paid in full and on time, with only lawful deductions.
- Casual employees have the right to be paid at the end of each working day.
- Employees are entitled to safe and healthy working conditions.
- Employers or colleagues must not sexually harass employees. If you have over 25 employees, you must have a sexual harassment policy in place.
- Employees have the right to reasonable working hours and at least one rest day per week.
- Employees working for more than three months must receive a written appointment letter.
- Employees have the right to housing or a housing allowance.
- Clean, safe drinking water must be provided at the workplace.
- Employers must ensure proper medical attention during working hours for illnesses.
- Employees are entitled to compensation by the government if their employer becomes insolvent.
What Do Kenya Labour Laws Say About Paying Employees?
Wages must be paid in full, using Kenyan currency. You can pay via cash, cheque, or bank transfer, but not with goods, services, or store credit.
Payments should happen during working hours, close to the job site, and definitely not in a bar or any place selling alcohol.
What’s the minimum wage?
You can’t go below the government-set minimum wage, which varies depending on job type and location.
The general baseline for formal sector workers right now is around KES 15,201.65, according to Trading Economics.
When it comes to deductions, only the following are allowed:
- Affordable Housing Levy (1.5% of gross pay)
- NSSF (pension)
- SHIF (health insurance)
- PAYE (income tax)
- NITA Levy (for staff training)
All deductions combined can’t take over two-thirds of an employee’s salary.
When are wags due?
- Casual employees — end of each workday
- Short-term hires (under 1 month) — at the end of the contract
- Monthly staff — by the end of the month
- Indefinite or journey-based workers — monthly, or once the journey ends
Occupational Safety and Health Kenya compliance
Under Kenya’s Occupational Safety and Health Act (2007), every employer is legally required to protect their team from avoidable risks on the job.
In practice, it looks like this:
- Keep the workplace clean and well-ventilated
- Provide enough lighting and space
- Ensure proper drainage to avoid water buildup
- Offer clean, accessible washrooms
- Limit noise, air pollution, and vibration
- Avoid overcrowding
- Set up a safety and health committee as required by law
Understanding Termination Procedures in Kenya
Can you actually terminate an employee in Kenya?
Yes, but only under specific circumstances and following precise procedures.
Kenyan employment law allows termination for three main reasons: misconduct, incapacity (including poor performance), and operational requirements (redundancy).
Outside these grounds, termination becomes unlawful regardless of how well you follow the process.
This is what the law requires for each scenario.
Fair and Lawful Termination
A termination is only considered lawful if you follow due process. As an employer, you must:
- Give the employee a written notice clearly stating the reason for termination
- Make sure the employee receives and acknowledges the notice
- Follow the correct notice period, based on how wages are paid:
- Daily wage: 1 day
- Weekly wage: 7 days
- Monthly wage: 28 days
- Probation period: 7 days from either side
You also have the option to pay in lieu of notice.
For example, if someone is on a monthly contract, you can choose to pay them one month’s salary instead of giving a 28-day notice.
Redundancy Laws in Kenya
Before terminating on the grounds of redundancy, the employer must:
- Notify the employee and Labour Officer (and union, if applicable) at least 30 days in advance.
- Apply fair selection criteria (seniority, ability, reliability).
- Provide a 1-month notice or pay in lieu.
- Pay severance of at least 15 days per year worked.
- Ensure no Collective Bargaining Agreement terms are misused to the employee’s disadvantage.
Misconduct-Based Termination
Misconduct, incapacity, or poor performance are valid grounds for termination, but must follow due process.
The employer must:
- State the issue clearly and in writing
- Give the employee a chance to respond
- Allow them to be accompanied by a representative if they choose
- Communicate the final decision in writing
If the case goes to court, you’ll need to prove both the reason and the fairness of the process.
Summary Dismissal
Summary dismissal occurs when an employee is terminated without notice due to serious misconduct.
When does this apply?
- Absenteeism without cause
- Intoxication at work
- Willful negligence
- Using abusive language
- Defying lawful commands
- Arrest for a cognizable offence without bail in 14 days
- Committing or being suspected of a crime against the employer
What Counts as Unfair Termination?
Termination is unfair when an employer:
- Fails to justify the reason
- Uses a reason not connected to conduct, capacity, or business needs
- Ignores due process
- Acts outside the principles of equity and justice
Invalid Grounds for Termination
Some reasons are automatically illegal, no matter how clean your process looks. These include termination due to:
- Pregnancy or related conditions
- Taking lawful leave (e.g., sick or maternity leave)
- Union membership or union-related activities
- Religious, political, racial, or social beliefs
- Filing a complaint against the employer
- Participating in a lawful strike
Working Hours, Overtime, and Leave Regulations
The standard workweek in Kenya is 40 hours, with a mandatory rest day each week.
Employees can take on overtime, but it should not exceed 15 hours per week.
That brings the legal maximum to 52 hours per week, or 60 hours for night workers.
Should you pay for overtime?
Overtime must be paid at 1.5 times the normal hourly rate.
Leave policies
Employees are also entitled to various types of paid leave.
- Annual leave
After 12 months of continuous service, employees should receive at least 21 working days of fully paid leave. This is calculated at 1.75 days per month.
Note: weekends and public holidays don’t count toward leave days.
- Maternity leave
Female employees are entitled to 3 months of paid leave. A 7-day written notice is required before starting, with a clear return-to-work date. - Paternity leave
Male employees get 14 calendar days of paid leave. - Sick leave
After two months of employment, employees qualify for 7 days of full-pay sick leave, plus an additional 7 days at half pay within the same year. If someone falls ill while on annual leave, sick leave doesn’t apply. - Public holidays
Employees are entitled to all gazetted public holidays as official days off. - Compassionate leave
This is left to company policy and discretion.
Mandatory Employee Benefits in Kenya
When you’re an employer in Kenya, you’re legally required to provide specific benefits to your team.
Here’s what that includes, how it works, and what else you might want to offer.
Statutory Benefits
These are mandatory and apply to most employees in the formal sector.
a) NSSF (National Social Security Fund)
This is your team’s retirement savings. As of 2025, you and your employee contribute 6% of their salary, up to a limit.
Here’s how it works:
- For the first KSh 8,000, each of you contributes KSh 480
- For any salary between KSh 8,001 and KSh 72,000, each of you adds an extra KSh 3,840
In total, you’re both contributing up to KSh 4,320 each per month. These payments should be remitted monthly.
b) SHIF (Social Health Insurance Fund)
As the employer, you’re required to deduct 2.75% of each employee’s gross monthly salary; the minimum is KSh 300 and remit payments by the 9th of the following month.
Other Common & Optional Benefits
While not legally required, many employers offer additional benefits to attract and retain talent:
- Medical insurance (private or enhanced cover)
- Pension/top-up retirement schemes
- Paid leave beyond the statutory minimum
- Work-from-home allowances or transport stipends
- Wellness programs (e.g., mental health support, gym reimbursements)
If you need help setting any of these up or want to ensure you’re doing them correctly, Bridge Talent Management can walk you through it.
Get a free consultation today.
Best Practices for Managing Benefits in Kenya
- Deduct and remit statutory contributions on time. Deductions such as NSSF, SHIF, and PAYE are due by the 9th of the following month.
- Communicate the breakdown of each deduction to employees.
- Stay updated with government notices.
- Document your HR policies on benefits, leave, and allowances to avoid disputes.
- Use payroll software or a qualified human resource consultancy to simplify compliance.
Penalties for Non-Compliance with Labour Laws
What happens when you don’t follow the rules?
The penalties are substantial, and ignorance will not be an acceptable defense.
The specific penalties depend on the violation, as seen below:
- Forced or compulsory labour carries the heaviest penalty: up to KES 500,000 in fines or two years imprisonment, or both.
- Employment documentation failures, such as not providing employment contracts, disciplinary procedures, or itemized pay statements, result in fines up to KES 100,000 or two years imprisonment.
- Wage payment violations, including withholding wages or failing to pay according to legal requirements, attract fines up to KES 100,000 or two years imprisonment.
- Notification failures apply to employers with 25 or more staff who don’t notify the Director of Employment about vacancies or terminations. The penalty is up to KES 100,000 or six months imprisonment.
How to Stay Compliant: Practical Employer Checklist
Employment laws in Kenya are updated often, sometimes with little notice.
Therefore, we recommend checking in on changes at least once a year, or working with a partner who tracks them for you.
These are the four other steps you need to take to protect your company.
- Do a basic compliance audit.
Make sure to review your current contracts, policies, and payroll processes. Are your documents up to date? Are you making the right deductions? A quick audit can flag small issues before they become big ones.
- Use the right HR templates
Clean, compliant templates for contracts, warning letters, and termination notices make it easier to act quickly and stay within the law. If you don’t have any, contact us and we’ll set you up with everything you need to stay protected and professional.
- Train your managers
Many compliance issues start with miscommunication. To avoid such issues, equip your HR team and line managers with training on the basics. They should know what to say, what not to say, and when to escalate situations.
- Communicate with your team
Finally, ensure that your employees understand their rights, benefits, and responsibilities. When these policies are clear, expectations are easier to manage, and disputes are easier to avoid.
Final Thoughts: Responsible Employment Begins with Compliance
Employment law violations won’t just cost you financially. They create a kind of disruption that pulls you away from growth opportunities, damages relationships with your team, and can derail months of progress with a single complaint or audit.
Given how complex these acts have become, it’s often more practical to work with specialists who track these changes as their full-time job.
Such expertise is typically far less costly than the price of non-compliance.
Bridge Talent Management supports businesses like yours with everyday compliance, including contracts, audits, policies, payroll, and everything in between.
If you need a second set of eyes (or just want to avoid last-minute scrambles), we’re here to help.
Book your free consultation to talk with one of our labour law experts today.
FAQs
What are the key employment laws in Kenya?
Most employment laws are grounded in the Employment Act of 2007 and the Employment (General) Rules, 2014. They cover contracts, wages, working hours, leave, termination, and employee rights in Kenya.
What are the recent updates to the Employment Act in Kenya?
Recent changes include replacing NHIF with SHIF (requiring 2.75% salary deductions), introducing the Affordable Housing Levy at 1.5% of salary, and implementing a 5% disability employment quota for companies with 20+ employees.
What rights do employees have under Kenya labour laws?
Employees are entitled to fair pay, safe working conditions, reasonable hours, protection from discrimination or harassment, and benefits like sick and maternity leave.
What is the legal process for terminating an employee in Kenya?
You can only terminate for three reasons: misconduct, incapacity, or operational requirements (redundancy). The process requires written notice stating the reason, proper acknowledgement from the employee, and following the correct notice periods.
How does redundancy work under Kenyan labour laws?
Before declaring redundancy, you must notify the employee and the Labour Officer 30 days in advance, apply fair selection criteria, offer one month’s notice or pay in lieu, and pay severance of at least 15 days per year worked.
What are the occupational safety and health requirements for employers in Kenya?
Under the Occupational Safety and Health Act 2007, you must maintain clean, well-ventilated workplaces with proper lighting, drainage, and accessible washrooms.
What are the regulations regarding working hours and overtime in Kenya?
Standard working hours are 40 per week, with a max of 52 including overtime (or 60 for night workers). Overtime must be paid at 1.5 times the usual hourly rate.
What benefits are employers required to provide to employees in Kenya?
Mandatory benefits include NSSF contributions, SHIF health insurance, and various leave entitlements.
What are the penalties for non-compliance with labour laws in Kenya?
Penalties range from KSh 100,000 to KSh 500,000 in fines, with potential imprisonment terms up to two years.
