Section 41 of the Employment Act of 2007 supports dismissing employees for poor performance. It is one of the legally recognised grounds for ending an employment contract in Kenya.
However, there is significantly more to it than most employers realise. For underperforming employees, the gap between knowing termination is an option and executing it lawfully is where millions of shillings in compensation awards get lost.
Kenyan employers consistently underestimate how detailed the process of dismissing someone for poor performance actually is.
The Employment and Labour Relations Court has repeatedly ruled against employers who skip steps, make assumptions, or treat PIPs as a formality.
This article walks you through the correct process, from identifying underperformance, fixing it where possible and to the moment termination becomes legally defensible.
The Two Types of Employee Underperformance
Understanding what kind of underperformance you are dealing with is the first and most important step when managing underperforming employees. There are two major types of underperformance you’ll see at the workplace:
Competency-based underperformance is about capability. It shows up as consistently missed deadlines, failure to meet targets, poor quality of work, or an inability to handle the requirements of the role. The employee may be trying , they are simply not able to deliver at the expected standard.
Motivation-based underperformance is about engagement. It manifests as mood changes, withdrawal, repeated absenteeism, tardiness, or a visible decline in effort from someone who previously performed well. The capability is there. The will is no , at least not currently.
The distinction matters because the response to each is different.
A competency gap requires training, mentorship, and a realistic assessment of whether the skill can be developed. A motivation gap requires a conversation about what has changed, because something almost always has. Applying the same intervention to both types and expecting the same outcome is one of the most common mistakes managers make.
What Makes Employees Underperform?
There are well-documented reasons why employees stop performing, and the law expects employers to understand them before reaching for a termination letter.
In Vincent Namai v National Bank of Kenya Limited (2023), the court ruled against the employer despite the fact that a PIP had been issued. The problem was that the employer had not made a genuine effort to understand the circumstances behind the underperformance. That oversight cost them KES 5 million.
Unclear expectations
Unclear expectations is the single largest cause of underperformance in Kenyan workplaces. The good news is that it is arguably the most preventable. When employees do not have a precise understanding of what they are supposed to deliver, how it will be measured, and what success looks like, poor performance is almost inevitable.
Before you conclude that an employee is underperforming, ask whether your expectations were ever made unambiguous.
Insufficient resources
An employee cannot perform well without the tools, budget, or authority to do their job. If the constraint is structural, termination does not fix it. It just cycles a different person into the same broken environment.
Skill gaps
An employee may have been perfectly competent when hired and genuinely unable to keep up following a technology change, a process overhaul, or a shift in role requirements. This is not the same as being incapable. It is a training need, and the employer has an obligation to address it before performance management escalates.
Bottlenecks and blockers
Cross-team communication breakdowns, administrative backlogs, unhelpful interdependencies, and unclear approval chains all prevent capable employees from delivering. If an employee’s output depends on inputs they cannot control, measuring only their output and ignoring the blockers will produce an unfair and legally indefensible conclusion.
Non-work related issues
Personal circumstances, health problems, family crises, financial stress, and mental health challenges directly affect performance. An employee going through a difficult period is not necessarily an underperforming employee. They may need short-term accommodation rather than a performance improvement plan. Ignoring this distinction has landed many Kenyan employers in court.
What a Lawful Performance Management Process Looks Like
Kenyan employment law does not require perfection from employees, just a fair process that takes care of multiple perspectives.
The Employment Act’s Section 41 establishes that before a performance-based dismissal, the employee must be heard, informed of the reasons, and given a genuine opportunity to improve. Courts interpret “genuine opportunity” broadly and generously, in favour of the employee.
Here are the steps to keep in mind when managing underperforming employees.
Step 1: Set SMART Goals
Every performance management process must begin with clear, documented expectations, usually at the start of each year or contract period.
Goals should be Specific, Measurable, Achievable, Relevant, and Time-bound. Vague targets like “improve your performance” or “be more proactive” are not enforceable or quantifiable KPIs and will not survive scrutiny in an employment dispute. Write them down, share them formally, and get written acknowledgment.
Step 2: Conduct Intermittent Reviews
Performance reviews should happen regularly, not only when things go wrong. Quarterly or monthly one-on-ones create a documented record of ongoing feedback, which serves two purposes: it gives the employee a fair chance to course-correct, and it gives the employer evidence that the process was genuine rather than retrospective. A tribunal looking at a dismissal wants to see a consistent paper trail, not a file that only thickens in the month before termination.
Step 3: Issue a Performance Improvement Plan (PIP)
When informal feedback has not produced the required improvement, the next step is a formal PIP. A well-constructed PIP must include:
- Specific areas of concern: documented examples of where performance has fallen short, with dates and measurable evidence
- Clear improvement targets: what the employee must achieve, expressed in measurable terms
- A realistic timeline: typically 30 to 90 days, depending on the complexity of the role
- Support and resources: coaching, training, mentorship, or additional supervision that the employer will provide
- Review checkpoints: scheduled dates when progress will be formally assessed
- Consequences: an explicit statement that failure to meet the targets within the timeline may result in further disciplinary action, up to and including termination
The PIP must be issued in writing, discussed with the employee, and signed by both parties. A PIP that the employee never saw or did not understand is not a PIP, it is a paper trail that will work against you.
What You Must Prove Before Terminating for Poor Performance
Kenyan courts have been consistent, before a performance-based termination can be upheld, the employer must demonstrate four things.
1. Clear expectations were set.
You must show documented evidence that the employee knew exactly what was expected of them, in measurable terms, from the beginning of the relevant period.
2. Regular feedback was given.
The employee must have been informed, in writing, more than once, that their performance was below the required standard. A single warning issued two days before termination will not satisfy this requirement.
3. A genuine opportunity to improve was provided.
The PIP must have been real. Courts have thrown out terminations where PIPs were issued with impossibly short timelines, without adequate support, or where it was evident from internal communications that the decision to terminate had already been made before the PIP process concluded.
4. External blockers were considered and addressed.
If the employee raised concerns about resources, unclear instructions, or personal circumstances during the process, you must show that these were taken seriously and investigated. Dismissing them without engagement, as in the Namai case, is a significant legal liability.
Issuing Warnings: The Correct Sequence
Most well-drafted HR policies follow a progressive warning structure before termination. While the Employment Act does not prescribe a specific number of warnings, courts expect a reasonable escalation process.
A typical sequence looks like this: verbal warning (documented in writing), first written warning, final written warning, and then termination. Each warning should state clearly what the problem is, what improvement is required, and what the consequence of continued underperformance will be. Jumping straight to dismissal without this sequence, unless there is serious misconduct involved, is the fastest way to lose an unfair dismissal claim.
Frequently Asked Questions
Here are some frequently asked questions about managing underperforming employees:
Can I dismiss an employee who is on a PIP?
Not during the PIP period, unless there is a separate misconduct issue. The PIP must be allowed to run its full course before a decision is made.
Does an employee have to sign the PIP for it to be valid?
Yes, wherever possible. If an employee refuses to sign, document the refusal in writing with a witness present. The refusal itself does not invalidate the process, but it must be on record.
What if the employee’s performance improves during the PIP but declines again afterwards?
You can issue a further PIP or move directly to a final written warning, depending on what your HR policy provides for and how significant the decline is. Consistency matters; apply your policy the same way regardless of the individual involved.
How long should a PIP last?
There is no statutory minimum or maximum, but 30 to 90 days is standard practice for most roles. The timeline should be long enough to be realistic and short enough to be meaningful.
Bottom Line on Managing Underperforming Employees in Kenya
Dismissing an employee for poor performance in Kenya is legally permissible. It is also legally demanding.
The employers who get it right are the ones who start the process early, document everything, give support, and treat the PIP as a sincere effort to save a working relationship, not a procedural hurdle before a decision that has already been made.
The employers who get it wrong pay for it. Sometimes significantly.
Make your performance management process legally sound. Speak to our HR team today.
