Severance pay in Kenya is narrower than most people assume, and understanding when it applies saves a lot of wasted expectation.
Only redundancy
Under Section 40 of the Employment Act 2007, severance is legally required only in cases of redundancy.
It does not apply to termination for misconduct, resignation, or poor performance.
15 days' basic wages for each completed year of service, based on your last monthly wage.
In practice: monthly salary ÷ 30 × 15 × years of service.
If your contract or a collective bargaining agreement provides a better package, those terms apply instead.
What redundancy means
The loss of employment by involuntary means through no fault of the worker, where the services of a worker become superfluous — including abolition of office, job or occupation.
The role disappears. Not you.
The 30-day notice to the Labour Officer
This is the procedural requirement employers most often skip. Before declaring redundancy, the employer must:
- Notify the employee and the County Labour Officer 30 days in advance
- Apply fair selection criteria
- Give one month's notice or pay in lieu
- Pay severance at 15 days per year
If that 30-day notice to the Labour Officer was not given, the redundancy is procedurally defective.
Service pay is a separate thing
The Act also provides for service pay, payable for each completed year in certain circumstances of termination by notice.
But there is an important exclusion: you are not entitled to service pay if you are a member of a registered pension fund, a gratuity or service pay scheme under a collective agreement, or NSSF.
So for most formally employed Kenyans contributing to NSSF, service pay does not arise.
The 60-day deadline
If you believe the termination was unfair, you have 60 days from termination to file a complaint at the Labour Office.
What to check
Whether the 30-day Labour Officer notice was given, whether selection was fair, and whether the 15 days used your correct basic wage.
Frequently asked questions
When does severance apply in Kenya?
Only in cases of redundancy under Section 40 of the Employment Act 2007. It does not apply to misconduct, resignation or poor performance.
How is severance calculated?
Fifteen days of basic wages for each completed year of service, based on your last monthly wage — monthly salary divided by 30, times 15, times years worked.
What must my employer do before declaring redundancy?
Notify you and the County Labour Officer 30 days in advance, apply fair selection criteria, give one month’s notice or pay in lieu, and pay severance.
What is service pay and do I get it?
A separate entitlement for certain terminations by notice. But you are not entitled if you belong to a registered pension fund, a gratuity scheme under a collective agreement, or NSSF.
How long do I have to complain about unfair termination?
Sixty days from termination to file a complaint at the Labour Office.