What is severance pay in Kenya?
Severance pay in Kenya refers to the compensation that an employee receives from their employer upon termination of their employment. This payment is designed to provide financial support to the employee during the transition period and to acknowledge the services rendered by the employee to the organization. The Kenyan labor laws govern the provisions and conditions for severance pay, ensuring that employees are fairly compensated for their contribution to the workplace.
In Kenya, severance pay is regulated by the Employment Act, 2007, which outlines the requirements and eligibility criteria for employees to receive severance pay. The Act stipulates that severance pay is payable to employees who have been employed for at least one year, but not more than five years, and who are terminated without cause or with notice. The amount of severance pay is calculated based on the employee’s salary and the number of years of service.
Eligibility and Calculation of Severance Pay
To be eligible for severance pay in Kenya, an employee must meet the following criteria:
1. Have been employed for at least one year: Employees who have been employed for less than one year are not entitled to severance pay.
2. Be terminated without cause or with notice: Employees who are terminated due to reasons such as misconduct, poor performance, or mutual agreement are not eligible for severance pay.
3. Have not resigned: Employees who resign are not entitled to severance pay unless they have served for at least one year.
The calculation of severance pay is based on the employee’s salary and the number of years of service. The formula for calculating severance pay is as follows:
Severance Pay = (Basic Salary / 30) x Number of Years of Service
For example, if an employee earns a basic salary of KES 30,000 per month and has been employed for three years, their severance pay would be:
Severance Pay = (KES 30,000 / 30) x 3 = KES 30,000
Special Considerations and Exceptions
While the Employment Act, 2007 provides a general framework for severance pay, there are certain special considerations and exceptions that may apply:
1. Termination due to redundancy: In cases where an employee is terminated due to redundancy, they are entitled to a higher severance pay. The amount is calculated based on the employee’s salary and the number of years of service, with a multiplier of 1.5.
2. Termination due to illness or disability: If an employee is terminated due to illness or disability, they may be entitled to additional benefits, such as medical cover or a lump sum payment.
3. Termination during pregnancy or maternity leave: Under the Employment Act, 2007, an employee cannot be terminated during pregnancy or maternity leave. If termination occurs during this period, the employee is entitled to severance pay, along with other benefits.
Conclusion
Severance pay in Kenya is an important aspect of the employment relationship, ensuring that employees are fairly compensated for their services upon termination. The Employment Act, 2007 provides a clear framework for the calculation and eligibility of severance pay, with special considerations for certain circumstances. Employers are required to adhere to these regulations to ensure compliance with the law and maintain a fair and just workplace.
