One of the ways that an employment contract can be terminated is by giving notice or paying in lieu of notice. This article looks at the intricacies of this mode of termination.

Minimum notice period

The minimum notice period is determined by the duration after which the salary is paid; so that if one is paid weekly, the minimum notice period is one week and if one is paid monthly, as most people are, the minimum notice period is one month. This simple formula is provided in Section 35 of the Employment Act, 2007;

  • 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 periodically at intervals of less than one month, a contract terminable by either party at the end of the period next following the giving of notice in writing; or
  • where the contract is to pay wages or salary 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 giving of notice in writing.

Therefore, if your salary is computed on the basis of a daily rate but is paid at the end of the month, you should give not less than one months’ notice of termination.

Where, however, the employment contract provides for giving a period longer than that provided in Section 35, the provisions of the employment contract will apply. It is common to find in the contracts of those in management, a requirement to give more than one month’s notice. CEO’s, for example, are normally required to give between three to six months’ notice.

Importance of the notice period

In James Chutha Gathere vs Nation Media Group Limited [2013] eKLR the Court noted that the termination notice period is important as it ensures smooth handing over of work and company property.

Waiver of the notice

Where notice is given by the employee, the employer can waive the notice as long as the employee is paid for the notice period. This is provided in Section 38 of the Employment Act, 2007, the section provides;

Where an employee gives notice of termination of employment and the employer waives the whole or any part of the notice, the employer shall pay to the employee remuneration equivalent to the period of notice not served by the employee as the case may be unless the employer and the employee agree otherwise.

Payment in lieu of notice by the employee

Section 36, allows either party to pay the other in lieu of serving the notice period, it states;

Either of the parties to a contract of service to which section 35(5) applies, may terminate the contract without notice upon payment to the other party of the remuneration which would have been earned by that other party, or paid by him as the case may be in respect of the period of notice required to be given under the corresponding provisions of that section.

What happens if the employee wishes to pay in lieu of notice but the employer requires the employee to work for all or part of the notice period? A compromise should be reached whereby the employee is released after a proper handover and clearing. Alternatively, the employment contract should give the employer the right to require the employee to serve the notice and should also provide that the terminal dues will not be paid until the employee carries out a proper handover and clears with the various departments.


Using your leave days as part of the notice period

Where termination is by the employee, they can opt to use their leave days as part of the notice period.

Where termination is by the employer, the employee cannot be forced to utilise his leave days as part of the notice period. Such action should only be taken with the consent of the employee. The Industrial Court has upheld the legal position that leave should be taken voluntarily for purposes of rest and should not be converted and use for administrative purposes.

In David Wanjau Muhoro vs Ol Pejeta Ranching Limited [2014] eKLR, it was held as follows: –

…The other notable irregularity in the procedure, related to the 30 days of compulsory leave, which were offset against the Claimant’s annual leave entitlement. The law does not contemplate the conversion of an Employee’s annual leave entitlement into anything else, other than cash

…Section 28 of the Employment Act 2007, which regulates annual leave entitlement does not allow for conversion of annual leave days, into a period of disciplinary suspension.

Therefore, whereas an employee can choose to utilise their leave days as part of the notice period, this arrangement cannot be forced on an employee.

***THE END***

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About Anne Babu

Anne is an Advocate of the High Court of Kenya and the Founding Partner of Anne Babu & Co. She has practised employment law for over 12 years and her employment law practice has been recognized by the prestigious Chambers & Partners. Anne cares about employers and their labour issues.


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  1. Daniel says:

    Dear Anne. Thanks for beautiful post. There is always this debate as to whether an employer (or even an employee for that matter) can legally terminate a contract without giving any reason. If an appointment contract reads ” the contract can be terminated by either party by giving a month’s notice or a months pay in lieu of notice”, is it legal for an employer to giver notice of termination without advancing any reason thereof?

    1. Anne Babu says:

      Whereas the employee does not have to give reasons for resigning, the employer must have a valid reason and must follow the termination procedure prior to terminating a contract. You can have a look at the posts on separation.

  2. Daniel Ongoya says:

    Dear Anne,
    What of in situations where an employee has been terminated and has, say 20 leave days. Because of the sensitivity of the nature of the work, as may be in the case of a personal secretary, the employer decides that the employee proceeds on terminal leave awaiting the expiry of the notice days to allow for the filling of the position. But the employer fully pays for the one month notice and the salary for all the days worked up to the time of termination?

    1. Anne Babu says:

      That is ok as long as the leave days are paid at the end. The leave days can only be used as part of notice if the employee consents.

  3. I have read your posts on several occasions and they are always clearly written, most informative, and address an important point on which clarity is required. Thank you.

    1. Anne Babu says:

      Asante, tutajitahidi zaidi.

  4. Lydiah says:

    Dear Anne,

    In rendundancy , how do you go about it if the employee is on Probabtion and another in maternity. How many notices are required to the employee for example if its to take effect on 30th Nov can you give notice on 1st Nov?


    1. Anne Babu says:

      The Court of Appeal has recently confirmed that the notice for redundancy should be one and for 30 days.

    2. Anne Babu says:

      If the contract provides a longer notice period then go with the contract.

  5. Justin says:

    Thank you clearly explaining the subject matter in a way that is easily understandable. My question relates to training expenses and allowances that an employer might have incurred at the beginning of a contract period.
    Is the employee forced to pay the amount if one terminates their contract before the stated period? In the contract it states that one must pay if they terminate their contract before 2 years lapses. (Noting that four other employees on the same job title have resigned without them paying any training expenses)

    1. Anne Babu says:

      If it is provided in your contract you have a contractual obligation to repay. Such clauses are quite common especially where significant amounts are spent in training. You cannot rely on the others not having paid to avoid paying; the clause is drafted for the benefit of the company and therefore the company has the right to decide whether or not to enforce it.

      1. Njagi says:

        hello, I received a letter notifying me on my job termination due to redundancy. it was dated 4th January 2018. the redundancy is to take effect from 31/01/2018. Now should I work for the whole of January for me to be paid?

        1. Anne Babu says:

          Yes unless your emplotey waives that requirement.

  6. Service pay.
    May I know the circumstances under which service pay is given.
    After serving a thirty day notice, how long should an employer take to clear his employee?
    Is a payslip issued to someone receiving his last dues?

    1. Anne Babu says:

      Service pay is given when a contract is terminated by giving notice or pay in lieu.
      The dues should be paid on the last day of employment.
      A payslip should be given.

  7. Mike says:

    Dear Anne,

    What happens when an employee retracts his/her resignation in the middle of notice period considering the employer has not yet formally accepted the resignation.


    1. Anne Babu says:

      Formal acceptance is not mandatory. Once one has resigned, the employer is not bound to accept a retraction.

      1. John says:

        Hi Anne, I have given a 16days reaireaigna notice while my contract requers me to give 28days notice. Does that me I should lose my full month salary or I should be paid for the day’s I have worked?

        1. Anne Babu says:

          Your employer will deduct the days you are not working.

  8. Maryanne says:

    Dear Ann,

    What happens when an employee has submitted their resignation with 30 days notice but their new annual leave days start in the middle of the resignation period. i.e, they gave their notice on 10th of February but their new leave days start on 6th of March and their resignation notice periods ends on 9th March to make 30 days notice. Is the Employer supposed to pay the staff for the full new annual leave days in their final dues come 9th March?

    1. Anne Babu says:

      Yes, though the employee can decide to take those leave days up to the end of the notice period with the employer’s consent.

  9. Samuel Mukuria says:

    Dear Anne,
    I was dismissed on 9th April this year and I was promised of being paid my dues once I cleared with all dpts, which I did bt now the employer keeps saying through proxy’s he’ll be in touch once he’s ready. He does answer my calls or texts.
    How long should an employer take to pay an employee after a dismissal? Is there a stipulation in the law in that regard?

    1. Anne Babu says:

      The dues should be paid on your last day of employment. If not, seek the assistance of a labour officer or lawyer to recover them.

  10. Samuel Mukuria says:

    Thanks Anne,
    Which is more effective and cost effective given my current status, can you help?

  11. Samuel Mukuria says:

    Hi Anne,
    Can you help with my unpaid dues, if so kindly let me know the procedure.

    1. Anne Babu says:

      Send an email with details to enquiries

  12. Eunice says:

    Hello Anne,
    The high court as per your posts, maintain the notice period for redundancy is 30 days, however the labour office/industrial court still maintains it’s one Month notice, and another notice in lieu (2 Months) What is the best way to work this out as this can waste a lot of time with court battles at the industrial court level.

    1. Anne Babu says:

      The decision of the Court of Appeal should be binding on the other courts.

  13. Andrew says:

    Hi Anne,
    Kindly help me solve an issue on leave days been used for notice period. Is employer supposed to pay the leave days forfeited for notice. Real situation be like an employee resigns to 4th June and she states that her last working day is 8th June meaning she has served 5 days notice and she agrees to be deducted the rest of 25 days from her annual leave whichh stands at 29.5. Is it in order if the employer doesnt pay the 25 forfeited days for notice. I will appreciate.

    1. Anne Babu says:

      Yes, if both parties agree, leave days can be used during notice period and only the balance paid in cash.

  14. Regina says:

    Hey Ann.what happens in case i resign without notice and i have 21 days leave?will i be paid my leave days.

    1. Anne Babu says:

      Your employer can decide to use the leave days as part of the notice.

  15. George Otieno Oloo says:

    Dear Anne,
    Many thanks for your professional guidance in this forum. I have an issue I’m trying to understand.
    Is it possible for an employer to change the terms of a fixed term employment contract of an employee mid-way especially the duration, say, from 5 years to a 1 year, renewable?
    If this is possible what would be the right steps to be followed so that the employee is not left at a disadvantaged position. Would the employer be required to pay Severance?
    Does this require a new contract or just a contract addendum?

    1. Anne Babu says:

      The consent of the employee is required for such a change to be lawful. The change can be effected through a contract amendment or a new contract. Severance is only paid in the event of a redundancy.

  16. Omagwa says:

    Is it lawful for an employer to issue renewable fixed term say 1 year contracts?

    1. Anne Babu says:

      Yes it is. The type and duration of the contract are at the employer’s discretion though the contract should clearly provide that renewal is at the employer’s absolute discretion.

  17. Ruth says:

    Hello Anne,
    How is the payment for leave days calculated when one wants to terminate their job? I have 20days leave but my employer says that it’s my monthly salary divided by 20days including weekends. I thought 20leave days are 20working days!
    Please assist.

    1. Anne Babu says:

      Should be divided by 30 days to get the daily pay.

  18. David Wanjiru says:

    My wife joined a Education institute as an IT Officer. At the time of employment she had joined KTTC as School Based Students a fact that was communicated to the interview panel. An year later she was allowed to do her teaching practice but the employment contract (still under probation) was terminated in the middle of TP. However she continued to perform some of IT duties, of course with less pay fearing that the TP would be terminated. What rights does she have? What can she do if the institute refuses to clear her from TP?

    1. Anne Babu says:

      Was she working and doing TP in the same institute? What was the reason for termination? What is the link between her job and TP?

  19. Sharon says:

    Is an employee legible for being paid while on suspension before the termination. Let’s say I was suspended in July for two weeks. The company didn’t give me any way forward after the two weeks. After following up, I was served with a termination letter in August. Am I supposed to be paid for the period between July and August?

    1. Anne Babu says:

      Payment during suspension is subject to your terms and conditions of service. If there is no provision, you should be paid in full. Seems like due process wasn’t followed in your termination.

  20. Ninoy says:

    Dear Anne,

    Is the notice period counted as calendar days or working days?

    Warm regards,

    1. Anne Babu says:

      Calendar days.

  21. Bonface onyango says:


  22. Abiagel says:

    Hello, with regards to the accumulated leave days which is to act as notice period, can an employer pay?

    can the employer claim that he cannot pay since the employee was employed elsewhere during the notice period?

    1. Anne Babu says:

      I’m afraid both your questions are not clear.

  23. Justin Njate says:

    Hi Anne,

    How does an employer calculate pay in lieu if you have opted for that option instead of serving the notice period of one month , i.e does it include transport and housing allowances, or it is calculated with the basic gross pay.

    1. Anne Babu says:

      It should not include facilitative allowances such as transport and housing since you are not working.

  24. Clement says:

    Dear Anne,

    What is the legal procedure for releasing an employee who as attained the retirement age?

    1. Anne Babu says:

      There is no legal procedure. This is normally provided in the organization’s manual. Normally involves a simple letter of notification of retirement.

  25. SERAH says:

    What happens when an employee abscords work and a year later come to claim their final dues

    1. Anne Babu says:

      They are entitled to salary up to the last day worked plus accrued leave less any notice period which they failed to serve.

  26. Gats says:

    Hi Anne,
    If an employee is terminated due to grossmisconduct after a disciplinary hearing, he/she entitled to pay in lieu of notice?

    1. Anne Babu says:

      Not if the person has been summarily dismissed.

  27. Johnsone says:

    Hi Anne,

    Going through this blog, I now believe we have a labour law professional in you. Very informative and professionally explained.

    I have 65 leave days and my employment has been terminated. Is the employer supposed to pay me for all those days? The employer on his side is saying I can only pass 10 days to the next year so I will have to forfeit the 50 days.

    How can I go about it.



    1. Anne Babu says:

      Hi, thank you for your compliments. You should be paid the accrued leave. Note however that the labour courts are divided on this point so that some hold that accrued leave must be paid, others hold that accrued leave may be forfeied after 18 months others hold that accrued leave may be forfeited as provided in the company policy.

  28. Samwel says:

    I love your articles.keep sharing more posts

  29. Jane Mbugua says:

    Very helpful information on Employment Act.
    Is there a difference between Redundancy and Retrenchment

    1. Anne Babu says:



    Ex worker of mine has sent me demand letter for unfair dismissal through lawyer can I settle dispute with him without involving his lawyer.

    1. Anne Babu says:

      There is nothing to stop you from reaching out to them directly.

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