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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.

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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. Advocates. She has practiced employment law for 10 years. She is a repository junkie and a lover of editing.

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Comments

  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?

    Thanks

    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.