Employment contracts are the cornerstone of the employer-employee relationship, setting out the rights, duties, and obligations of both parties. In Kenya, the Employment Act of 2007 and other labor laws govern employment contracts. This article discusses the key clauses and legal requirements for employment contracts in Kenya.

Key Clauses

A well-drafted employment contract should include the following key clauses:

1. Parties: The full names and addresses of the employer and the employee.

2. Job Description: A clear description of the employee's job title, duties, and responsibilities.

3. Remuneration: The employee's basic salary, allowances, and any other benefits, as well as the mode and frequency of payment.

4. Working Hours: The normal working hours and any provisions for overtime, shift work, or flexible working arrangements.

5. Leave: The employee's entitlement to annual leave, sick leave, maternity/paternity leave, and other types of leave, in accordance with the Employment Act.

6. Termination: The notice period required for termination of the contract by either party, and any provisions for summary dismissal for gross misconduct.

7. Confidentiality: The employee's obligation to maintain confidentiality of the employer's trade secrets, customer information, and other proprietary information.

8. Intellectual Property: The ownership of any intellectual property created by the employee in the course of employment.

9. Non-Competition: Any restrictions on the employee's ability to work for a competitor or start a competing business after termination of employment.

10. Dispute Resolution: The mechanisms for resolving any disputes arising from the employment contract, such as mediation, arbitration, or litigation.

Legal Requirements

The Employment Act and other labor laws impose certain mandatory requirements for employment contracts:

Written Contract: Employers must provide employees with a written contract of employment, stating the terms and conditions of employment, within two months of commencement of employment (Section 8).

Statement of Initial Particulars: Employers must provide employees with a written statement of initial particulars of employment, including the job title, remuneration, working hours, and leave entitlements, before the employee commences work (Section 10).

Minimum Wage: The remuneration provided in the contract must not be less than the statutory minimum wage, as set by the Regulation of Wages Order for the relevant industry or occupation (Section 27).

Statutory Deductions: The contract must provide for statutory deductions from the employee's remuneration, such as income tax, National Social Security Fund (NSSF) contributions, and National Hospital Insurance Fund (NHIF) contributions (Section 19).

Termination Notice: The contract must provide for a notice period for termination, which must not be less than the statutory minimum notice period of 28 days for monthly contracts (Section 35).

Certificate of Service: Upon termination of employment, the employer must provide the employee with a certificate of service, stating the employee's job description, duration of employment, and reason for termination (Section 51).

Case Law

Kenyan courts have interpreted and applied the legal requirements for employment contracts in various cases:

In the 2014 case of Juma v Rift Valley Water Services Board, the Employment and Labour Relations Court held that an employee who had worked for more than one month without a written contract was deemed to have a contract of indefinite duration, terminable only for just cause or by notice.

In the 2017 case of Kenya Airways Limited v Aviation & Allied Workers Union Kenya & 3 others, the Court of Appeal held that an employer cannot unilaterally vary the terms and conditions of employment without the employee's consent, even if the contract provides for such variation.

In the 2019 case of Raphael Mwiti Thiaine v Kiambu Water & Sewerage Company Limited, the Employment and Labour Relations Court held that an employer cannot terminate an employee's contract without following the termination procedure set out in the contract or the Employment Act, including giving the employee an opportunity to be heard.

Conclusion

Employment contracts are essential for defining the terms and conditions of employment and protecting the rights of both employers and employees. In Kenya, employment contracts must comply with the minimum standards set by the Employment Act and other labor laws.

Employers should ensure that their employment contracts are well-drafted, with clear and enforceable clauses on key issues such as remuneration, working hours, leave, termination, and confidentiality. They should also ensure that they comply with the legal requirements for written contracts, statements of particulars, minimum wages, statutory deductions, termination notices, and certificates of service.

Employees should carefully review their employment contracts before signing them, and seek legal advice if they have any concerns or questions. They should also keep a copy of their contract and any other relevant documents, such as payslips and leave records.

By using clear and compliant employment contracts, employers and employees can avoid disputes and foster a productive and harmonious working relationship.