Good News for Kenyans Fired During COVID-19 as Court Opens Door to Compensation

Thousands of Kenyan workers who were dumped on the streets by employers during the height of the COVID-19 pandemic have received a major victory, following a landmark ruling by Kenya’s Employment and Labour Relations Court (ELRC).

The bench has affirmed that operational distress caused by the global pandemic does not grant companies a free pass to ignore statutory redundancy procedures.

For thousands of Kenyans whose livelihoods were cut short without fair process, the ruling opens a legal window to hold former employers accountable and claim massive financial compensation.

The court’s decision establishes a non-negotiable legal precedent: even if an organisation has a valid commercial reason or severe revenue drop to reduce staff, it must follow strict procedural rules under Kenya's labour laws.

The judgment stemmed from a dispute involving two workers abruptly terminated in 2020 after their employer cited falling revenues and business slowdowns due to COVID-19.

While the court acknowledged that declining workloads formed a valid, substantive reason for restructuring, it penalised the employer heavily for completely ignoring procedural fairness.

The company issued abrupt dismissal notices on short notice, alerted trade unions only after terminations had been executed, and failed to notify the regional Labour Officer in advance.

As a result, the court declared the retrenchments unlawful and ordered the firm to pay each worker six months' gross salary in compensation, alongside full statutory severance pay and legal costs.

This ruling offers a major financial lifeline to workers who were unfairly let go during pandemic-era downsizing exercises without prior notice, union consultations, or proper severance payouts.

However, retrenched employees seeking cash settlements must act fast and pay close attention to strict statutory timelines:

• The 3-Year Limitation Rule: Under Section 90 of the Employment Act, civil suits arising from a breach of an employment contract must be filed within three years of the date of termination or default.

• Strict Court Deadlines: Courts have consistently affirmed that the three-year limitation period under Section 90 cannot be extended once it lapses.

• Continuing Injury Exceptions: Where an employer’s breach involves continuing damage or withheld statutory benefits, claims must be instituted within 12 months after the cessation of the injury.

If your termination occurred within these statutory windows, or if your former employer failed to finalise contractual settlements, you remain legally eligible to pursue compensation in court or through labour conciliators.

To know if you have a solid claim for compensation, your retrenchment must be measured against Section 40 of Kenya’s Employment Act, which requires employers to strictly satisfy the following conditions:

• Mandatory Advance Notice: The employer must issue at least one month's written notice to the employee (or their trade union) and the local area Labour Officer prior to the retrenchment.

• Accrued Annual Leave: All pending, unutilized annual leave days must be calculated and paid out in cash upon termination.

• Notice Pay: The company must provide one month's formal notice or pay one month's gross salary in lieu of notice.

• Statutory Severance Pay: Retrenched staff must receive severance pay calculated at a minimum of 15 days' basic wages for every completed year of service.

• Fair Selection Criteria: The employer must use objective, transparent selection criteria (such as seniority, skill, and performance) rather than arbitrary selection.

If your employer skipped any of these mandatory steps while citing "COVID-19 hard times," the termination is classified as procedurally unfair under Kenyan law, entitling you to compensation of up to 12 months' salary plus accrued benefits.

Former employees looking to initiate claims against past employers are advised to gather their paperwork immediately before approaching legal counsel or trade unions:

1. Assemble Core Contracts: Gather your original employment agreement, appointment letters, and any written salary adjustment notices.

2. Secure Termination Letters: Locate your physical or digital redundancy letter, email correspondence, or show-cause notices detailing how you were dismissed.

3. Collect Financial Proof: Retrieve bank statements, payslips, and any records showing partial or incomplete final payouts.

4. Compile Leave Records: Secure any available documentation showing accrued, unutilized annual leave balances at the time of exit.

5. Establish Lack of Notice: Keep records demonstrating that no prior notice was served to you, your union, or the local area Labour Officer.