What happens when employee is sacked or resigns

Many at times people quit their jobs for either being fired, having resigned or a move to a "greener" pasture. However, in the event that one of the aforementioned occurs, there are some payments in terms of compensation that an employee is entitled to as is stipulated in the laws of Kenya:

The employment arena in Kenya favors the employer for the simple reason that many employees, you included do not know  or bother to know their rights. Please consider this as a fifteen min
crash course on employment law in Kenya. I will specifically handle the various contentious benefits you are entitled to once you no longer have a relationship with your employer. I'd recommend you print or bookmark this page as am sure it will come in handy one of these days.

The Employment Act 2007 states the various payments employees whose services have been terminated are entitled to.These are service pay, gratuity, and severance pay. These are dues paid to a worker at the end of employment.

An employee does not contribute any portion of his salary towards these packages, it is entirely the employer’s responsibility. The amounts vary according to the terms of service. But there are conditions that are attached to these payments and it is a lack of understanding of these conditions that causes conflict.

The Employment Act 2007 Section 35 of the Act provides the circumstances under which service pay applies.

For an employee to qualify for service pay, they must have served under a contract in which they were paid at least a monthly remuneration as stated in subsection 1c of this section.The subsection talks about the requirement of a one month notice of termination of contract by either party. Section 35 (5) then provides that “an employee whose contract of service has been terminated under subsection 1(c) shall be entitled to service pay for every year worked, the terms of which shall be fixed.” However, this is not automatic.

The Act, under Section 35 (6) explains the circumstances under which an individual earning a monthly salary does not qualify for service pay. For example, employees who are members of a registered pension or provident fund scheme under the Retirement Benefits Act should not even think about service pay.
Their pension overrides service pay.

Neither should an employee expect an individually worked out service pay when they are members of “a gratuity or service pay scheme established under a collective agreement”.Also, workers contributing to the National Social Security Fund (NSSF) don’t get service pay, and so are those belonging to any other schemes established and operated by the employer, and whose terms are more favourable than those of the service pay schemes established under this Act.

Other payments that tend to be contested are gratuity and severance pay.

A gratuity is like a monetary gift from the employer to the employee for services rendered over a given period of time. As in the case of service pay, an employee does not contribute any portion of his or her salary towards this payment.

Gratuity can also be paid out as a lump-sum amount if the employee retires or resigns from employment, as well as in the event of death or when rendered incapable of performing due to a disability. To qualify for the payment, an employee must have worked with the organisation for a specified minimum period of time.

However, this rule is relaxed in the event of death, or when an employee has been affected by a disability.
Gratuity is similar to service pay, except that the latter is only paid at the end of employment.

Then there is severance pay. This is paid to an employee who has been declared redundant. It frequently courts controversy. Section 40(g) of the Employment Act 2007 provides that an employer shall not terminate a contract of service on account of redundancy unless “the employer has paid to the employee declared redundant, severance pay at the rate of not less than fifteen days pay for each completed year of service”.

An important point to note is according to the law, employees whose contracts have been terminated can only receive one form of end of contract payment. It is either service pay, gratuity, or severance pay, but not two or all of them.

This is an arrangement provided for subtly under subsection 6 (c) of Section 35 of the Employment Act 2007, to pre-empt situations in which employees whose contracts have been terminated may be tempted to claim more than one form of compensation. The law indicates that the employee can only be entitled to the compensation option whose terms are most favorable under their terms of service.

There you go. I hope that you now know your rights.