Introduction 

Kenya is fast becoming a key hub for international business, particularly in the tech, finance, and manufacturing sectors. But with opportunity comes responsibility - and for companies hiring in Kenya, understanding local labour laws isn’t optional. It’s essential. In 2023, the Kenyan government introduced further reforms to support fair employment, streamline dispute resolution, and increase compliance enforcement. Employers unfamiliar with these changes risk non-compliance, reputational damage, and fines.

If you’re expanding into Kenya or managing a global workforce that includes Kenyan employees, now is the time to review your HR practices.

Quick Tips

• Probation periods in Kenya are capped at 6 months under the Employment Act.

• Employment contracts must be in writing if lasting more than three months.

• All terminations must follow fair procedure and valid reason standards.

• Employers must contribute to statutory schemes like NSSF and NHIF.

• Avoid misclassifying workers - independent contractors are assessed strictly.

Why Contracts and Classification Matter 

Under Kenya’s Employment Act 2007, all employees with contracts of over three months must receive written terms of employment. These must outline job description, place of work, hours, pay, and leave entitlements. Misclassification - treating employees as contractors - is a common pitfall. Kenya’s Employment and Labour Relations Court often rules in favour of workers in such cases.

One client I supported assumed a remote worker in Nairobi could be engaged under a freelance agreement. When issues arose, the worker claimed employee status. Because key employer behaviours (like setting hours and approving leave) were evident, they had a case. We acted quickly to resolve the matter and transition to compliant employment - but it highlighted the need for proper setup from day one.

Termination Procedures Are Strictly Regulated 

Termination of employment in Kenya must be both substantively justified and procedurally fair. This means:

• A valid reason (such as poor performance or redundancy)

• Notice or pay in lieu (unless dismissal is for gross misconduct)

• A disciplinary hearing where applicable

Section 41 of the Employment Act requires employers to inform the employee of the reason and allow them to respond, often with a witness present. This process must be documented. The 2021 Employment (Amendment) Act also introduced protections around parental leave, paternity leave, and remote work, which may apply depending on the employment setup.

Global companies should avoid using “at-will” clauses in Kenyan contracts - they’re not recognised and can lead to claims. We helped one multinational adjust their contracts to reflect fair dismissal terms, ensuring alignment with Kenyan law while preserving business flexibility.

Statutory Contributions and Benefits

Kenyan employers must register with and contribute to:

• NSSF (National Social Security Fund) – pension scheme contributions

• NHIF (National Hospital Insurance Fund) – healthcare coverage

• PAYE (Pay As You Earn) – tax deductions

As of 2024, new NSSF contribution rates apply, increasing employer and employee responsibilities. Failure to comply can lead to audits and financial penalties. HR and payroll systems must be updated accordingly, especially for companies managing Kenyan teams from abroad.

In one case, a UK-headquartered firm unknowingly under-contributed to NHIF for months due to a system mismatch. We helped them retroactively correct payments and align their payroll software with Kenya Revenue Authority guidelines to prevent further issues.

Final Thoughts 

Kenya offers tremendous opportunity, but it’s not a market where shortcuts in HR work. Labour law is well enforced, and local professionals are increasingly aware of their rights. For businesses committed to growing with integrity, compliance isn’t a cost - it’s part of the value proposition.

What’s next for your global people strategy? 

Book a free compliance check-in or HR audit with ThinkGlobal HR. Whether you’re reviewing contracts, onboarding Kenyan employees, or building scalable people systems, we’ll guide you with clarity, care, and local knowledge you can trust.