Terminal Benefits

All about Terminal Benefits,Terminal Benefits and Labour Laws, Terminal Benefits and Wages and Salaries and Family and more on AfricaPay Kenya.

What are terminal benefits?

Terminal benefits are final entitlements of an employee upon termination of an employment contract. 

What is an employee entitled to as terminal benefits upon the termination of their employment contract?

Generally, under various sections, the Employment Act, 2007 provides the following for upon termination of the employment contract, (under section 35 (5), 36 and 40 (1) (e) (f) (g)): 

  • Any remuneration for work done before termination. 
  • Any annual leave pay due to an employee for leave not taken. 
  • Any notice pay due.
  • Any severance pays due if an employee qualifies for this.
  • Certificate of Service (section 51)

If an employee's contract has been terminated due to misconduct, are they still entitled to severance pay?

No. Termination of employment on grounds of misconduct does not warrant severance pay. 

Is an employee entitled to severance pay upon their retirement?

On severance pay the law is clear in case of redundancy, in which case a worker loses employment on grounds that are not his /her cause. The other forms of employment termination do not warrant severance pay. However they are entitled to other forms of payment, for example, a pension fund in case of retirement. 

How is severance pay calculated?

Employment Act, section 40 (1) (g) specifies severance pay at the rate of not less than 15 days pay for each completed year of service with the same employer. This means that severance pay is calculated by multiplying 15 days’ salary by the number of years that an employee has rendered services to an employer.

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