Terminal Dues are an entitlement upon termination of employment: Court of Appeal in Kenya Rules

On 24^th January 2025, the Court of Appeal in Nation Media Group Limited v Munene [2025] KECA 114 (KLR) upheld an award of Kshs 3,844,110/= being 10 months’ salary as compensation for unfair termination to the Respondent in addition to holding that the employee be paid their terminal dues. The Court held that an employer must pay terminal dues as per contract 0f employment, and may also be liable to pay compensation for unfair termination if found to have unfairly terminated an employee from employment.

Redundancy is governed by Section 40 of the Employment Act 2007 whereby the following procedure must be followed:

1. Notice must be given to the union the affected member is in, citing the extent and reasons for redundancy. The notice must be at least one month prior to the date of termination by redundancy.
2. Where an employee is not unionized, the employer must give the notice to the employee in writing.
3. Due regard must be given to seniority in time, skill, ability and reliability in selecting employees to be declared redundant.
4. Terminal benefits, payment in cash for accrued leaved days and severance pay must be paid.

The Court of Appeal noted that declaration of a redundancy is entirely within the purview of an employer. However, a court must be satisfied that the employer exercised the redundancy discretion properly and legally, failure to which the same will be deemed to be unfair termination.

The appellate court clarified that terminal benefits are different from compensation for unlawful termination and are both payable in case of unfair termination. Terminal dues compensate an employee in view of the service rendered until the date of termination, and are set down by law and contract of employment. On the other hand, compensation for unfair termination compensates an employee for wrongful loss of employment, and are mainly awarded at the discretion of the Court.

The Court also upheld the High Court decision  in SAMUEL G. MOMANYI v ATTORNEY GENERAL & another [2012] KEHC 5446 (KLR) to the effect that section 45(3) of the Employment Act 2007 is unconstitutional, which means that any employee may sue for wrongful termination irrespective of the period they have worked for an employer.

Legal implications for Employers and Employees

1. For Employers
2. Strict adherence to due process – Employers must be cognizant of the different termination methods and their requisite procedural obligations. This will ensure compliance with statutory provisions and negate liability in disputes arising from termination.
3. Burden of proof – As stated, the burden to prove that reasons for termination of employment are valid lies with an employer. Employers must therefore ensure that they have valid reasons for termination, which would satisfy a Court of law, before terminating an employment contract.
4. Employers must pay applicable terminal dues/benefits as per a contract of employment and may also be liable for pay compensation for wrongful termination if found to have unfairly terminated an employee.
5. Any employee (including those who have worked for less than a year) are entitled to sue for wrongful termination.
6. For Employees
7. Compensation – In instances of unfair termination, employees are entitled to both terminal dues and compensation for unfair termination, as the case may be. It is not enough for the employer to only pay terminal/pending dues.
8. Right to be heard – Due process must be followed before termination. Notices must be issued within the requisite period, a chance to be heard must be offered to an employee and any other obligation placed on the employer satisfied before termination.

This alert is for informational purposes only and does not constitute legal advice. For further guidance, contact us for more detailed legal advice at This email address is being protected from spambots. You need JavaScript enabled to view it.