Employment Contracts in Kenya: Complete 2026 SME Guide
Hiring your first employee is a milestone — and clear written terms help both sides understand the job. The Employment Act 2007 applies to oral and written contracts. It requires a written contract for work lasting three months or more in aggregate, and for specified work not reasonably expected to finish within that period. Written terms are good practice for every employee.
This guide explains when writing is required, which employment details must be recorded, and how casual work can change legal status.
1. When Is a Written Contract Required?
There are separate rules for putting the agreement in writing and recording its details:
- When writing is legally required (Section 9): Put the contract in writing if its period or working days add up to three months or more, or if specified work could not reasonably be expected to finish within an equivalent three-month period.
- Employment details (Sections 10 and 11): Record the required particulars, such as the job, pay, hours and leave. The details may be supplied in instalments, generally no later than two months after employment begins, and the required particulars must be included in a single document. If the employee is due to start work outside Kenya for more than one month before that period ends, give the statement before they leave.
- Casual work: Being paid daily does not create a blanket exemption. Section 37 can treat the contract as monthly-paid when the employee's period or continuous working days reach the equivalent of one month, or when specified work is not reasonably expected to finish within an equivalent three-month period.
2. Mandatory Terms Your Contract Must Include
Under Section 10 of the Employment Act, your written contract or statement of particulars must cover:
- Full names of employer and employee
- Job title and description — duties, responsibilities, reporting lines
- Date of commencement — when employment starts
- Duration — fixed-term or indefinite
- Place of work — location, or note that it may change
- Working hours — follow the applicable Wage Order, contract or CBA for the role
- Remuneration — basic salary, allowances, bonuses, and how/when paid
- Leave entitlements — annual, sick, maternity, paternity
- Notice period — for termination by either party
- Disciplinary rules — or reference to a staff handbook
- Dispute resolution — how conflicts will be handled
3. Statutory Leave Entitlements (2026)
These are the minimums — your contract can offer more, but never less:
- Annual Leave: 21 working days paid leave per year (accrues after 12 months of continuous service)
- Maternity leave: Three months with full pay. There is no two-month service qualification; give at least seven days’ written notice of the expected date, or shorter notice where reasonable.
- Paternity Leave: 2 weeks fully paid
- Sick Leave: the Employment Act baseline after two consecutive months is 7 days at full pay and 7 days at half pay in each 12-month period, subject to a medical certificate and any more favourable applicable wage order or contract.
- Pre-adoptive leave: One month with full pay from the date the child is placed in the employee’s care. Give at least 14 days’ written notice and the required adoption documents.
4. Working Hours and Overtime Rules
There is no single working-hours schedule for every job. The applicable Wage Order, employment contract or collective bargaining agreement (CBA) determines the rules for the worker and sector.
Under the General Order, as one example, normal work is up to 52 hours over six days; night work may be up to 60 hours a week. This is not a rule for every sector.
- Ordinary overtime: at least 1.5 times the normal hourly rate.
- Rest days and public holidays: twice the normal hourly rate.
- Two-week ceiling under this Order: combined normal and overtime hours may not exceed 116 hours for other adult workers or 144 hours for night workers over two consecutive weeks.
A different Wage Order, contract or CBA may set different or more favourable terms. Check the rule for the worker's industry before agreeing hours, and write the schedule and overtime terms into the contract.
5. Minimum Wage Compliance
Your contract must pay at least the statutory minimum wage. As of the latest Wage Order (effective 1 May 2026, Legal Notices No. 108 & 109, Kenya Gazette Supplement No. 160):
| Occupation | Cities* | Former municipalities | Other areas |
|---|---|---|---|
| General labourer (cleaner, sweeper, gardener, ayah, house servant, day watchman, messenger) | KES 18,047.40 | KES 16,650.95 | KES 9,628.07 |
| Night watchman | KES 20,133.72 | KES 18,665.88 | KES 11,483.43 |
| Telephone operator, receptionist, storekeeper | KES 27,796.51 | KES 25,412.61 | KES 21,668.18 |
| Tailor, driver (medium vehicle) | KES 30,634.69 | KES 28,155.87 | KES 25,105.72 |
| Cashier, driver (heavy commercial vehicle) | KES 40,724.23 | KES 38,323.71 | KES 35,932.75 |
| Artisan Grade I | KES 40,724.23 | KES 38,323.71 | KES 35,932.86 |
* Nairobi, Mombasa, Kisumu, Nakuru and Eldoret cities. Former municipalities and the town councils of Mavoko, Ruiru and Limuru form the second zone.
Rates are basic minimum wages exclusive of housing allowance. Employers who do not provide free accommodation must pay an additional house allowance on top of these rates.
Source: Legal Notice No. 108 — Regulation of Wages (General) (Amendment) Order, 2026; effective 1 May 2026.
6. Statutory Deductions From Salary
Every payslip must show these deductions (your contract should reference them):
- PAYE (Pay As You Earn): Progressive income tax — 10% on first KES 24,000, up to 35% on income above KES 800,000/month. Personal relief of KES 2,400/month applies.
- NSSF: 6% employee contribution + 6% employer contribution. Tier I: earnings up to KES 9,000 at 6%. Tier II: earnings from KES 9,001 to KES 108,000 at 6%. Maximum per party: KES 6,480/month.
- SHIF (Social Health Insurance Fund): 2.75% of gross salary, paid by employee only (minimum KES 300/month). Replaced NHIF in October 2024. Fully tax-deductible.
- AHL (Affordable Housing Levy): 1.5% of gross salary, contributed by both employer and employee.
- HELB: Deduction for student loan repayment, if applicable.
7. Termination and Notice Periods
Kenya does not follow at-will employment. You cannot fire someone without a reason. Here's what the law requires:
- Written notice: All termination must be in writing
- Minimum notice period: 28 days for monthly-paid employees (Section 35). Contracts can specify longer periods.
- Daily-paid workers: Section 35 permits termination at the close of a day without notice, subject to section 37 conversion to monthly-paid status where its conditions are met.
- Summary dismissal: Only for a lawful reason, and the employer must still explain the grounds and hear the employee’s representations under section 41(2).
- Redundancy: Give at least one month’s written notice to the employee or their union and the labour officer, apply fair selection criteria, and pay severance of at least 15 days’ pay for each completed year of service (section 40).
On termination, provide a certificate of service stating the employee’s name, employer’s name and address, start date, nature and usual place of work, and end date. It need not give the reason for termination. The duty does not apply where employment lasted less than four consecutive weeks (section 51).
8. Additional Clauses to Include
While not always mandatory, these clauses protect your business:
- Confidentiality: Employee must protect trade secrets and proprietary information
- Intellectual property: Clarify ownership of work created during employment
- Non-competition: Restrictions on working for competitors after leaving (must be reasonable in scope and duration)
- Probation period: The initial period may not exceed six months. It can be extended by agreement for up to a further six months (12 months total), after the employer explains the extension and consults the employee (section 42).
- Work equipment: Who provides tools, uniforms, and safety gear
9. Step-by-Step: Creating a Compliant Contract
- Draft the contract — Use the mandatory terms list above as a checklist. Templates are available from the Ministry of Labour or your HR consultant.
- Customise for your business — Add job-specific duties, probation terms, and any additional clauses (confidentiality, IP, non-compete).
- Review against the Employment Act — Ensure no term falls below statutory minimums (leave, notice, wages).
- Have both parties sign — Each party keeps a signed copy. The employee must receive their copy.
- Record the terms in writing — Writing is legally required for the qualifying work described in Section 9 and remains good practice for other employees. Follow the separate particulars deadline in Sections 10 and 11.
- File and maintain — Keep required written particulars for five years after termination (section 10(6)); retain other employment records for the period required by the relevant law.
10. Common Mistakes to Avoid
- Keeping no written record: Written terms help prevent disagreements. In legal proceedings, Section 10(7) places the burden of proving or disproving a disputed term on the employer if the required contract or particulars are not produced.
- Paying below minimum wage: Even if the employee agrees, it's illegal. Penalties apply.
- No notice before termination: Firing without proper notice = unfair dismissal. Compensation can be up to 12 months' salary.
- Skipping statutory deductions: KRA and SHA can impose penalties and back-taxes.
- Not providing a certificate of service: Required by law. Employees need it for future employment.
- Verbal promises: If it's not in the contract, it's hard to enforce. Put everything in writing.
11. Frequently Asked Questions
Do I need a written contract for a casual worker?
Daily pay and engagement for less than 24 hours at a time are part of the Act's casual-worker definition, but they are not a blanket exemption. Section 9 requires writing if the period or working days add up to three months or more, or specified work is not reasonably expected to finish within an equivalent three-month period. Separately, Section 37 treats the contract as monthly-paid if the employee's period or continuous working days reach the equivalent of one month, or the specified-work condition applies.
Can I change the terms of employment without the employee's consent?
No. The Kenya Court of Appeal held in Kenya Airways v Aviation & Allied Workers Union (2017) that an employer cannot unilaterally vary employment terms without the employee's consent.
What happens if I don't provide a written contract?
Section 8 says the Act applies to oral and written contracts. If an employer fails to produce a written contract or the required particulars in legal proceedings, Section 10(7) puts the burden of proving or disproving an alleged employment term on the employer. It does not automatically make the employee's version the contract, so keep clear written records.
How long does a probation period last?
The initial period may not exceed six months. By agreement, it can be extended once for up to a further six months after the employer explains the need and consults the employee. Either party may terminate during probation on at least seven days’ notice or pay in lieu.
Sources and update record
Updated 26 October 2026: Corrected leave entitlements, termination procedure, probation and employment-record retention.
Contract-writing requirements and casual-work conversion were last checked against their cited sources on 11 October 2026. Minimum-wage and working-hours sources were checked on 12 October 2026.
Minimum wage schedule figures checked: 12 October 2026.
Working-hours rules checked: 12 October 2026.
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