TerraLex Cross-Border Guide to Cross-Border Labor & Employment Guidance

Kenya is an economic hub in East Africa and Africa at large. It offers investors an opportunity to tap into the resources available in Kenya creating employment for both citizens and foreigners. Therefore, facilitating a diverse working force. Due to the interactions, there is a need to have an understanding of the legal framework in employment, labor rights, and the regulatory framework. Therefore, this guide aims to provide the basic and essential aspects of employment and labor relations from a Kenyan and cross-border perspective.

In Kenya, employment status refers to the classification of individuals based on their working relationship with an employer. The Employment Act of 2007 recognizes three main categories of employment status: 1. Permanent Employment: Permanent employment refers to a long-term employment relationship where the employee is engaged on an ongoing basis with no predetermined end date. Permanent employees are entitled to various benefits and protections under the law, including notice periods for termination, leave entitlements, and other statutory rights. 2. Fixed-Term Employment: Fixed-term employment refers to an employment relationship with a predetermined duration or a specific project or task. The contract clearly states the start and end date of employment. Fixed-term employees have similar rights and protections as permanent employees, but the duration of their employment is limited. 3. Casual Employment: Casual employment refers to irregular or intermittent work arrangements where the employee is engaged on an as-needed basis with no regular working hours or fixed schedule. Casual employees typically work on a temporary or short-term basis and do not enjoy the same benefits and protections as permanent or fixed-term employees. However, they are entitled to minimum wage rates and other basic employment rights. Also, it is worth noting that casual employees can convert to permanent employees.

It's worth noting that there may be additional employment categories or arrangements specific to certain sectors or professions. For example, apprenticeships, internships, and part-time employment arrangements may have their own distinct regulations and provisions.

In Kenya, the immigration and hiring of foreign employees and nationals are regulated by the Kenya Citizenship and Immigration Act of 2011 and its regulations. These laws outline the requirements, procedures, and conditions for employing foreign workers in Kenya. Here is an overview of the key aspects of immigration and hiring foreign employees in Kenya:

1. Work Permits: Foreign nationals who wish to work in Kenya generally require a valid work permit. There are different categories of work permits, including Class A, Class B, and Class C permits, each with specific eligibility criteria and requirements. Work permits are issued by the Department of Immigration.
2. Employer's Responsibility: The employer intending to hire a foreign employee in Kenya is responsible for initiating the work permit application process on behalf of the employee. The employer needs to provide relevant documentation, including a letter of request, a copy of the employment contract, and proof of compliance with local labor laws and regulations.
3. Specific Sector Regulations: Some sectors or professions in Kenya may have additional regulations and requirements for employing foreign nationals. For example, the health sector, education sector, and certain professional fields may have specific licensing or registration requirements for foreign workers.
4. Quota System: The Kenyan government may impose quotas on the number of work permits issued for certain categories or sectors. This is to ensure a balance between foreign and local employment opportunities. Employers should check for any quotas or restrictions that may apply to their specific sector.
5. Duration and Renewal: Work permits in Kenya are typically issued for specific durations, such as one year or two years, depending on the category. Employers can apply for permit renewals before the expiry date, subject to fulfilling the necessary requirements and demonstrating a continued need for the foreign employee.
6. Dependent Passes: Foreign employees who hold valid work permits may apply for dependent passes for their immediate family members (spouses and children) to reside in Kenya. The dependent pass allows family members to live in the country but not necessarily work.
7. Compliance and Penalties: Employers are required to comply with the immigration laws and regulations when hiring foreign employees. Failure to do so can result in penalties, including fines, deportation of the foreign employee, and potential difficulties in obtaining future work permits.

It's essential for employers to consult the Department of Immigration or engage immigration experts to ensure compliance with the current immigration regulations and requirements in Kenya. These regulations are subject to change, so staying updated with the latest information is crucial to avoid any legal issues in hiring foreign employees or nationals.

In Kenya, the terms of employment are regulated by various laws and regulations that aim to protect the rights of both employers and employees. The primary legislation governing employment in Kenya is the Employment Act No 11 of 2007. Additionally, specific sectors may have their own regulations. Some of the pertinent this to consider before one gets to employment are:

1. Contract of Service: Employment in Kenya is based on a contract of service between the employer and the employee. The contract can be either written or oral, but it is recommended to have written agreements to avoid disputes. The contract should include essential terms such as the nature of employment, job description, working hours, remuneration, and termination conditions.
2. Working Hours: The standard working hours in Kenya are 40 hours per week, with a maximum of 9 hours per day. For night workers, the maximum working hours are 8 hours per day. The law requires that employees receive overtime pay for work done beyond the regular working hours, typically at a rate of at least 1.5 times the normal hourly rate.
3. Minimum Wage: The Kenyan government sets a minimum wage for different sectors through the Minimum Wage Order. The minimum wage varies depending on the industry, location, and skill level of the employee. It is important for employers to ensure that they comply with the minimum wage requirements to avoid legal repercussions.
4. Leave Entitlements: Under the Employment Act, employees in Kenya are entitled to various types of leave, including annual leave, sick leave, and maternity leave. Employees are entitled to 21 working days of annual leave after completing one year of continuous service. Sick leave is provided for a maximum of seven days per year, and maternity leave is 90 calendar days for female employees.
5. Termination of Employment: The Employment Act provides provisions for the termination of employment contracts. Termination can be either through resignation by the employee or by dismissal by the employer. The law requires employers to provide notice periods or payment in lieu of notice. The length of the notice period depends on the length of service and is usually between one and three months.
6. Taxation: Foreign workers employed in Kenya are generally subject to income tax in Kenya. However, the tax liability may also be affected by any double taxation agreements between Kenya and the employee's home country. Both employers and employees need to understand and comply with tax obligations in both jurisdictions.
7. Health and Safety: Employers are responsible for providing a safe and healthy working environment for all employees, including foreign workers. Employers must comply with health and safety regulations in Kenya to ensure the well-being of their employees.

It is advisable for employers and employees engaging in cross-border employment arrangements to seek legal advice and consult relevant authorities to ensure compliance with both Kenyan laws and any applicable international agreements or regulations.

Under Kenyan law, wages are governed by various laws such as the Employment Act, 2007, the Regulation of Wages (General)(Amendment) Order, 2022, and other sector-specific regulations. The Regulation of Wages (General)(Amendment) Order, 2022 sets out the minimum wages to be paid to different classes of occupation in different regions of the country. The minimum wages vary depending on skills that one has, location, and nature of work. They are reviewed and updated by the government periodically.

The Kenyan Employment Act sets the prerequisites for payment, disposal, and recovery of wages, allowances, and salaries and it provides that an employer shall pay the entire amount of wages earned or payable to an employee in respect of work done and shall regard the contract of service. The Act applies to all employees in Kenya whether or not they are foreigners or citizens.

In Kenya local employees are subject to taxation based on the prevailing tax laws and regulations. The tax system in Kenya includes various taxes that may be applicable to local employees including Income Tax, National Social Security Fund (NSSF), National Health Insurance Fund and Value Added Tax (VAT) which is basically a consumption tax on purchased goods.

However, In the context of cross-border employment where Kenyan employees are employed in foreign jurisdictions or foreigners into Kenyan jurisdiction, the specific regulations depend on the bilateral agreements or treaties between the country involved.

Collective Agreements are negotiated between employers or employer organizations and trade unions representing employees in Kenya we have Central Organizations of Trade Unions (COTU) as the Umbrella of Trade Unions, and it has its affiliate members. The agreements outline the terms and conditions of employment in different industries and sectors. These terms and conditions include but are not limited to wages, working hours, overtime pay, leave entitlements, work health and safety, and dispute resolution mechanisms. They are legally binding and enforceable under the Employment Act of 2007.

In the context of cross-border employment, collective agreements play a crucial role in ensuring fair and equitable treatment of workers. However, the applicability of these agreements in cross-border employment depends on various factors including the agreement itself and the existence of bilateral or international agreements between the countries.

In Kenya pensions and benefits are regulated by various laws and regulations such as the Pensions Act 2005, Employment Act 2007, The Retirement Benefits Act, National Social Security Fund Act, Income Tax (Retirement and Benefit) Rules 1994. These laws aim to ensure sustainability, social security coverage, and retirement benefits for employees in Kenya.

The pensions act provides for the grant and regulating of pensions, gratuities, and other allowances in respect of the public service of officers under the Government of Kenya. Pension is either contributed, during employment, by the employer alone, the employee alone, or by the employee and supplemented by the employer. Pension benefits are deferred to retirement or disability of the employee and are generally payable thereafter to dependents on the employee’s death.

Section 5(1) of the Pensions Act provides that every officer shall have an absolute pension and gratuity while section 6 (1) is express that no pension, gratuity, or other allowance shall be granted under the Act to any officer except on retirement from public service.

Further, The Retirement Benefits Act governs the establishment, operation, and regulation of retirement benefit schemes. The retirement benefits schemes are regulated and supervised by the Retirement Benefits Authority (RBA) established under the Retirement Benefits Act – No. 3 of 1997 (Act). One of the functions of RBA is to protect the interests of members and sponsors of the retirement benefits sector. Under the Act, every retirement benefits scheme other than a scheme established by written law should be established under an irrevocable trust (section 26). The scheme manager, custodian, or administrator is required to be a limited liability company and should also be registered under the RBA (Sections 25 25A, 25B, and 27).

Section 32 provides that every retirement benefits scheme (other than a scheme funded out of the Consolidated Fund) is required to have a scheme fund into which all contributions, investments, earnings, income, and other monies payable under the scheme should be paid.

However, in the context of cross-border trade, application of these laws and entitlements to pensions and benefits may vary depending on factors such as nationality of the employee, duration of the employment, and existence of any applicable bilateral treaties or agreements.

Employees have the right under the Labour Relations Act to join a trade union and cannot be penalized or discriminated against by their employer for opting to exercise such right. As long as a trade union represents the simple majority of unionisible employees the employer must recognize it and engage it in discussions involving the terms and conditions of employment of the workers.

It is the duty of the Minister, Labour Officers, and the Industrial Court to promote and guarantee equality of opportunity in employment.

An employer has a statutory duty to consult with the appropriate employee representatives or with the employee personally in a number of circumstances, including:

• issuing a policy statement on sexual harassment;
• change of particulars of employment;
• on proposed changes to an employee pension scheme;
• where employees are being transferred from one business to another;
• disposal of wages;
• redundancy; and
• termination on grounds of misconduct.

Working time and Holidays are regulated by the Employment Act. The act established the minimum standards for work hours, rest days, and holidays for employees in Kenya. Section 27 of the Employment Act obligates employees to regulate the working hours of their employees according to the act and every employee shall be entitled to one rest day in every period of seven days.

Section 28 provides that employees who have worked continuously for at least one year are entitled to annual leave of 21 days per year. Other leaves provided for in the act are Sick leave, Maternal leave, and Pre adoptive leave.

The Act also recognizes public holidays as noticed and on public holidays employees are entitled to a paid day off.

The protection of employees against dismissal is governed by the Employment Act 2007. The act sets out provisions to prevent unfair and arbitrary termination of employment. Section 35 and 36 of the Act provides that before termination of an employment contract, the employer is required to issue the employee with a written notice of termination or payment in lieu of the notice. The notice period varies on the nature of the contract of service or employment, and it is typically between 1 to 3 months.

Further, section 45 of the Act protects employees against unfair termination or dismissal from work unfairly or without any justifiable cause. It further provides for what are unfair circumstances. The acts further provide for valid grounds on which an employer can dismiss an employee which include but are not limited to, misconduct, poor performance, and incapacity.

However, when employees are unfairly dismissed, they have a right to seek redress. Section 47 provides for complaints of summary dismissal and unfair termination. It stipulates that, where an employee has been summarily dismissed or his employer has unfairly terminated his employment without justification, the employee may, within three months of the date of dismissal, present a complaint to a labor officer and the complaint shall be dealt with as a complaint lodged under section 87.

After seeking redress in the appropriate avenue, the remedies that the court can give are provided for under section 49 of the Act.

After termination, the employers are obligated by the Act under section 51 to issue employees with a certificate of service unless they worked for less than four (4) weeks.

All these are measures put in place to protect employees from unfair dismissal and termination from their workplaces.

Many times, companies and organizations restructure either by way of mergers or acquisitions. During the process of restructuring some positions that existed may be scrapped hence rendering some employees to be laid off. Redundancy under Kenyan laws is governed by the Employment Act. Section 40 outlines conditions that an employer has to meet before declaring an employee redundant. Some of the conditions are:

• where the employee is a member of a trade union, the employer notifies the union to which the employee is a member and the labor officer in charge of the area where the employee is employed of the reasons for, and the extent of, the intended redundancy not less than a month before the date of the intended date of termination on account of redundancy.
• where the employee is not a member of any trade union the employer should notify the employee personally in writing and the labor office.
• the employer has, in the selection of employees to be declared redundant had due regard to seniority in time and to the skill, ability, and reliability of each employee of the particular class of employees affected by the redundancy
• where there is in existence a collective agreement between an employer and a trade union setting out terminal benefits payable upon redundancy; the employer has not placed the employee at a disadvantage for being or not being a member of the trade union
• the employer has where leave is due to an employee who is declared redundant, paid off the leave in cash;
• the employer has paid an employee declared redundant not less than one month's notice or one month's wages in lieu of notice; and
• the employer has paid an employee declared redundant severance pay at the rate of not less than fifteen days' pay for each completed year of service.

However, the above-mentioned shall not apply if the services were terminated due to insolvency.

Buying and selling of business involves a myriad of considerations and legal requirements that have to be strictly met. Some of the regulations and laws concerning selling a business are: 1. Business Transfer agreement- this will govern the relationship between the buyer and the seller, the consideration, warranties, and representations, and the type of business as well as the obligations of the parties 2. Companies Act, 2015 if the business is structured as a company. The provisions of the act have to be followed. This includes registration, transfer of shares or assets, disclosure of beneficial owners' information, and compliance with corporate governance procedures. 3. Intellectual Properties laws – if the business sold or purchased includes intellectual property assets such as patents, trademark, or copyrights, the relevant intellectual property has to be adhered to. 4. Employment laws- In that when an old business is sold to another party (purchaser) the existing employees and their contracts are also transferred to the new owner. Hence the Employment Act of 2007 ensures that their rights are not infringed and that they can have redress if their terms of employment are altered to their detriment. 5. Tax laws- when selling or buying a business it is advisable to contact tax experts as various tax laws will come in place. This will include capital gains, VAT on the sale of assets, and Income tax. 6. Competition laws – Depending on the type and size of business the Competition Act may come in place to ensure fair competition in the market. Some transactions require approval from the Competition Authority which ensures regulatory compliance.

The resolution of employment disputes in Kenya is primarily governed by the Employment Act of 2007, as well as other laws and regulations. The Employment Act provides a framework for addressing disputes between employers and employees. Here are the main avenues for resolving employment disputes in Kenya:

1. Negotiation and Mediation: The first step in resolving an employment dispute is usually negotiation and mediation. This involves the parties involved in the dispute attempting to reach a mutually acceptable resolution through discussions and the assistance of a mediator. The mediator acts as a neutral third party who facilitates the negotiation process.
2. Conciliation: If the parties are unable to resolve the dispute through negotiation or mediation, they can seek conciliation services. The Ministry of Labour and Social Protection provides conciliation services through its officers who work to bring the parties together and help them settle. The conciliator does not impose a decision but assists in facilitating a resolution.
3. Arbitration: If conciliation fails, the next step is arbitration. The parties can agree to refer the dispute to arbitration, either through a private arbitrator or the Ministry of Labour and Social Protection's Arbitration Court. Arbitration involves presenting the dispute before an arbitrator who acts as a neutral third party and makes a binding decision based on the evidence and arguments presented.
4. Employment and Labour Relations Court: If the dispute remains unresolved through negotiation, mediation, conciliation, or arbitration, the parties can file a case in the Employment and Labour Relations Court. This specialized court handles employment-related disputes, including unfair dismissals, breaches of employment contracts, and other employment-related matters. The court's decision is legally binding.
5. Appeals: If any party is dissatisfied with the decision of the Employment and Labour Relations Court, they have the right to appeal the decision to a higher court, such as the Court of Appeal or the Supreme Court, depending on the circumstances and the legal grounds for appeal.

Cross-border employment in Kenya involves the employment of foreign workers or the employment of Kenyan workers outside the country. While there are general statutory rights that apply to all employees, regardless of their nationality or location, there are specific considerations and regulations related to cross-border employment in Kenya. Here are some statutory rights and regulations applicable to cross-border employment in Kenya:

1. Work Permit/Visa: Foreign workers coming to Kenya for employment purposes are required to obtain a work permit or visa. The Immigration Act and regulations provide guidelines and requirements for obtaining work permits or visas, depending on the nature and duration of employment.
2. Employment Contract: Cross-border employment should have a written employment contract that outlines the terms and conditions of employment, including remuneration, working hours, leave entitlements, termination procedures, and any specific provisions related to cross-border employment.
3. Taxation: Cross-border employees, whether Kenyan citizens working abroad, or foreign workers employed in Kenya, are subject to taxation laws. The tax liability and regulations may vary depending on factors such as residency status, duration of employment, and double taxation agreements between countries.
4. Social Security: Cross-border employees may be subject to social security regulations and contributions in their home country or the country of employment. The specific requirements and obligations vary depending on bilateral agreements and national social security systems.
5. Employment Rights: Cross-border employees are entitled to general employment rights and protections provided under Kenyan laws, as mentioned earlier. These rights include non-discrimination, fair wages, working hours, leave entitlements, health and safety, and protection against unfair dismissal.
6. Repatriation: In cases of termination or completion of cross-border employment, there may be provisions or regulations regarding the repatriation of the employee to their home country, including payment of travel expenses or relocation benefits.

Employers and employees involved in cross-border employment arrangements need to familiarize themselves with the specific requirements, regulations, and legal obligations applicable to their situation.

The Employment Act of 2007 protects children from employment. Section 52 protects the employment of children and it states that employment of a child is deemed to happen where: - the child provides labor as an assistant to another person and his labor is deemed to be the labor of that other person for payment;

• the child's labor is used for gain by any person or institution whether or not the child benefits directly or indirectly; and
• there is in existence a service contract where the party providing the service is a child whether the person using the services does so directly or by agent.

Section 53 further prevents the employment of children against all forms of child labor.

Discrimination under the Kenyan Laws is addressed by several statutes including the Constitution of Kenya 2010, The Employment Act 2007, and other sector-specific laws. These laws prohibit discrimination and aim to ensure equal treatment of all people in workplaces.

Article 27 of the Constitution of Kenya guarantees the right to equality and prohibits discrimination on various grounds including race, sex, pregnancy, marital status, ethnic or social origin color, age, disability, religion, conscience, belief, culture dress, language, or birth.

Further, the Employment Act protects against discrimination in Employment. Section 5 of the Act stipulates that an employer shall promote equal opportunity in employment and shall strive to eliminate discrimination in employment policy or practice. In addition to that, it obligates employers to pay employees equal remuneration for work of equal value.

Section 6 of the Employment Act addresses sexual harassment at workplaces and prohibits its occurrence. It also provides mechanisms for reporting and addressing complaints of sexual harassment.

Generally, the law of Kenya prohibits all forms of discrimination whether direct or indirect.

Outsourcing and personnel supply in Kenya are regulated by various laws and regulations including Employment Act 2007 and the Labour Act 2007. Some of the aspects and key considerations related to outsourcing and personnel supply in Kenya are: 1. Definition of Outsourcing- in the contract the parties must in clear terms define outsourcing, the scope of work, and key performance indicators so that the same cannot be construed as an employment contract. 2. Personnel supply agencies- they provide entities with temporary workers and act as intermediaries between employers and employees to supply the entities with workers. It is important to have a personnel supply agreement before each engagement.

The personnel agencies must ensure compliance with the applicable laws and regulations. This includes strict adherence to proper registration, if employing foreign nationals, they should comply with the Citizen and Immigration Act payment of wages and benefits and provide a safe and healthy working environment to the supplied workers.

Employees are entitled to various rights and protections to ensure fair and safe working conditions. The primary legislation providing for this is the Employment Act, 2007. Some of the employee rights protected under the Act are: - Employment contract

• Leave days
• Non-Discrimination
• Fair wages
• Working hours
• Health and safety
• Freedom of association

It is important for employees to be aware of these legal protections before they start working so as to ensure a safe working space.