Kenya does not offer unemployment benefits. There are instances in which one gets their pensions when termination of employment happens. According to Section 6 (1) (f) of the Pensions Act, grants for payment of pension, gratuity, or other allowance, in the case of termination of employment in the public interest.
According to Section 35 (5) of the employment ACT 2007, an employee whose contract of service is terminated legally, they are entitled to service pay for every year worked, which is fixed by:
- A provident fund scheme under the Retirement Benefits Act
- A gratuity scheme established under a collective agreement
- Any other scheme established & operated by an employer whose terms are more favorable than those of the service pay scheme based under this section
- The National Social Security Fund (NSSF).
So what terminal benefits are you entitled to as an employee upon the termination of your employment contract?
Under various sections, the Employment Act, 2007 provides for the following upon termination of the employment contract, (under sections 35 (5), 36, 40 (1) (e) (f) (g));
- Any remuneration for work done by an employee before termination.
- Any annual leave pay due to an employee.
- Any notice pay due to an employee.
- Any severance pay is due if an employee qualifies for this.
- Certificate of Service (section 51).
If my contract as an employee is terminated due to misconduct, am I still entitled to severance pay?
No. Termination of employment on grounds of misconduct cancels out severance pay.
Am I entitled to severance pay upon retirement?
Apart from being unable to work due to circumstances such as disability, other forms of employment termination do not warrant severance pay. Workers are, however, entitled to other forms of payment, e.g., a retirement pension fund.
How is the severance of your pay calculated?
The 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.
Similar article: Employee Financial Literacy and Why it Matters
Conclusion
Severance pays and issues on your retirement plan should your contract be terminated pre-retirement is tricky. Hence, it is important for employees to educate themselves on the various laws put in place for them to know how to act accordingly in these situations that may arise.
