Redundancy v Dismissal: What Employers Need to Get Right Before Ending Employment

The terms redundancy and dismissal are often used interchangeably, yet they describe different ways in which an employment relationship may come to an end. While both may result in the termination of employment, the circumstances leading to each, as well as the legal protections and entitlements that may arise, are different. Understanding whether an employee has been declared redundant or dismissed is important in determining the rights and remedies available to them. 

This article explores how redundancy and dismissal arise and the legal protections around them. 

What is redundancy? 

The Employment Act defines redundancy as the loss of employment, occupation, job or career by involuntary means through no fault of an employee, involving termination of employment at the initiative of the employer, where the services of an employee are superfluous and the practices commonly known as abolition of office, job or occupation and loss of employment. 

In simple terms, redundancy occurs when an employer no longer needs a particular job or position, and as a result, the employee loses their job through no fault of their own. This may happen when a business is restructuring, closing a department, introducing new technology or experiencing financial difficulties. 

Redundancy Procedure 

For employers, a genuine business reason does not mean that they can simply inform an employee that their position has been abolished. The Employment Act prescribes a process that must be followed before an employee is declared redundant. The redundancy must be both substantively justified and procedurally fair. This means there must be a genuine reason why the position or services are no longer required, and the employer must also follow the required process. The process is: 

Step 1: Issue a redundancy notice  

An employer must issue a redundancy notice to the affected employee or, where the employee is a member of a trade union, to the relevant trade union. A separate notice must also be given to the Labour Officer responsible for the area in which the employee is employed. 

The notice should be issued at least one month before the intended date of termination on account of redundancy. The redundancy notice should clearly set out the reasons for the proposed redundancy and the extent of the intended redundancy. 

The requirement to disclose the extent of the proposed redundancy is important as shown in Kenya Union of Domestic, Hotels, Educational Institutions, Hospitals and Allied Workers (KUDHEIHA) V Moi University [2026] KEELRC 2354 (KLR) where the Court considered what an employer is required to disclose when notifying employees and the Labour Officer of an intended redundancy. The court held that the expression “extent of the intended redundancy” requires the employer to disclose sufficient information concerning the number and categories of employees likely to be affected by the redundancy.  

Employers should ensure the redundancy notice clearly explains how many employees are likely to be affected and the categories or positions involved. 

Step 2: Consultation 

The employer should engage in genuine consultations with the affected employees or their representatives regarding the proposed redundancy. These consultations should address the reasons for the redundancy, possible alternatives to termination, the criteria to be used in selecting employees for redundancy, severance pay and other applicable entitlements, and any opportunities for redeployment within the organization. 

Although consultation is not expressly set out as a standalone requirement in the Employment Act, Kenyan courts have emphasized its importance, drawing from the Supplementary Provisions to the International Labour Organization (ILO) Recommendation No. 119. The importance of consultation with an affected employee was highlighted in Yule v Care International in Kenya [2024] KEELRC 2815 (KLR). The employer argued that consultation had taken place before the employee’s termination. However, after examining the evidence and minutes of the meeting, the Court found that the meeting was essentially an opportunity to inform the employee that a decision to terminate her employment had already been made. There had been no meaningful discussion about whether the redundancy could be avoided or how its consequences could be minimized.  

During a redundancy, consultation should be a genuine conversation and not just a formality. Employers should not simply inform an employee that they have been selected for redundancy. Instead, they should discuss whether there are ways to avoid or minimize the impact of the redundancy, such as redeployment to another suitable role or department within the organization, reduced working hours, temporary changes to working arrangements or other measures that could reduce the number of employees ultimately affected. 

Step 3: Apply fair selection criteria 

Where a redundancy affects several employees performing similar or related roles, employers must apply a fair and objective selection criteria. In particular, the employer should take into account the employee’s length of service, skills and ability, having regard to the reliability of each employee of the particular category affected by the redundancy. This helps ensure that the selection process is transparent, fair and not based on discriminatory or arbitrary considerations. 

This is important because an otherwise genuine redundancy can still give rise to legal challenges if the employees selected for termination appear to have been chosen arbitrarily, discriminatorily or for reasons unrelated to the genuine business need. Employers should therefore be able to demonstrate why particular employees were selected and how the applicable selection criteria was consistently applied. 

Step 4: Payment of redundancy dues 

Once an employee has been declared redundant, the employer should calculate all redundancy related entitlements due to the affected employee and ensure that these are paid in full. This includes payment for any accrued but unutilized leave days, at least one month’s notice or one month’s wages in lieu of notice, and severance pay of not less than fifteen days’ pay for each completed year of service. 

Employers should ensure that these calculations are accurate and that payment is properly documented. 

What is Dismissal? 

Dismissal occurs when an employer brings an employee’s contract of employment to an end, usually because of concerns relating to the employee’s conduct, performance, capability or another substantial reason.  

Common grounds for dismissal include misconduct, such as serious breaches of workplace rules or policies, poor performance, where an employee consistently fails to meet reasonable performance standards despite being given an opportunity to improve and incapacity, where an employee is unable to perform their contractual duties.  

Dismissal Procedure 

An employer cannot simply dismiss an employee because he/she believes there is a valid reason to do so. Under the Employment Act, a dismissal must satisfy both substantive and procedural fairness requirements. This means that the employer should have a valid and fair reason for the termination and should follow the appropriate procedure before making the decision. The court affirmed the importance of substantive and procedural fairness in Kaberech v Xfor Security Solutions (Kenya) Limited [2023] KEELRC 155 (KLR). The Court identified three key components of procedural fairness. First, the employer must notify the employee of the intention to terminate their employment and the grounds for the proposed termination. Second, the employee must be afforded a sufficient opportunity to be heard and to make representations in response. Third, the employer must consider the employee’s representations before reaching a final decision.  

Differences between redundancy and dismissal 

Conclusion 

For employers, the key lesson is simple, the reason for ending employment determines the process that must be followed. Where a position is genuinely no longer required, the employer should approach the matter as a redundancy and comply with the statutory requirements governing notice, consultation, selection and payment of dues. 

Where the termination arises from an employee’s conduct, performance, capacity or another reason relating to the employment relationship, the employer must establish a valid and fair reason and follow a fair procedure. 

Finally, employers should not treat termination of employment as a purely administrative exercise. Before ending an employment relationship, it is important to identify the correct basis for termination, follow the applicable process, keep a clear record of the steps taken and ensure that all employee entitlements are properly addressed. 

How we can assist 

The Employment and Labour Law team at CM Advocates LLP has extensive experience in Kenya’s employment law and regulatory framework, and regularly advises employers and employees on employment contracts, workplace policies, disciplinary and termination processes, redundancies, employment disputes and broader workplace compliance. 

If you would like to consult on this article or any other legal issue, you may contact us through corporate.commercial@cmadvocates.com  

CM ADVOCATES LLP 

Head Office – Nairobi 
I&M Bank House, 7th Floor 
2nd Ngong Avenue 
Nairobi, Kenya 
E: law@cmadvocates.com 

Mombasa Office 
Links Plaza, 3rd Floor 
Links Road, Nyali 
Mombasa, Kenya 
E: mombasaoffice@cmadvocates.com 

Regional Presence 

Uganda | Tanzania | Rwanda | Zambia | Ethiopia | South Sudan