The Last Payslip: Terminal Dues in Kenya, and What Each Way Out of a Job Pays

In brief

• Every employment ends, and the law attaches money to the ending: salary to the last day, pay for leave earned and not taken, notice or pay in lieu, and, where the exit is a redundancy, severance. What the final cheque should contain depends entirely on how the job ended.
• The commonest disputes on the last payslip are not exotic. They are leave that was never tracked, notice confused with severance, gratuity promised and forgotten, and deductions the employer had no right to make.
• An employee should be able to recompute their own dues from this guide in ten minutes, and an employer should be able to close an exit so cleanly that there is nothing left to argue about, which is the cheapest outcome available to both.

This series opened with the first payslip and ends the week with the last one, because the two bookend every employment there is. However a job ends, by resignation, dismissal, redundancy, the expiry of a contract or retirement, the ending is an account to be settled, and Kenyan law is more precise about that account than either side usually realises. The employee wants to know what the envelope should contain. The employer wants to close the file without a claim trailing behind it. This guide serves both, item by item, with the figures worked, and it should be read alongside the two pieces it completes, on what an unfair dismissal is worth and on the redundancy procedure and its dues.

The items, one by one

Salary first, to the last day worked, including any overtime and allowances already earned, because the ending of employment forgives nothing that was already owed. Then accrued leave. Annual leave is twenty-one working days for each completed year, and where the final year is incomplete the entitlement accrues proportionately, roughly one and three-quarter working days for each completed month of service, so an employee leaving mid-year with untaken days is paid for them at their current rate. Then notice. Where the employer ends the employment, the employee is entitled to the notice period worked on full pay or to payment in lieu of it, one month for monthly-paid staff unless the contract lengthens it; where the employee resigns, the obligation runs the other way, and an employee who leaves without serving notice can lawfully have the equivalent set off. Then the payments that belong to particular endings. Severance pay, fifteen days’ pay for every completed year, belongs to redundancy alone. Service pay arises on certain other terminations but is displaced where the employer was contributing to the NSSF or an equivalent scheme, which in the era of universal NSSF contributions makes it the entitlement most often claimed and least often due. And gratuity is a creature of contract, owed only where the contract or a collective agreement promises it, but once promised it is as enforceable as salary, and the employer who offered a gratuity in the hiring letter and hopes it has been forgotten by the exit is financing a claim.

What each way out pays, side by side

Monthly pay KES 70,000, four completed years, seven days’ untaken leave	Resignation	Termination by employer on notice	Redundancy
Notice pay (one month, where the employer ends it without notice worked)	nil	70,000	70,000
Accrued leave pay (seven days)	16,333	16,333	16,333
Severance pay (fifteen days per completed year, redundancy only)	nil	nil	140,000
Illustrative dues before tax, besides salary earned to the last day	16,333	86,333	226,333

The table explains most of the arguments that reach this desk. The resigning employee is often surprised to collect only leave, but notice is a shield for the party receiving it, not a bonus for the one giving it. The dismissed employee’s column assumes a lawful termination; where the dismissal was unfair, the compensation of up to twelve months discussed earlier in this series sits on top of these dues, not instead of them. And the redundancy column shows why employers sometimes try to dress a redundancy as something else, and why the courts undress it. All of the figures are gross, and all of them are employment income in the taxman’s hands, gratuity included, so the net envelope follows the same PAYE logic as every payslip before it.

What may be deducted, and what may not

The final payslip is where unlawful deductions bloom, because the employer is holding money and the relationship is over. The law permits the statutory deductions, sums the employee has genuinely consented to in writing, and the set-off of notice not served, and it caps total deductions at two-thirds of the wages due. What it does not permit is the employer’s own rough justice, docking the till shortage, the chipped laptop or the unreturned uniform without consent or process, holding the entire dues hostage to a clearance form, or conditioning payment on the signing of a discharge voucher. Clearance procedures are lawful as administration and unlawful as ransom, and an employer who withholds everything because one item is disputed has converted a small argument into a statutory claim. The certificate of service deserves its own sentence, because it is a statutory right on any termination after four weeks of service, it is not a reference and need say nothing kind, and withholding it to force a signature is a breach with no defence.

For the employee: check, then ask, then act

Recompute the dues from this guide before you sign anything, using your gross pay, your completed years and your leave record, and if you do not have your leave record, ask for it, because the employer is required to keep one and its absence is the employer’s problem, not yours. Query the computation in writing and keep the reply. Treat the discharge voucher with the respect you would give any document that extinguishes rights, which is to say, read it, and where the sums are large or the ending was contested, take advice before signing rather than after. The claims that cannot be revived are the ones signed away at the exit interview for less than they were worth, and the three-year limitation that governs employment claims is generous only to those who have not signed a full and final discharge in the meantime.

For the employer: the clean exit is a document, not a mood

An exit closed properly is a computation sheet showing each item and how it was arrived at, dues paid on or promptly after the last day rather than ripening into a grievance, the certificate of service handed over unconditionally, the payslip for the final payment issued like any other, and, where a settlement is genuinely being bought, a discharge voucher that records real consideration for the release rather than dressing the employee’s own entitlements up as generosity, because a discharge that gave nothing extra buys nothing extra when tested. The habit pays twice. It removes the small claims entirely, and when the larger dispute comes, the employer who demonstrably paid every undisputed shilling on time stands before the court as the reasonable party, which is worth more than most submissions.

What happens next

This closes the opening week of Work Matters: the payslip, the contract, the dismissal, the redundancy, the watched workplace and now the last payslip, which together cover the life of a Kenyan employment from offer to exit. The series resumes with the disputes and the reforms as they arrive, including the new obligations the Persons with Disabilities Act, 2025 places on employers. For a computation checked, an exit structured or a shortfall pursued, the firm acts on both sides of the final payslip.

Frequently asked questions

How are terminal dues calculated in Kenya?

Salary to the last day, pay for accrued untaken leave at roughly one and three-quarter days per completed month, notice pay where the employer terminated without notice worked, severance of fifteen days per completed year where the exit is a redundancy, and any gratuity the contract promises. The table above works a full example.

When must terminal dues be paid?

On or promptly after the last day of service. There is no lawful basis for holding dues for weeks pending clearance, and an employer may withhold a genuinely disputed item only, not the whole envelope.

Is gratuity taxable in Kenya?

Yes. Gratuity and the other terminal payments are employment income and attract PAYE, so the amounts in any computation are gross and the envelope arrives net.

Can my employer deduct losses or unreturned items from my final dues?

Only with your written consent or a lawful basis, and total deductions cannot exceed two-thirds of the wages due. Unilateral docking for shortages or property is the commonest unlawful deduction on final payslips.

Can my employer refuse me a certificate of service?

No. It is a statutory entitlement on termination after four weeks of service, it is not a reference, and it cannot be withheld to force you to sign a discharge or complete a clearance.

Peter Maina is a Partner of Peter Maina & Company Advocates. This article states the law as at 16 October 2026. It is general information, not legal advice. For a dues computation checked or an exit closed properly, on either side, reach out on e-mail peter@pmlaw.co.ke or WhatsApp +254 714 644 080.