Compensation for Unfair Dismissal in Kenya: How Much Would You Actually Get?

In brief

• The Employment Act allows the court to award up to twelve months’ gross salary for an unfair termination, on top of notice pay and terminal dues, but the twelve months is a ceiling, not an entitlement, and most awards land well below it.
• What moves the figure is evidence: the reason for the dismissal, how the procedure was handled, your length of service, your own conduct, and what you did afterwards. Both the employee pressing the claim and the employer defending it are arguing about the same short list of factors.
• A claim must be brought within three years of the termination, and the strongest cases are built in the first weeks, when the letters, the payslips and the memories are fresh.

Of all the questions an employment lawyer in Nairobi is asked, the commonest arrives within days of a dismissal and is admirably direct: how much would I actually get? The honest answer is more useful than the folklore, which has settled on the idea that an unfair dismissal is worth twelve months’ salary the way a matatu fare is worth the fare. It is not, and understanding why not is the difference between a realistic claim and a wasted one. This guide sets out what the law allows, what actually determines the figure, and what each side of the dispute, the employee deciding whether to sue and the employer measuring its exposure, should be doing about it.

What the law allows the court to award

Where the Employment and Labour Relations Court finds a termination unfair, the remedies come in layers. First the dues that were owed regardless, any unpaid salary, pay for leave accrued but not taken, and pay for the notice period if notice was not given or paid. Then the remedy for the unfairness itself, compensation of up to the equivalent of twelve months’ gross salary, computed on what you were earning when the relationship ended. And in a narrow band of cases the court can order reinstatement to the job or re-engagement in a comparable one, though in practice the courts treat forced reunions with scepticism, reinstatement cannot be ordered more than three years after the dismissal, and the working assumption for most claimants should be money, not the job back. Where the employee served under a contract that attracted service pay, or a collective agreement or pension scheme that improves on the statutory floor, those entitlements ride on top.

Why twelve months is the ceiling and not the figure

The Act does not hand the maximum to every successful claimant. It directs the court to weigh the circumstances, and the factors that recur in the judgments are worth knowing before either side spends money on the dispute. The wishes of the employee and the practicality of reinstatement. The length of service, because twenty years dismissed in a morning reads differently from eight months. The gravity of the employer’s failures, since a dismissal that was wrong in both reason and procedure attracts more than one where a genuine reason was spoiled by a rushed process. The employee’s own contribution to the situation, which can shrink an award substantially where misconduct was real but the process was not. And what the employee did after dismissal, because the law expects a claimant to mitigate by seeking work, and a court will notice two idle years as readily as two diligent ones. The pattern that emerges from the decided cases is unromantic: awards cluster in the range of three to six months’ salary, the full twelve is reserved for the cases that offend the court, long service ended in bad faith with no process at all, and procedural lapses alone, where the reason itself was sound, sit at the modest end.

What the money looks like, worked through

Illustration: gross pay KES 80,000, four years’ service, dismissed summarily without a hearing	KES
One month’s pay in lieu of notice	80,000
Accrued leave pay, say twelve untaken days	32,000
Compensation for unfair termination, say six months of the twelve the Act allows	480,000
Illustrative total before tax, excluding any unpaid salary and costs	592,000

Three notes on the table, each of which decides real cases. The computation runs on gross salary, which is one more reason the contract should state gross, a point developed in our guide to what an employment contract must contain. The award and the dues are employment income in the taxman’s hands, so the cheque that arrives is net of PAYE, and a claimant budgeting on the gross figure is budgeting on money that was never coming. And the illustration assumes six months, which a court might give for a four-year employee dismissed without any hearing; the same facts with a genuine reason and a defective process might fetch three, and with grave proven misconduct, nothing beyond the notice that was skipped.

If you are the employee, the claim is built early

The limitation period is three years from the termination, but the useful period is the first month. Keep the termination letter, the contract, the payslips and every message about the ending of your employment, and write down the sequence of events while it is sharp. Demand your certificate of service, which the law entitles you to. Do not sign a discharge voucher or accept a final payment described as full and final settlement without advice, because a signed discharge is the first document the employer’s advocate will produce. And weigh settlement honestly. The Employment and Labour Relations Court does justice, but not quickly, and a sound settlement this year is often worth more than a better judgment some years from now. Our employment and labour team assesses the merits candidly before you commit to litigation, because a lawyer who tells you only what you hope to hear is spending your money on optimism.

If you are the employer, the exposure is measured before the letter

Read the same factors from the other chair and they become a checklist for limiting exposure. A fair reason, documented before the decision rather than reconstructed after it. A hearing at which the employee heard the allegations and answered them, with notice and a companion allowed. Dues computed and paid on the way out, because an employer who shortchanges the undisputed amounts hands the claimant both a grievance and a court’s sympathy. Where the ground is misconduct, the file should show the investigation; where it is poor performance, the warnings and the chance to improve. The arithmetic of prevention is not subtle. The hearing that was skipped to save an awkward afternoon can cost twelve months of salary, plus dues, plus two sets of costs, plus management years in affidavits, and the business that dismisses properly buys itself the shortest and cheapest version of the dispute, which is the one that never files.

What happens next

The next article in this series takes up the termination that is about the position rather than the person, redundancy, where the law prescribes a procedure of its own and the dues are different. The two articles are a pair, because the first question in any termination dispute is which regime the dismissal belongs to, and employers in difficulty sometimes dress a dismissal as a redundancy, a disguise the courts have long experience of removing.

Frequently asked questions

Is the twelve months’ compensation automatic if I win?

No. It is the statutory maximum, and the court sets the figure by weighing length of service, the gravity of the employer’s failures, your own conduct and your efforts to find other work. Most awards fall between three- and six-months’ gross salary.

How long do I have to file an unfair dismissal claim in Kenya?

Three years from the date of termination. Waiting erodes evidence and remedies, and reinstatement in particular cannot be ordered more than three years after dismissal, so take advice early even if you have not decided to sue.

Can I get my job back?

The court can order reinstatement or re-engagement, but it does so sparingly, where the relationship can genuinely be revived, and only within three years of the dismissal. Plan the claim around compensation and treat reinstatement as the exception.

Is the award taxable?

Yes. Compensation and terminal dues are treated as employment income and attract PAYE, so the amount received is net of tax. Factor that into any settlement you are weighing.

I resigned because the situation was made unbearable. Do I have a claim?

Possibly. A resignation forced by the employer’s conduct can amount to constructive dismissal, which the law treats as a termination by the employer. These are evidence-heavy claims, so keep the record of what was done and said, and take advice before you resign if the choice is still open.

Peter Maina is a Partner of Peter Maina & Company Advocates. This article states the law as at 13 October 2026. It is general information, not legal advice. For a candid assessment of a dismissal, on either side of it, reach out on e-mail peter@pmlaw.co.ke or WhatsApp +254 714 644 080.