New employment law seeks to bar firing of staff, pay cuts

By Hillary Mageka On Tue, 28 Apr, 2020 09:34 | 2 mins read
Uhuru Kenyatta
President Uhuru Kenyatta and National Assembly Speaker Justin Muturi at a past function in 2019. PHOTO | PSCU

It will be a criminal offence for any employer to fire or terminate the contract of service of an employee during the Covid-19 pandemic if the President assents to a new law.

The new amendments to the Employment Act, No.11 of 2007 also states that an employer shall not coerce an employee to take a salary cut during the same period.

If a company or proprietor commits either of the two or both, the new law says it shall be deemed to have committed an offense and shall on conviction be liable to a fine not exceeding Sh100,000 or to imprisonment for a term not exceeding two years or to both.

The National Assembly on Wednesday amended the Employment Act, No.11 of 2007 to prohibit employers from terminating contracts of service of employees, dismissal of an employee or coercion of an employee to take salary cuts.

Instead, the law now requires employees who are unable to meet their obligations during the pandemic to arrange with their employees to take unpaid leave of absence instead of sacking them.

“Where the Covid-19 pandemic has adversely affected the ability of an employer to pay salaries or wages, the employer shall not terminate contract of service or dismiss an employee; or coerce an employee to take a salary cut,” the new law states.

It adds: “Where an employer is unable to meet his obligations to pay salaries or wages, the employer shall permit an employee to take leave of absence without pay for the duration of the Covid-19 pandemic.”

At the same time, the House also amended the Banking Act (Cap 488) to protect customers who are unable to service their loans due to prevailing economic difficulties arising from the pandemic from being referred to the credit reference bureaus (CRBs) for listing as loan defaulters.

The new section (5A) introduced in the Act provides that the Microfinance Act, the Sacco Societies Act, 2008, an institution registered under the Co-operative Societies Act, public utility companies, mobile loan applications, and any other institution mandated to share credit information under any written law, or their respective officers, shall not share any credit information with a credit reference bureau for a period of six months from the date of commencement of this section.

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