If you run a business in Kenya, chances are your workforce is not one neat category. You might have a receptionist who has been “casual” for three years, a project officer on a renewable one-year contract, and a senior manager on permanent terms. Each of these relationships is governed differently under Kenyan labour laws and getting the label wrong is one of the most common and costly mistakes employers make.
Here is a practical breakdown of how the Employment Act, 2007 (the Act) treats each type of engagement and where the legal risks usually sit.
1. Casual Employment
Under Section 2 of the Act, a casual employee is someone engaged and paid at the end of each day, for no longer than 24 hours at a time. It is meant for genuinely short, day-to-day work. For example, a mason hired at a construction site for a single day’s task, a laundry lady, popularly known as ‘mama fua’ in local parlance, hired to do laundry and general house cleaning once a week, or a restaurant that hires extra staff for a weekend catering event.
This is where many employers get into trouble. Section 37 of the Act explicitly provides where if a casual employee works continuously for a month, or performs work that is not actually temporary in nature (i.e., work that may reasonably be expected to take three months or more to complete), the law automatically deems them converted into a term or permanent employee with all the accompanying rights (leave, notice, protection from unfair termination, and so on). Kenyan courts have consistently upheld this. In Kenyatta University v Maina [2022] KECA 1201 (KLR), the Court of Appeal upheld a judgment by the Employment and Labour Relations Court (ELRC) that a university employee who was kept on rolling short-term contracts for close to a decade had, by operation of Section 37, become a permanent employee.
Using the casual status as a way to sidestep statutory obligations does not hold up in court. Courts specifically frown on tactics like artificially breaking service every few weeks to reset the clock. This is generally treated as an unfair labour practice, not a clever workaround, unless the employer can actually prove the nature of the work requires engagement for sporadic periods at a time.
2. Fixed-Term Contracts
A fixed-term contract runs for a specified period or until a specific event occurs, and ends automatically upon expiry without invoking the statutory termination process. It
is a legitimate and common structure, especially for project-based roles, grant-funded positions, or defined engagements.
What, then, should Employers look out for?
(i) Frequent renewals build expectations. There is no statutory cap on how many times a fixed-term contract can be renewed, but repeated, indefinite renewals can create a legitimate expectation of continued or even permanent employment in the eyes of the court, particularly where the role itself is clearly ongoing rather than genuinely time-bound.
(ii) The nature of the role matters more than the label. If the work is core, perennial, and indistinguishable from that of your permanent staff, calling it fixed-term year after year will not necessarily protect you from a claim.
3. Permanent (Indefinite) Employment
Where a contract does not specify an end date, it is treated as employment for an unlimited period commonly referred to as permanent and pensionable in the Kenyan workforce. Permanent employees are entitled to the full suite of statutory protections, i.e. leave, notice or pay in lieu, redundancy safeguards, and fair process before termination.
This category is often the reference point courts use when deciding whether a casual or fixed-term arrangement was really a disguised permanent relationship. If it looks, functions, and continues like permanent employment, that is usually how it will be treated regardless of what the contract says.
Why should you be concerned as a Business?
Misclassifying employees is one of the most common sources of employment litigation in Kenya. The cost of getting it wrong shows up later, in the form of:
· Backdated statutory benefits and terminal dues
· Unfair termination claims and reinstatement orders
· Reputational damage during an audit, funding review, or acquisition
A quick internal audit of how your employee are actually classified versus how they are contracted on paper is one of the cheapest risk-mitigation exercises an organisation can
do. The classification you choose shapes what you owe employees, what protections apply, and how exposed you are if a dispute lands in court.
If you would like a professional review of your current employment contracts and HR processes or support building compliant structures from the ground up, get in touch with us at info@hrfleek.com to book a consultation.