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

Tuesday, April 28th, 2020 00:00 |
A worker picks flowers at a farm in Naivasha. Photo/PD/FILE

Hillary Mageka and Kirera Mwiti @hillarymageka

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 offence 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.

Meet obligations

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.

The MPs also varied the contractual terms in relation to loan repayment plans to require financial institutions to prescribe other alternative repayment arrangements including providing for deferred payments, where a customer has defaulted or is unable for any reason to meet the existing contractual obligations.

Increase burden

This includes restructuring loan repayment plans: 

“This legislative intervention will cushion Kenyans from bank charges that would have increased their financial burden due for repayment as a result of accumulated charges levied for non-repayment.”

Meanwhile, flower farms in Naivasha have moved in to the second phase of sacking their workers as the effects of Covid-19 pandemic continue to be felt in nearly all the sectors.

The employers are now targeting those who were on half salaries after deciding to send them home without any pay as the lockdown in Europe persists.

Already over 1,000 workers mainly from Oserian Limited, which is among the largest flower farms in Naivasha, have been sent home.

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