Employment Law Changes in 2025: What Employers Need to Know

Kenya's Employment Act has undergone significant amendments in 2025. Every employer must understand these changes to remain compliant and avoid costly penalties.

Overview of 2025 Employment Act Amendments

The National Assembly passed sweeping changes to Kenya's employment laws, addressing modern workplace challenges including remote work, gig economy workers, and enhanced employee protections. These amendments took effect on July 1, 2025, giving employers a six-month grace period that ends December 31, 2025.

Key Change #1: Remote Work Provisions

What Changed

For the first time, Kenyan law formally recognizes remote and hybrid work arrangements. Employers must now:

• Provide written remote work agreements specifying work hours, communication expectations, and performance metrics
• Cover reasonable home office expenses (internet, electricity proportionate to work use)
• Ensure remote workers receive the same benefits as office workers
• Implement data security measures for remote work

Impact on Your Business

If you have remote employees, you must:

• Draft and sign remote work addendums by December 31, 2025
• Establish clear remote work policies
• Budget for home office stipends (typically KES 2,000-5,000/month)
• Review and update your data protection policies

Sample Remote Work Clause

"The Employee will work remotely from [location]. The Employer will provide a monthly home office allowance of KES 3,000 covering internet and electricity. The Employee must be available during core hours 9 AM - 3 PM EAT and respond to communications within 4 business hours."

Key Change #2: Minimum Wage Adjustments

What Changed

The 2025 amendments index minimum wage to inflation, requiring automatic annual adjustments. New minimum wage rates effective January 1, 2026:

• Nairobi/Mombasa: KES 15,201/month (up from KES 13,572)
• Other Urban Areas: KES 13,429/month
• Rural Areas: KES 12,522/month
• Agricultural Sector: Specific rates apply (consult Labour Office)

What You Must Do

• Review all employment contracts by December 31, 2025
• Adjust salaries to meet new minimums
• Update your payroll systems
• Budget for future automatic increases

Penalties for Non-Compliance

Paying below minimum wage now carries fines of up to KES 500,000 or 12 months imprisonment. Additionally, employees can claim back pay for up to 3 years.

Key Change #3: Expanded Parental Leave

What Changed

Kenya has significantly expanded parental leave provisions:

Maternity Leave:

• Increased from 3 months to 4 months fully paid
• Option to extend unpaid for 2 additional months
• Protection against dismissal during pregnancy and 6 months post-delivery

Paternity Leave (NEW):

• 2 weeks fully paid paternity leave (previously optional)
• Must be taken within 3 months of birth/adoption
• Cannot be denied except in exceptional circumstances

Adoption Leave (NEW):

• 3 months paid leave for primary adopter
• 2 weeks for secondary adopter
• Applies to children under 3 years old

What This Costs Employers

For a business with 20 employees, assume 3-4 employees take maternity leave and 2-3 take paternity leave annually. Budget approximately KES 1-2 million for leave costs (salary + temporary replacement costs).

How to Prepare

• Update employee handbooks with new leave policies
• Establish leave request procedures
• Plan for temporary staffing or workload redistribution
• Train HR on new requirements

Key Change #4: Gig Economy Worker Protections

What Changed

Platform-based workers (Uber drivers, food delivery riders, freelance app workers) now have minimum protections:

• Right to written terms and conditions
• Minimum earnings guarantees during active hours
• Protection against arbitrary deactivation
• Access to dispute resolution mechanisms

Who This Affects

If your business uses digital platforms to engage workers, or you run a platform business, you must:

• Provide written terms within 7 days of onboarding
• Implement fair deactivation procedures with right to appeal
• Establish grievance mechanisms
• Consider worker classification (employee vs. contractor)

Key Change #5: Enhanced Anti-Discrimination Provisions

What Changed

The amendments strengthen protection against workplace discrimination, now explicitly covering:

• Pregnancy and maternity status
• HIV/AIDS status
• Genetic information
• Caregiver responsibilities
• Past criminal convictions (after rehabilitation)

New Harassment Provisions

Employers must:

• Maintain written anti-harassment policies
• Conduct annual workplace harassment training
• Investigate complaints within 14 days
• Protect whistleblowers from retaliation

Practical Implementation

• Draft comprehensive anti-discrimination and harassment policies
• Conduct mandatory training for all staff (keep records)
• Designate harassment reporting officers
• Document all investigations thoroughly

Key Change #6: Whistleblower Protections

What Changed

Employees who report illegal activities, safety violations, or rights abuses are now protected against:

• Dismissal or demotion
• Salary reduction
• Harassment or intimidation
• Unfavorable work assignments

Employer Obligations

• Establish confidential reporting channels
• Investigate reports promptly and fairly
• Prohibit retaliation
• Maintain anonymity where possible

Penalty for Retaliation: Up to KES 1 million fine plus compensation to the employee, which can include full salary for up to 2 years.

Key Change #7: Termination and Severance Updates

What Changed

New requirements for termination procedures:

Notice Periods:

• Employees with less than 1 year: 2 weeks notice
• 1-5 years service: 1 month notice
• Over 5 years service: 2 months notice

Severance Pay:

• 15 days pay per year of service (increased from previous formula)
• Mandatory for redundancy and retrenchment
• Must be paid within 7 days of termination

Redundancy Process Requirements

Employers must now:

• Notify the Labour Commissioner 30 days before redundancy
• Consult with affected employees and their representatives
• Use fair and objective selection criteria
• Provide written reasons for redundancy
• Consider alternatives to redundancy

Compliance Checklist for Employers

By December 31, 2025 (Grace Period End):

1. ☐ Review and update all employment contracts
2. ☐ Draft remote work agreements (if applicable)
3. ☐ Adjust salaries to meet new minimum wage
4. ☐ Update leave policies for extended maternity/new paternity leave
5. ☐ Create anti-discrimination and harassment policies
6. ☐ Establish whistleblower reporting mechanisms
7. ☐ Update employee handbook
8. ☐ Calculate and budget for increased severance costs
9. ☐ Train HR staff on new requirements
10. ☐ Conduct mandatory harassment training

Ongoing Compliance:

• Monthly: Review payroll compliance with minimum wage
• Quarterly: Review and update policies as needed
• Annually: Conduct harassment training
• As Needed: Update contracts when hiring new staff

Penalties for Non-Compliance

The 2025 amendments significantly increased penalties:

• Minor violations: KES 50,000 - 200,000
• Serious violations: KES 500,000 - 2,000,000
• Repeat offenses: Up to KES 5,000,000 or imprisonment
• Employee compensation: Unlimited (determined by court)

Resources and Support

Official Resources:

• Ministry of Labour: www.labour.go.ke (guidance documents)
• Federation of Kenya Employers (FKE): Training and templates
• Labour Offices: Free consultation on compliance

Affordable Compliance Solutions:

• AI Legal Platforms: Contract review and policy drafting at KES 1,000-5,000
• Labour Law Firms: Compliance audits starting at KES 50,000
• HR Consultants: Policy development and training

Common Questions

Q: What if I can't afford the new minimum wage?

A: You must comply - there are no exceptions. Consider adjusting business model, increasing prices, or seeking efficiency improvements. The Labour Office may offer payment plans for back wages in some cases.

Q: Can I still use probation periods?

A: Yes, probation periods remain legal (maximum 6 months for most roles, 12 months for specialized positions). However, minimum wage and basic benefits still apply during probation.

Q: Do the new rules apply to businesses with under 5 employees?

A: Yes, all employment laws apply regardless of business size. However, some reporting requirements may be simplified for micro-businesses.

Conclusion

The 2025 Employment Act amendments represent the most significant changes to Kenyan labour law in decades. While compliance requires effort and investment, these changes ultimately create more stable, professional employment relationships that benefit both employers and employees.

Start your compliance process today. The December 31, 2025 deadline is approaching fast, and early action prevents last-minute stress and potential penalties.

Remember: employment law compliance is not just about avoiding penalties – it's about building a fair, productive workplace that attracts and retains the best talent.