Terminal Dues, Service Pay & Severance in Kenya

Start with how employment ended

Terminal dues describe different amounts that may need to be reconciled when employment ends. They are not one standard payment due in every case. Resignation, redundancy, expiry and dismissal can raise different entitlements and deductions.

Write down the start date, last working day, exit reason, notice given, pay components and any payments already made. Compare the contract, relevant policies and any collective agreement. A calculation is only as reliable as the employment facts and assumptions behind it.

Separate earned amounts from other claims

Begin with earned salary and verified leave balances, then assess notice and any contractual benefits. Keep a possible claim for unfair termination separate from the ordinary final-pay reconciliation. Compensation is not an automatic amount that should simply be added to every exit package.

For each line, record the period, pay basis, calculation and evidence. If one party uses basic salary and another uses gross pay, ask why that basis is appropriate for the specific item. Avoid using one daily-rate divisor indiscriminately for every entitlement.

Service pay is not redundancy severance

Service pay under section 35 of the Employment Act is subject to the Act's exclusions, including specified pension, gratuity and NSSF arrangements. It should not be assumed merely from years worked. Establish actual membership and the applicable terms.

Redundancy severance is a different issue under section 40. An employee who resigns should not automatically be assigned a redundancy calculation. Conversely, an employer describing a payment as gratuity does not by itself resolve whether the applicable redundancy obligations have been met.

Reconcile payments and deductions

• Match salary and leave entries to payroll and attendance records.
• Check notice actually served, waived or paid instead.
• Identify advances, loan balances and the basis for proposed deductions.
• Separate gross figures, tax treatment and net payment.
• Record amounts already paid to avoid counting them twice.
• Read any proposed settlement or release before signing it.

An outstanding loan is not a reason to abandon a documented final-pay calculation. Equally, a disputed deduction should be identified with its supporting agreement and figures, not hidden in a net total.

Prepare an evidence-led review

The terminal-dues calculator can organise a provisional breakdown. Use the redundancy tool only where that exit route is relevant, and the dismissal checker where the reason or process needs assessment. Their outputs do not establish a binding entitlement or court award.

For advice, prepare the contract, latest payslips, exit correspondence, leave record and your own schedule. Begin with a short enquiry and keep confidential payroll material for the secure process agreed with the firm. Ask for a review of both the figures and any deadline affecting your next step.

Useful tools for this question

The tools provide provisional information based on selected assumptions. They do not verify documents or determine legal rights.

Official sources and further reading

• Employment Act: sections 28, 35, 36, 40 and 49

Related legal services

This guide provides general information, not legal advice, and does not create an advocate-client relationship. The appropriate route, applicable law and current official procedures should be checked for your circumstances. Do not send confidential documents through the enquiry form.