Non-compete clauses in Kenyan employment contracts

published on 9 May 2025 | reading time approx. 3 minutes

Whereas non-compete clauses are not expressly referenced in Kenyan employment legislation, the Kenyan Employment and Labour Relations Court (the court) has boldly advanced its distaste for a blanket application while highlighting very limited exception during and after exit or termination of an employee. The allowable exception is tied to meeting the reasonableness criteria. In a nutshell, for courts to enforce a non-compete clause within an employment contract, the employer must adequately establish that the clause serves a broader public benefit and that at the same time it remains non-detrimental to the interests of the employee. While evaluating the circumstances of each case, the courts remain cognizant of the employees' right to earn a living.

Kamau & another (Cause E932 of 2023) held that non-compete clauses are presumptively unlawful as restraints of trade, unless they meet the strict reasonableness threshold that balances party interests with the protection of public welfare. In rendering this decision, the court particularly upheld the primacy of an individual's constitutional right to earn a living. This interpretation further aligns with the decision rendered in Credit Reference Bureau Holdings Limited v Steven Kunyiha [2017] where the court affirmed its statutory authority to void restrictive covenants ab initio if they failed the reasonableness test.

What constitutes 'reasonableness' ?

It is common perception that 'reasonableness' is solely linked to the adequacy of compensation made to an employee during exit or termination of employment. It is to be noted however that this is not the case. While fair remuneration addresses livelihood concerns, courts are known to apply the full reasonableness test that involves examining the clause's duration, geographical scope, and assessing if the same goes beyond protecting legitimate business interests.

A reasonable non-compete clause must therefore cover a reasonable geographical area. An unduly broad area is likely to render the clause invalid even if the employee is offered what seems to be adequate compensation. The courts do not tolerate ambiguous non-compete clauses that provide little to no detail on the geographical breadth of the clause. In the case of Craft Silicon Limited v Niladri Sekhar Roy [2018] the court held the view that an employer cannot limit an employee's right to earn a living. The court proceeded to reject the application of a non-compete clause concluding that the restrictive clause was vague because it was not capped within any geographical boundaries and thus had the effect of impeding the employee's own right to earn a living.

Adequate compensation may be useful in the justification of longer non-compete periods as it demonstrates that the employee continues to enjoy his or her right to earn a living. It is to be noted however, that the period must not be unduly long. In the case of LG Electronics Africa Logistics FZE vs. Charles Kimani [2012] the court took judicial notice of the reality that in Kenya at the time, unemployment was soaring and that therefore loss of employment based on a restrictive clause would be unreasonable and not in the interest of either party. He equated such an action as being contrary to public policy. It has also been appreciated that a long non-compete duration has the potential to negatively impact on the employee's career progression especially in dynamic and fast paced fields like information technology.

A non-compete clause should only restrict the use of the employer's proprietary secrets and not general knowledge, skills, education, experience, or technological advancements gained through learning or professional development. In Direct pay Limited v Tum [2024], the court upheld an arbitrary award under which the arbitrator had found the right to work as a constitutional right by virtue of the International Labour Organization Treaty, to which Kenya is a party. As such, the employer's actions in seeking to restrict the employee's engagement to employment were found to be not only unconstitutional, but also unreasonable and therefore unenforceable.

In Mediheal Group Ltd t/a Mediheal Group of Hospitals & another v Umesh (Cause E022 of 2021), the court reasoned that it is difficult to reasonably limit the experience and knowledge gained by an employee from working for a specific business without impeding their career.

It is also interesting to note that even in cases where a non-compete clause is considered as reasonable, the same may not be enforced where an employer initiates the exit or termination of employment. In the case of Mwaura v Taxify Kenya Limited [2023] the court held that an employer could not enforce a non-compete clause if it initiated the termination of the employment contract. It was established that by severing the employer-employee relationship, the employer had waived its right to bring any claim against the employee arising out of the perceived breach of the non-compete clause. In view of the above, non-compete clauses should be considered only in very special cases.