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published on 30 April 2025 | reading time approx. 3 minutes
Understanding these legal entitlements is crucial for both employers and employees. For employers, a claim for unlawful termination may result in financial and reputational exposure that may also affect staff motivation. On the other hand, employees facing unfair termination are likely to suffer sudden financial instability, emotional health risks and reputational damage leading to reduced chances to secure other opportunities in future. Human Resource Management therefore remains a sensitive and quite crucial role in any organization. An organization must ensure to uphold fair practices in the workplace, have human resource procedures and policies in place that foster a culture of transparency, accountability and that are compliant with the labour laws. This Article therefore seeks to highlight the compensation likely to be awarded by a court in favour of an employee who succeeds in a claim of unfair termination.
Lost income is assessed as wages and benefits that the employee would have received if they had not been unfairly terminated. The compensation is typically capped at a maximum of twelve months income, as per Section 49 of the Act. It is to be noted that such compensation remains subject to statutory deductions.
Under Section 36 of the Act, an employer is required to provide notice before terminating an employee, or alternatively, pay wages in lieu of notice. The notice period typically depends on the terms of the employment contract or where this is not provided for, the period within which the income is settled. If an employer fails to provide notice, the employee is entitled to notice pay, which is the equivalent of the wages they would have earned during the notice period.
These are quite varied and may include unpaid bonus, unpaid income, accrued leave, overtime, service pay or other allowances contained as minimum applicable benefits in the labour laws and in an employment contract. In the event of redundancy, an employee may also be entitled to severance pay.
In cases where a court finds that an employee has suffered emotional and psychological distress due to harassment or outrageous character of the employer leading to unfair termination, a court may assess suited damages as compensation. In most cases, compensation for lost income is seen as suitable compensation for mental and emotional distress.
Exemplary damages go a step beyond compensation and are used to punish and or deter. The damages are sparingly awarded by courts in cases of oppressive, arbitrary or violation of constitutional rights by an employer.
The court may in exceptional circumstances order that an employee be reinstated back to the position that he occupied prior to the unfair termination. The court is also at liberty to order for the employee to be absorbed back into the organization, in a different but comparable role or position and at a similar wage.
In conclusion, damages arising from unlawful termination are designed to compensate the affected employee for the losses and harm suffered as a result of the employer's wrongful actions. In rare cases the courts will issue exemplary damages to punish or deter a rogue employer. In arriving at the suited compensation, the court considers, amongst other items, the wishes of the employee, the circumstances of the termination, the practicability of compensation, the employee's length of service, the reasonable expectation of the employee, availability of future employment opportunities for the employee, value of severance pay applicable, extent of employee contribution towards the termination, available mitigation measures by the employee and any compensation already made by the employer. A thorough evaluation of each case independently is therefore critical in assessing the likely exposure on an organization or an employee.
Penninah Munyaka
Associate Partner
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Rachael Gachira
