In Kenya, severance pay is statutory but narrow: it is owed only where employment ends on account of redundancy, at not less than fifteen days' pay for each completed year of service under section 40(1)(g) of the Employment Act 2007. Service pay is a separate entitlement under section 35(5), yet most formal-sector employees cannot claim it, because section 35(6) switches the section off for members of the National Social Security Fund and of registered pension, provident or collective-agreement schemes. Gratuity, the word most people actually search for, is not a statutory private-sector entitlement at all; it comes from your contract, a collective agreement or an established practice of the employer. The calculator on this page works out the one figure the statute genuinely fixes, which is redundancy severance.
Severance pay, service pay and gratuity are not the same thing
Much of the material online collapses all three into a single "15 days per year" rule. It is not one rule.
Severance pay vs service pay vs gratuity in Kenya
| Payment | Statutory basis | When it applies | Rate | Who is excluded |
|---|
| Severance pay |
Employment Act 2007, s.40(1)(g) |
Redundancy only |
Not less than 15 days' pay per completed year: a floor, not a ceiling |
Anyone whose job ends another way; insolvency is carved out by s.40(2) |
| Service pay |
Employment Act 2007, s.35(5) |
Termination by notice under s.35(1)(c) |
None fixed by statute: "the terms of which shall be fixed", so a contract or CBA rate governs, otherwise the court decides |
NSSF members, plus members of a registered pension or provident fund, a CBA gratuity scheme or any more favourable employer scheme (s.35(6)) |
| Gratuity |
None in the private sector. Public service sits under the Pensions Act (Cap 189) and the Public Service Superannuation Scheme |
Whenever a contract, CBA or established practice says so |
Whatever the contract or scheme provides |
Private-sector staff with no contractual promise of gratuity |
One rule ties the three together: you receive one of them for a given period of service, not two or three. Double recovery was treated as impermissible in Jeremiah Mbithi Ngewa v Intex Construction Limited [2014] KEELRC 545 (KLR). If your contract already pays a gratuity, do not expect service pay stacked on top.
How severance pay is calculated in Kenya
Section 40(1)(g) requires that "the employer has paid to an employee declared redundant severance pay at the rate of not less than fifteen days pay for each completed year of service". Two things follow. "Not less than" makes fifteen days a minimum, so a more generous contract or collective agreement displaces it upwards. And the statute says "days pay", not "days basic pay"; the familiar gloss about fifteen days' basic wages is commentary rather than statutory text.
To convert a monthly salary into a daily rate, this calculator divides by 30, the divisor that dominates Kenyan severance practice. Fifteen days is then exactly half a month's pay, so each completed year adds half a month. The ladder below uses a monthly pay of KES 50,000.
Statutory minimum redundancy severance on KES 50,000 monthly pay (15 days per completed year, monthly pay divided by 30)
| Completed years | Days of pay owed | Severance pay (KES) |
|---|
| 1 year | 15 days | 25,000 |
|---|
| 2 years | 30 days | 50,000 |
|---|
| 3 years | 45 days | 75,000 |
|---|
| 5 years | 75 days | 125,000 |
|---|
| 7 years | 105 days | 175,000 |
|---|
| 10 years | 150 days | 250,000 |
|---|
Why the calculator asks how your job ended
Severance attaches to redundancy and to nothing else. Resignation does not attract it, nor does dismissal for gross misconduct or poor performance, nor ordinary termination on notice. That is why choosing "resigned or other" returns zero: the money is not being withheld from you, it simply does not arise. There is also an optional field for a higher contractual rate in days, since fifteen days is only the floor. Redundancy brings a second payment with it, because section 40(1)(f) requires not less than one month's notice or one month's wages in lieu.
Service pay and the NSSF exclusion
Section 35(5) reads: "An employee whose contract of service has been terminated under subsection (1)(c) shall be entitled to service pay for every year worked, the terms of which shall be fixed." Note what is absent. The statute creates the entitlement, then leaves the rate to be fixed elsewhere. There is no statutory service pay rate in Kenya.
The larger obstacle is section 35(6), which disapplies the section where the employee is a member of (a) a registered pension or provident fund scheme under the Retirement Benefits Act, (b) a gratuity or service pay scheme established under a collective agreement, (c) any other employer scheme on more favourable terms, or (d) the National Social Security Fund. Since NSSF membership is effectively universal in the formal sector, most formal employees are excluded from service pay. The court applied that exclusion in Njeru v Board of Management St Lwanga Catholic Primary School [2025] KEELRC 3233 (KLR).
Registration is not the test; remittance is
Courts have asked whether the employer actually remitted contributions rather than whether the employee was nominally registered. In Stephen O. Edewa v Lavington Security Limited [2019] KEELRC 976 (KLR) the claimant was an NSSF member, yet service pay was awarded for a stretch from 2001 to 2010 in which the employer remitted nothing. The working rule: an NSSF member with contributions actually remitted has no claim, while one registered but with nothing paid over is commonly awarded service pay for the unremitted period. Your NSSF statement of contributions is the first document to obtain.
Edewa is also where the fifteen-day figure entered service pay practice. The judge said "I believe a rate of 15 days' pay per year of service is fair and reasonable", which is discretion borrowed by analogy from section 40(1)(g) rather than a statutory rate, and a contract or CBA rate displaces it. That award also back-solves to a divisor of 30, since KES 10,500 a month produced KES 52,500 for ten years.
One point of housekeeping, because it is widely muddled. The NSSF Act 2013 remains in litigation, the Supreme Court having remitted the appeal in [2024] KESC 3 (KLR). That dispute concerns contribution rates and the Act's validity, not whether NSSF membership exists, so it does not revive service pay for NSSF members. Neither section 35 nor section 40 was amended between 2024 and 2026, and section 35 has never been amended at all.
Is gratuity mandatory in Kenya?
In the private sector, no. Gratuity is not created by the Employment Act, so it stands or falls on the contract, a collective agreement or an established practice of the employer. In Sirere & 6 others v Nesco Services Ltd [2024] KEELRC 2323 (KLR) the court rejected a gratuity claim for want of a contractual basis and observed that gratuity should not be confused with service pay. Look at your offer letter and staff handbook, not the statute.
Public service is different. Terminal benefits there are statutory, under the Pensions Act (Cap 189) and the contributory Public Service Superannuation Scheme established by Act No. 8 of 2012, which commenced on 1 January 2021 for civil servants, teachers and the disciplined services.
Three things the law leaves open
1. Fifteen days is a redundancy rate, not a service pay rate
For redundancy severance, fifteen days per completed year is statutory. For service pay it is only convention, and it yields to a contract, a CBA or a different view of what is reasonable on the facts.
2. There is no statutory monthly-to-daily divisor
The Act defines remuneration but not a day's pay, and the Regulation of Wages (General) Order gives a 52-hour six-day week and an hourly overtime divisor without any monthly-to-daily conversion. Practice has settled unevenly: division by 30 dominates for severance and service pay and is what this page uses; division by 26 is common when valuing accrued leave days; the Sirere judgment used 30. Division by 22, which appears in some commercial calculators, has no legal basis in Kenya.
3. Basic or gross pay is unsettled
The statute says only "pay". Most workplace practice uses basic salary excluding allowances, while Sirere calculated on gross. Neither reading is settled, so run the figure both ways and treat the gap as the range genuinely in dispute.
The rest of your final dues, and what to do if nobody pays
Severance or service pay sits alongside your other terminal entitlements. Section 35(1)(c) gives a monthly-paid employee 28 days' written notice, exercisable by either party, so it is 28 days rather than a calendar month; a daily-paid employee may be terminated at the close of any day. Add accrued but untaken annual leave, unpaid salary to the last working day, and a certificate of service.
If payment is refused, put the claim in writing with your own computation attached, since a specific figure is harder to ignore than a general complaint. A labour officer at the Ministry of Labour can take up the complaint, and the Employment and Labour Relations Court has jurisdiction to determine and award the entitlement. This page is general information about Kenyan statutes and reported judgments rather than legal advice, and calculator output is an estimate. For a binding position on your own facts, consult a labour officer or an advocate.
Frequently asked questions
How is severance pay calculated in Kenya?+
Section 40(1)(g) sets not less than fifteen days' pay per completed year of service, and only for redundancy. Dividing monthly pay by 30 makes that half a month, so on KES 50,000 a month each completed year adds KES 25,000: five years is KES 125,000, ten years KES 250,000. A more generous contract or CBA rate overrides the minimum.
Is gratuity mandatory in Kenya?+
Not in the private sector, where it is contractual and a claim with no contractual basis fails, as in Sirere & 6 others v Nesco Services Ltd [2024] KEELRC 2323 (KLR). Public service is the exception: benefits are statutory under the Pensions Act (Cap 189) and the Public Service Superannuation Scheme created by Act No. 8 of 2012.
Do I get service pay if I am an NSSF member?+
Usually not, because section 35(6)(d) disapplies service pay for NSSF members and that covers most formal-sector employees. The qualification is that courts examine actual remittance rather than mere registration, so where an employer remitted nothing for a period, service pay has still been awarded for it. Get your NSSF statement of contributions before concluding either way.
Am I entitled to severance pay if I resign?+
No. Statutory severance arises only on redundancy, so resignation, misconduct dismissal, poor-performance dismissal and ordinary termination on notice all fall outside section 40, which is why the calculator returns zero for "resigned or other". You may still be owed notice pay, accrued leave, unpaid salary and any contractual gratuity.
Where does the "15 days' pay per year" rule come from?+
From section 40(1)(g), for redundancy severance. Applied to service pay it is judicial convention: in Stephen O. Edewa v Lavington Security Limited [2019] KEELRC 976 (KLR) the judge called a rate of fifteen days' pay per year of service fair and reasonable. Section 35(5) fixes no rate, so describing fifteen days as "the statutory service pay rate" is inaccurate.
Can I claim severance pay, service pay and gratuity together?+
No. They are alternatives for the same period of service, and double recovery was treated as impermissible in Jeremiah Mbithi Ngewa v Intex Construction Limited [2014] KEELRC 545 (KLR). A redundancy produces severance, a contractual promise produces gratuity, and service pay is the residual entitlement for employees outside every scheme listed in section 35(6).
Basic or gross salary, and which divisor applies?+
Both are genuinely unsettled. The statute says only "days pay", most practice uses basic salary excluding allowances, and Sirere used gross. No statute or wage order supplies a monthly-to-daily divisor: 30 dominates for severance and service pay and is used here, 26 is common for valuing leave days, and 22 has no legal basis. Run both readings to see the range.
How much notice must my employer give me?+
A monthly-paid employee is entitled to 28 days' written notice under section 35(1)(c), from either side, so 28 days rather than a calendar month. A daily-paid employee's contract is terminable at the close of any day. Redundancy is treated more generously: section 40(1)(f) requires not less than one month's notice or one month's wages in lieu.
