Redundancy Severance Pay Calculator Kenya
How much severance is due on redundancy?
Where housing is part of a consolidated salary, courts often use the whole salary.
At least 15. A CBA or contract may give more.
Not served means one month's wages in lieu are due.
Use the leave calculator if you're not sure.
Day rate, notice and extra payments
Courts use ÷ 30 for severance.
At least 1.
15 days' basic pay per year, only for employees outside NSSF and pension schemes.
Tax
Through payroll, before the package.
With a clause, severance is spread at the last monthly pay rate. Without, evenly over 3 years.
A new job's taxable pay. Used for the spread estimate.
Redundancy package
7 yrs 9 mths 22 days| Last month | Spread | |
|---|---|---|
| PAYE on package | 81,000.00 | 18,000.00 |
| Net package | 189,000.00 | 252,000.00 |
Spread: notice and leave taxed in the last month (18,000.00). KES 210,000.00 spread over 36 months at KES 5,833.33, KES 0.00 tax a month. KRA may compute this differently; employers often withhold in the last month.
- Completed years
- 7
- Day's pay
- 2,000.00
- Next anniversary
- 7 Jan 2027
Years counted: 7. A last day of 6 Jan 2027 or later would add one more year (KES 30,000.00).
Redundancy checklist (s.40(1))
- Employee and labour officer notified in writing at least one month before (s.40(1)(b))
- Selection based on seniority, skill, ability and reliability (s.40(1)(c))
- Leave due paid in cash (s.40(1)(e))
- One month's notice or one month's wages in lieu (s.40(1)(f))
- Severance of at least 15 days' pay per completed year (s.40(1)(g))
Voluntary early retirement or mutual separation isn't statutory redundancy; use the final dues calculator. If the employer is insolvent, Part VIII of the Act applies instead.
How it's worked out
- Count completed years from the start date to the last day worked. Part years don't count. A start on 29 February reaches its anniversary on 28 February.
- Find a day's pay: the severance base (basic by default) ÷ 30.
- Severance = days per year (at least 15) × a day's pay × completed years.
- Notice pay: one month's gross pay (or the contract's longer notice) if notice wasn't served, or the unserved share of it.
- Leave pay: days not taken × monthly gross ÷ 30.
- PAYE, last month method: the shared payroll engine taxes the last month's salary plus the package, with the package passed as a taxed-only amount so NSSF, SHIF and the housing levy stay on salary. PAYE on the package = PAYE(salary + package) − PAYE(salary).
- PAYE, spread estimate: notice and leave pay are taxed in the last month. Severance, ex gratia and service pay are split evenly over 36 months (or in chunks of monthly pay where the contract has a compensation clause), and each month's share is taxed on top of other taxable income (Income Tax Act s.5(2)(c)).
Example
| Basic pay | Completed years | Day's pay | Severance |
|---|---|---|---|
| KES 35,000 | 3 | 1,166.67 | KES 52,500 |
| KES 120,000 | 14 | 4,000.00 | KES 840,000 |
Questions people ask
How is severance pay calculated in Kenya?
At least 15 days' pay for every completed year of service (Employment Act s.40(1)(g)). Courts usually find a day's pay by dividing monthly pay by 30. For example, KES 35,000 × 15/30 × 3 years = KES 52,500, the figure the ELRC substituted in Thomas & Piron v Momanyi (2024).
Do partial years count?
No. The statute counts completed years, so 3 years and 11 months gets 3 years' severance, unless your contract or CBA is more generous.
What else must an employer pay on redundancy?
At least one month's notice or one month's wages in lieu, all accrued leave in cash, and severance. The employer must also give written notice to you (or your union) and to the labour officer, and use fair selection criteria (s.40(1)).
Is severance pay taxable?
Yes. It is compensation for termination under Income Tax Act s.5(2)(c), so PAYE applies. The Act spreads such compensation (for example over 3 years where the contract has no compensation clause), which can reduce the tax. The housing levy and SHIF don't apply to it.
Sources
- Kenya Law — Employment Act 2007
- Kenya Law — Regulation of Wages (General) Order
- Kenya Law — Thomas & Piron Grand Lacs v Momanyi (2024)
- Kenya Law — Gechiko & 21 others v Kapil Bakery (2025)
- Kenya Law — Income Tax Act (Cap. 470)
- KRA — Affordable Housing Levy notice
- Kenya Law — Stubbs v Fourth Generation Capital (2025)
Rates last checked 13 Sep 2026. Estimates only, not tax or legal advice.