Redundancy after 5 years on a KSh 50,000 basic salary entitles you to at least KSh 125,000 in severance pay.
Severance pay is a statutory minimum
Under Section 40 of the Employment Act, an employer cannot terminate a contract on grounds of redundancy without first paying severance. The formula is fixed by law: 15 days' basic pay for each completed year of service. If your employment contract or a collective bargaining agreement specifies a more generous severance package, that better term applies instead of the statutory minimum.
This figure is calculated on basic salary alone, not your full gross pay including allowances, following how Kenyan courts have interpreted the Act. Severance is separate from and in addition to other terminal dues like accrued leave pay and notice pay.
Rates used in this calculator
Employment Act entitlements
Severance (redundancy)
15 days’ pay per completed year
Service pay
15 days’ pay per completed year (non-NSSF members)
Annual leave
21 working days (1.75 days a month)
Overtime
1.5× on weekdays, 2× on rest days and public holidays
Severance pay is 15 days' basic wages for each completed year of service. Your daily rate is your basic monthly salary divided by 30, then multiplied by 15 and by the number of completed years worked.
Is severance pay based on gross salary or basic salary?
Kenyan courts have determined that severance pay is calculated on basic salary only, excluding allowances, even if your contract or payslip separates the two.
Am I entitled to severance pay if I resign?
No. Severance pay under the Employment Act only applies when employment ends due to redundancy. Resignation, dismissal for cause, or natural contract expiry do not trigger this statutory payment.
Is severance pay taxable?
Yes, severance pay is treated as taxable income and is added to other termination dues when working out the final PAYE liability.