Pay & Salary

Severance Pay Calculator (Kenya)

Updated November 2026 · Free · No sign-up

Calculate Kenyan severance pay — redundancy owes 15 days’ pay per completed year of service (Employment Act s40), plus one month’s notice and leave payouts, with the consultation steps that make it lawful.

Quick answer: Redundancy severance = 15 days’ basic pay × completed years of service — alongside 1 month’s notice (or pay in lieu), accrued leave payout, and the s40 procedure (union/labour-officer notice, selection fairness). 8 years at KSh 90,000/month ≈ KSh 360,000.

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The Section 40 Package

Severance15 days’ pay per completed year (redundancy only)
Notice1 month (or pay in lieu)
LeaveAccrued untaken days paid out
ProcedureWritten notice to the employee AND union/labour officer ≥1 month prior; fair selection (LIFO-style factors)

Severance vs service pay: severance is the REDUNDANCY formula; "service pay" (also 15 days/yr flavor) applies at other terminations ONLY for employees outside NSSF/pension coverage — NSSF membership generally extinguishes service-pay claims, a distinction courts police.

Worked Example

KSh 90,000/month, 8 years: daily = 3,000 (÷30) → 15 × 8 × 3,000 = KSh 360,000 + notice 90,000 + leave balance — procedure failures add unfair-termination compensation up to 12 months at the ELRC.

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Tax and Collection

Severance taxes as employment income with the KRA’s spreading treatment for lump sums (relate-back rules) — ensure payroll applies them rather than single-month banding. Disputes: Labour Office conciliation then ELRC; claims prescribe in 3 years. The country comparison places Kenya’s 15-day rule mid-table globally.

Frequently Asked Questions

How is severance calculated in Kenya?

15 days’ basic pay per completed year of service for redundancy — plus one month’s notice and accrued leave payout.

Who gets service pay vs severance?

Severance: redundancy cases. Service pay: other terminations but ONLY for workers outside NSSF/pension schemes — NSSF membership generally removes it.

What procedure must redundancy follow?

One month’s written notice to employee and union/labour officer, fair selection criteria, and genuine operational reasons — failures add up to 12 months’ compensation.

Is Kenyan severance taxable?

Yes, as employment income — with lump-sum relate-back spreading that payroll should apply to avoid over-banding.

How long do I have to claim?

Three years at the Employment and Labour Relations Court — start with the Labour Office.

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✓ Formula verified  •  Last updated: November 3, 2026