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What are the typical terms for a Severance Agreement?
Introduction
A severance agreement is a contract between an employer and an employee that outlines the terms of the employee's departure from the company. In Kenya, the terms of a severance agreement are governed by various laws, including the Employment Act, 2007, and the Labour Relations Act, 2007. This document will provide a detailed overview of the typical terms included in a severance agreement in Kenya, citing relevant legal provisions.
Table of Contents
Legal Framework
Employment Act, 2007
Labour Relations Act, 2007
Typical Terms in a Severance Agreement
Severance Pay
Notice Period
Accrued Benefits
Confidentiality and Non-Disclosure
Non-Compete and Non-Solicitation Clauses
Release of Claims
Return of Company Property
References and Future Employment
Governing Law and Dispute Resolution
Conclusion
1. Legal Framework
Employment Act, 2007
The Employment Act, 2007, is the primary legislation governing employment relationships in Kenya. Key sections relevant to severance agreements include:
Section 35: Notice of termination
Section 40: Termination on account of redundancy
Section 45: Unfair termination
Section 49: Remedies for wrongful dismissal and unfair termination
Labour Relations Act, 2007
The Labour Relations Act, 2007, also plays a role in governing the terms of severance agreements, particularly in relation to collective bargaining agreements and unionized employees.
2. Typical Terms in a Severance Agreement
Severance Pay
Legal Provision: Section 40(1)(g) of the Employment Act, 2007
Description: Severance pay is compensation provided to an employee upon termination of employment. The law mandates that an employee declared redundant is entitled to severance pay at the rate of not less than fifteen days' pay for each completed year of service.
Notice Period
Legal Provision: Section 35 of the Employment Act, 2007
Description: The notice period is the time frame within which either party must notify the other of the intention to terminate the employment contract. The length of the notice period depends on the terms of the employment contract but must comply with the minimum statutory requirements.
Accrued Benefits
Legal Provision: Section 40(1)(e) of the Employment Act, 2007
Description: Accrued benefits include any unpaid salary, leave days, and other entitlements that the employee has earned up to the date of termination. These must be paid in full upon termination.
Confidentiality and Non-Disclosure
Legal Provision: Common Law Principles
Description: Confidentiality and non-disclosure clauses are included to protect the employer's proprietary information. These clauses prevent the employee from disclosing sensitive information to third parties.
Non-Compete and Non-Solicitation Clauses
Legal Provision: Common Law Principles
Description: Non-compete clauses restrict the employee from engaging in similar employment or business activities that compete with the employer for a specified period and within a certain geographical area. Non-solicitation clauses prevent the employee from soliciting the employer's clients or employees.
Release of Claims
Legal Provision: Common Law Principles
Description: A release of claims clause requires the employee to waive any legal claims against the employer arising from the employment relationship or its termination. This provides the employer with protection against future lawsuits.
Return of Company Property
Legal Provision: Common Law Principles
Description: This clause requires the employee to return all company property, including documents, equipment, and any other assets, upon termination of employment.
References and Future Employment
Legal Provision: Common Law Principles
Description: This term outlines the employer's obligations regarding providing references for the employee and any agreements related to future employment opportunities.
Governing Law and Dispute Resolution
Legal Provision: Common Law Principles and Arbitration Act, 1995
Description: This clause specifies that the severance agreement is governed by Kenyan law and outlines the mechanisms for resolving any disputes that may arise, such as arbitration or mediation.
Conclusion
A severance agreement in Kenya typically includes terms related to severance pay, notice periods, accrued benefits, confidentiality, non-compete and non-solicitation clauses, release of claims, return of company property, references, and governing law. These terms are governed by the Employment Act, 2007, the Labour Relations Act, 2007, and common law principles. Understanding these terms and their legal basis is crucial for both employers and employees to ensure a fair and lawful termination process.
Answered by mwakili.com