Global Policies -vs- Local Protections: When Foreign Employment Practices Meet Kenya Labour Law

The modern workplace is increasingly becoming borderless. Kenyan employees now work remotely for foreign-based entities, often under contracts governed by foreign law and the particular entity’s global workplace policies.

This raises an important legal question: what happens when a foreign employer's policies conflict with mandatory Kenyan employment protections where the employee is based and working from Kenya? The answer is not always straightforward. Parties may agree to apply foreign law or adopt global HR policies, but such arrangements do not necessarily displace the protections an employee is entitled to under Kenyan law.

An international contract can still be connected to Kenya

Kenyan courts have recognised that an employment relationship may have an international character where, for instance, the employer is incorporated abroad while the employee performs the bulk of their duties in Kenya. In such cases, the courts look beyond the formal identity of the employer to the substance of where the relationship is actually rooted, including: the employee's habitual place of work, where remuneration is paid, and where tax and statutory deductions are administered.

This principle was applied in Dorcas Kemunto Wainaina v IPAS [2018] KEELRC 2065 (KLR), where the Employment and Labour Relations Court held that, despite the employer being US-based, the dominant features of the relationship connected it to Kenya. The case is a useful illustration of a wider point that a foreign-law clause in a contract does not, by itself, out the jurisdiction of Kenyan courts. Foreign-based employers should not assume that structuring a contract or policy abroad takes the relationship outside the reach of Kenyan law.

Global policies cannot override mandatory local protections

Foreign-based employers commonly rely on standardised global policies covering termination, working hours, leave, performance management, whistleblowing, conflicts of interest and employee conduct. These policies are typically drafted to comply with the law of the employer's headquarters, but once applied to staff working in Kenya, they must be measured against Kenya's mandatory statutory requirements.

For instance, global policies drafted in the US may contain provisions that are lawful in their jurisdiction but do not comply with the Kenyan law. Examples include

• Employment “at will”;

• Disciplinary procedures that allow termination without a formal hearing;

• Notice provisions that allow shorter period than that provided under the Act; and

• No notices or compensation on redundancy.

On the other hand, Kenya’s Employment Act for example, requires an employer contemplating termination for misconduct, poor performance or incapacity to explain the reason to the employee and give them an opportunity to respond. It further requires both a valid and fair reason for termination and compliance with a fair procedure. Wainaina V IPAS held that a global policy permitting termination without these safeguards cannot be relied on as a substitute for what Kenyan law demands.

Choice of law, jurisdiction and mandatory protection are distinct questions

A clause stating that a contract is governed by foreign law does not end the inquiry. Kenyan courts recognise that parties may choose the governing law, but will still weigh connecting factors e.g. where the employee actually works, and where pay and tax are administered, in deciding whether Kenyan courts have jurisdiction and whether mandatory local protections apply regardless of the chosen law.

Employers and employees should therefore keep three questions apart: the law governing the contract; the forum with jurisdiction to hear a dispute; and the mandatory protections that apply

where the work is actually performed. A contract can answer the first without resolving the other two as seen in Wainaina V IPAS.

Remote work has raised the stakes

The growth of remote employment has complicated traditional assumptions about where employment takes place. A Kenyan employee may be employed by a company incorporated in

Europe, report to a manager in the United States, be paid through an international payroll provider, and perform all substantive work from Kenya. Here, the applicable legal framework turns on the substance of the relationship rather than the location of the employer's head office.

Kenya’s Employment Act also contains specific provisions on foreign contracts of service. It prescribes requirements around the form and attestation of certain foreign contracts, including compliance with Kenyan employment standards, a reminder that Parliament has long anticipated cross-border employment and legislated to protect Kenyan workers within it.

The risk for multinational employers

The principal risk for foreign-based employers is assuming a uniform global policy can be applied identically in every jurisdiction. A policy lawful where it was drafted may still expose an employer to liability in Kenya if implemented without regard to mandatory local requirements. In particular around termination, discrimination, statutory leave, remuneration and disciplinary process. Kenya’s Employment Act prohibits discrimination in training, promotion, terms and conditions, and termination, and this protection cannot be diluted by a global policy permitting practices unlawful under Kenyan law.

Practical guidance

For foreign-based employers, the better approach is not to abandon global policies and to localise their implementation. Additionally, they should ensure that contracts and local addenda clearly identify the applicable law, jurisdiction, statutory benefits and procedures that apply to Kenyan staff.

For employees, the existence of a foreign employer or an international contract should not be

assumed to remove Kenyan legal protections. It is worth examining the governing-law clause, the actual place of work, the contractual terms, and Kenya's mandatory employment requirements before assuming a global policy is the final word.

This article is for informational purposes only and does not constitute legal advice. For tailored advice, please reach out to us directly at sarinke@mckayadvocates.com

Author Vivian Ntinyari