Month: September 2026

On 20 June 2026, the world marks the 75^th anniversary of the 1951 United Nations Convention Relating to the Status of Refugees (“the UN Refugee Convention”) which is the cornerstone of international refugee protection. As the United Nations High Commissioner for Refugees (“UNHCR”) observes, the UN Refugee Convention has saved lives, protected rights, and enabled millions of refugees to rebuild their livelihoods – establishing principles such as non-refoulement and rights to documentation, education, movement and work. This alert examines Kenya’s current refugee protection regime, focusing on access to employment.

 

The Old v The New: A Progressive Shift

The Refugees Act, 2006 (“the 2006 Act”) domesticated Kenya’s obligations under the UN Refugee Convention and the 1969 Organization of Africa Unity Convention Governing the Specific Aspects of Refugee Problems in Africa (“the OAU Refugee Convention”). Before the enactment of the 2006 Act, refugee matters in Kenya were largely handled administratively. The 2006 Act created formal structures, including the Department of Refugee Affairs, and provided a legal framework for the recognition and management of refugees.

However, the 2006 Act did not provide refugees with direct access to employment. Section 16 (4)  of the 2006 Act subjected refugees to the same restrictions as other non-citizens, effectively requiring work permits under the relevant immigration law. This meant that refugees had to meet employer sponsorship or skills-based criteria designed for economic migrants, in order to qualify for work permits.

The Refugees Act, 2021 (“the 2021 Act”) introduced a significant shift. Section 28 (5) of the 2021 Act grants refugees the right to engage in gainful employment, business, or professional work, subject to applicable laws but with consideration of their special circumstances. The use of “shall have the right” denotes a statutory realignment and establishes a clear legal entitlement for refugees to gainful employment.

Additionally, the 2021 Act provides for issuance of refugee identification documents, which are crucial for enjoying rights and services, including access to financial services. This reflects a legislative intent to enable refugees to participate economically and integrate fully into society.

 

Legislative Intent

The omission of restrictive language from the 2006 Act and its replacement with an affirmative right to work is indicative of a deliberate policy shift. Under principles of statutory interpretation, including the doctrine of implied repeal, the subsequently enacted and more specific 2021 Act should prevail over earlier enacted statutes on matters concerning refugee affairs in case of any inconsistency, including immigration law.

The phrase “subject to the applicable laws” should therefore be construed accordingly and should not be interpreted in manner that would defeat or nullify refugees’ right to work, but rather, preserve only non-conflicting or complementary requirements to enable the realization of the right.

 

Immigration Law v Refugee Protection

Kenya’s Citizenship and Immigration Act, 2011 (“the Immigration Act”) imposes strict work-permit requirements on all non-citizens. Employment without a permit where such permit is required is unlawful, and employers must obtain authorization before hiring foreign nationals. The law on immigration is designed to regulate economic migration and protect the domestic labour market – which is a matter of concern for every nation and its citizens.

Refugees, however, find themselves in foreign countries not due to economic migration, but rather, forced migration often fueled by armed conflict resulting in the arising protection obligation of the receiving state. Refugees cannot safely return to their home countries, and Kenya is legally bound under the UN Refugee Convention and the OAU Refugee Convention to offer them protection. The 2021 Act recognizes “special circumstances” that apply to refugees which implies that ordinary immigration restrictions should not be strictly applied to refugees. Applying the same work permit requirements to refugees as to ordinary economic migrants is to disregard the special circumstances pertaining to refugees alluded to in the 2021 Act.

Unlike economic migrants, refugees should not be required to demonstrate scarce skills or secure employer sponsorship. Section 28 (5) of the 2021 Act only requires that refugees’ qualifications be recognized by competent authorities.

Imposing ordinary work-permit criteria would likely exclude most refugees, effectively rendering their lawful right to work wholly illusory. The refugee statutory framework is therefore distinct from labour migration systems and each should be considered in its own light.

 

Constitutional Considerations

Constitutionally, Kenya guarantees equality (Article 27) and fair labour practices (Article 41) to all persons and makes no qualification as to the person’s status as a citizen, immigrant or refugee. Kenya has ratified both the UN Refugee Convention and the OAU Refugee Convention and as such, these Conventions have the force of law pursuant (Article 2). Notably, any law that is found to be inconsistent with the Constitution is null and void to the extent of such inconsistency.

To the extent therefore that any law or regulation would operate to deny refugees access to work, such law or regulation would be in conflict with Kenya’s obligations under the UN Refugee Convention and the OAU Refugee Convention, and arguably unconstitutional.

 

Practical Implications

Following the restrictive enactment of the 2006 Act, Kenya introduced the Class M Work Permit for refugees, which is issued free of charge. However, it is arguable that requiring such permits is tantamount to reintroducing the same barriers that the 2021 Act sought to remove.

A more purposeful approach and interpretation would be that recognized refugees with valid identification documents should be able to be employed without undergoing immigration permit processes. Treating refugee documentation as sufficient basis for employment would be consistent with the legislative intent of the 2021 Act and the legal obligation of refugee protection.

 

Conclusion

The 2021 Act reflects a progressive shift toward recognizing refugees as meaningful contributors to the country’s economy, in spite of their troubled background. Maintaining restrictive immigration controls risks undermining this recognition. A coherent legal approach requires interpreting refugee law as it properly should – with the unwavering intention of protecting refugees and uplifting their livelihoods.

Must an employer put workplace discipline on hold until the criminal process runs its course? Kenyan courts have consistently held that criminal proceedings and internal disciplinary processes are distinct, independent, and governed by different legal standards. As a result, an acquittal in a criminal case does not automatically shield an employee from disciplinary action, just as the pendency of criminal proceedings does not bar an employer from instituting internal disciplinary measures.

This principle was recently reaffirmed in Ogola v Bamburi Cement PLC [2026] KEELRC 1294 (KLR), where the Employment and Labour Relations Court held that an employer could lawfully summarily dismiss an employee for gross misconduct despite the Director of Public Prosecutions declining to institute criminal charges.

 

Recent Jurisprudence – The Ogola Case

In the Ogola (supra), the claimant, an electrical technician employed by Bamburi Cement PLC, was found leaving the employer’s premises with electronic spare parts allegedly belonging to the company. Although police investigations did not culminate in prosecution, the employer conducted internal disciplinary proceedings and summarily dismissed him for breach of trust and gross misconduct. The claimant argued that since he had not been charged criminally, the dismissal was unfair.

The Court rejected this argument and emphasised that employment discipline is separate from criminal justice. The Court held that under sections 41, 43, and 44 of the Employment Act, an employer only needs to demonstrate that it genuinely believed, on reasonable grounds, that the employee committed misconduct warranting dismissal.

 

Judicial Precedent

The foundation of this doctrine in Kenyan jurisprudence can be traced to James Mugera Igati v Public Service Commission of Kenya [2014] KEELRC 735 (KLR). In that decision, the Court categorically stated that there is nothing in the Employment Act or Public Service Commission Regulations tying disciplinary proceedings to criminal proceedings arising from the same facts. The Court distinguished the two processes by observing that disciplinary proceedings are private employment processes intended to protect the employer’s operational integrity, while criminal proceedings are public processes aimed at protecting society and maintaining public order.

The Court of Appeal subsequently endorsed this reasoning in Attorney General & another v Andrew Maina Githinji & another [2016] KECA 817 (KLR). The Court held that an acquittal in a criminal case does not prevent an employer from instituting disciplinary proceedings based on the same facts. The Court emphasised that the standards of proof are fundamentally different; criminal liability must be established beyond reasonable doubt, whereas employment discipline is determined on a balance of probabilities.

This distinction is critical. Criminal courts are concerned with whether an accused person committed an offence punishable by law, while employers are concerned with whether an employee’s conduct has destroyed trust, breached workplace rules, or undermined the employment relationship. An employee may therefore be acquitted because the prosecution failed to meet the high criminal threshold, yet the employer may still possess sufficient evidence to justify disciplinary sanctions.

The Court of Appeal reiterated this principle in Judicial Service Commission & another v Nyagol [2024] KECA 198 (KLR), where it held that criminal proceedings and disciplinary proceedings are founded on entirely different legal regimes. The Court observed that disciplinary proceedings arise from the contract of employment and internal workplace regulations, while criminal proceedings arise from statutory criminal law. The Court of Appeal further clarified that neither of the two processes binds the other. Thus, an acquittal does not automatically invalidate disciplinary action, nor does a criminal conviction automatically justify dismissal without compliance with section 41 of the Employment Act. Employers must still observe procedural fairness, including issuing a notice to show cause and accord the employee an opportunity to be heard.

 

Kenyan courts have also cautioned employers against indefinitely suspending disciplinary proceedings merely because criminal investigations are pending. In Teachers Service Commission v Makokha [2023] KEELRC 2518 (KLR), the Court rejected the proposition that disciplinary proceedings should automatically await the conclusion of criminal trials. The Court reasoned that employers cannot hold employees in disciplinary limbo indefinitely due to slow-moving criminal processes. This position reflects practical workplace realities. Criminal investigations and prosecutions in Kenya may take years to conclude. Requiring employers to await criminal outcomes before taking action would paralyse workplace discipline and undermine operational integrity, particularly in cases involving dishonesty, theft, fraud, or breach of trust.

The doctrine is especially significant in cases involving breach of trust. In Bamburi Cement Limited v William Kilonzi [2016] KECA 546 (KLR), cited extensively in Ogola (supra), the Court of Appeal held that the essential question is whether the employer had reasonable and sufficient grounds to suspect misconduct resulting in a breakdown of trust and confidence in the employment relationship. The Court stated that dishonesty or misconduct need not be proved to the criminal standard for dismissal to be justified.

 

Conclusion

The overarching lesson from Kenyan jurisprudence is therefore balanced. Employers are not required to await criminal prosecution before disciplining employees. However, employers must still comply fully with sections 41, 43, and 45 of the Employment Act by ensuring substantive justification and procedural fairness.

Ultimately, the Kenyan courts have developed a coherent and commercially practical doctrine: criminal law protects public order, while disciplinary processes protect workplace integrity. Although the two may arise from the same facts, they serve different objectives, apply different standards of proof, and operate independently. For employers, the message is clear, disciplinary action need not await the outcome of the criminal process, provided the requirements of fairness under employment law are met.

 

The Court of Appeal, in its recent decision in Kenya County Government Workers’ Union v Embu County Government & another (Civil Appeal No. 178 of 2020) [2026] KECA 1481 (KLR) (24 July 2026), addressed the tension between the legitimate use of successive fixed-term contracts and the protection accorded to employees whose work is permanent, continuous and integral to an organisation’s operations. The Court also examined the legal consequences that arise where the substance of an employment relationship departs from its contractual form.

 

Background and Facts of the Appeal

The claimant Union instituted these proceedings before the Employment and Labour Relations Court alleging discrimination in employment contrary to Article 27 of the Constitution and violation of the right to fair labour practices guaranteed under Article 41 of the Constitution. The Union contended that the County Government of Embu had engaged employees on successive fixed-term contracts lasting between six months and one year while simultaneously characterising those engagements as casual employment, contrary to sections 10(3)(c) and 37 of the Employment Act.

The County Government denied the allegations of discrimination. It maintained that it had inherited employees serving under fixed-term contracts and that the Employment Act recognises the principle of freedom of contract. Consequently, it argued that it was entitled to engage employees through any lawful form of employment, including fixed term and casual contracts.

 

The Court’s Findings

The Court of Appeal allowed the appeal by the Union. In so doing it considered, among other issues, whether the use of successive fixed-term contracts amounted to discrimination and whether the employees engaged as casual workers, had by operation of section 37 of the Employment Act, transitioned into permanent employment.

The Court answered both questions in the affirmative.

In determining the true character of the employment relationship, the Court adopted a substance-over-form approach. It reiterated that the character of an employment relationship is not determined solely by the contractual label assigned by the employer, but by the practical realities of the relationship assessed on case-by-case basis.

Applying that principle, the Court’s found that the employees had performed work of a permanent and continuous nature for prolonged periods, in some cases extending to twenty years. The Court held that the successive fixed-term contracts did not reflect genuine fixed-term engagements but constituted an elaborate device designed to deny employees the statutory and constitutional protections to which they were entitled. The contractual labels adopted by the employer were therefore not conclusive of the true nature of the employment relationship and could not defeat the employees’ rights under Article 41 of the Constitution.

Similarly, in addressing the interpretation of section 37(1) of the Employment Act, the Court held that the employees designated as casual workers fell within the protection of section 37(1) of the Employment Act. The employees having worked continuously for an aggregate period of not less than a month and performed duties that were not reasonably to be concluded within a specific period, by operation of the law converted the casual employment contracts to term contracts, entitling them to the protections available to regular employees.

 

Significance of the Judgment

The legal consequences of fixed-term contracts and their termination are well settled. However, his decision demonstrates that the application of fixed-term contracts is subject to the peculiar facts of each case.

The finding in Kenya County Government Workers’ Union case reinforces that the mere existence of a fixed-term contract does not, by itself, immunise such contracts and their implementation from judicial scrutiny. The Court of Appeal while recognising the freedom to contract in fixed term contracts as enunciated in the well-known decision of Transparency International–Kenya v Teresa Carlo Omondi reemphasized the relevance of substance-over-form analysis of employment contracts.

The takeaway for employers is that the drafting and implementation of termination clauses in fixed contracts carry a menacing potential for legal liability.  Ambiguous termination clauses are in general held against the maker, being the employer in this regard. As such, employers do not enjoy a carte blanch to structure and implementation of fixed term contracts in a manner that defeats statutory and constitutional labour protections.

The practical implication for employers is that legal exposure increases with the number and duration of successive renewals, particularly where the employee continues to perform work of a permanent and continuous nature.

In determining whether work is permanent and continuous, relevant considerations are whether the functions are integral to, and continuously required by and/or, for the employer’s operations. The centrality of the role played by the employee alone, however, is not determinative; courts will review the totality of the employment relationship. Consequently, employers should exercise due care in determining the duration and structure of fixed-term contracts, considering the nature of the work, the genuine operational justification for limiting the term, and the nexus between the engagement and the organisation’s core functions. Employers who align their fixed-term contracts with these considerations are better placed to mitigate disputes and limit potential legal exposure.

The Finance Bill 2026, (“the Bill”) was tabled before the National Assembly on 30^th April 2026 and published on 5^th May 2026.

The Bill focuses more on compliance and incentives as well as expanding the tax base and strengthening collection of digital taxes. The Bill proposes measures that will bring into taxation income earned by non-resident landlords, withholding tax on betting & digital taxation. It also aims to reduce the deadline for filing tax returns to 30^th April each year, as opposed to 30^th June, as is currently the case.

INCOME TAX ACT 

The Finance Bill 2026 proposes to amend the Income Tax Act, Chapter 470, (ITA) as follows:

Definition Section

1.1 Immovable property

The Bill proposes to amend the definition of the term “immovable property” by removing the word “and” and replacing it with “or”.  This amendment clarifies that the two conditions set out therein are intended to operate independently and as alternative grounds for determining whether property qualifies as immovable property. Accordingly, it will now be sufficient if either condition is met.

 

1.2 Expanded definition of Management or Professional Fee

The Bill proposes to expand the definition of “management or professional fee” to include interchange fees and merchant service fees arising from transactions that use a card as a means of payment.

This proposed amendment is designed to expand definition of management or professional fees to include interchange fees and merchant fees accruing from card payments transactions. It is meant to remedy the ambiguity cited by the Supreme Court under section 2 of the Income Tax Act. It is largely influenced by the Supreme Court decision in the case of Barclays Bank of Kenya Limited (now Absa Bank Kenya plc) V Commissioner for Domestic Taxes (Large Taxpayers Office) where the Supreme Court held that interchange fees paid by an acquiring Bank to an Issuing bank cannot be classified as management or professional fees subject to withholding tax.

If this proposal sees the light of day, interchange fees paid by an acquiring bank to an issuing bank will be classified as management or professional fees subject to withholding tax. This will increase the cost of card-based transactions, likely to be passed on to merchants and consumers, thereby directly undermining Kenya’s cashless economy agenda.

 

1.3 Expanded Definition of Royalty

The Bill proposes to amend the ITA by expanding the definition of royalty. This proposal technically is tailored to broaden the tax base when it comes to the chargeability of Withholding tax on payment systems. Unlike the usual norm where royalty is charged on intellectual property (“IP”), the proposal intends to broaden the charge of royalty taxes on digital payment and processing processes.

It is highly likely that this proposal is informed by the recent Supreme Court decision in the case of Barclays Bank of Kenya Limited (now Absa Bank Kenya plc) V Commissioner for Domestic Taxes (Large Taxpayers Office) where the apex Court held that payments made by Acquiring Banks to Card Companies do not constitute royalties.

The proposal contradicts OECD Model Tax Convention Article 12 commentary, which limits “royalties” to payments for IP rights and not operational network access fees. Uganda and Tanzania exclude such payments from royalties; Kenya will be diverging from EAC practice. The proposal, if passed into law, will increase costs for fintechs, banks, and any business using digital payment infrastructure.

 

1.4 Proposed Definition of Withdrawals

The Bill proposes to amend the ITA by deleting the current definition of withdrawals and substituting it with a new definition. The definition is proposed to change from “withdrawn from a wallet” to “paid or disbursed to the account of a player.” This amendment also seeks to align the definition with the Gambling Control Act, 2025, which replaced the former Betting, Lotteries and Gaming Act.

If the proposed bill is passed it will widen the tax base on gambling payouts. Previously, only wallet withdrawals attracted the 5% withholding tax (“WHT”) under the Third Schedule. The new language captures any payment to a player thus closing the loophole where operators might structure payouts outside traditional wallets.

 

1.5 Proposed Definition of Winnings

The Bill proposes to introduce a new the definition of the term winnings as “a pay-out, by a person licensed under the Gambling Control Act, 2025, from a lottery or prize competition, but does not include the amount staked or wagered.”

Taxation of gambling winnings is not a novel idea; taxation of winnings was first introduced by the Finance Act 2011 which introduced 20% withholding tax on winnings. This proposal was, however, dropped and later re-introduced via the Finance Act 2014. However, there was an ambiguity on whether the withholding tax should be applied on the gross amount of a player winnings or net winnings.

Currently, there is blanket taxation in which a gambler’s and/or a player’s withdrawals also include the player’s own deposited funds, and not just net winnings. This proposal will therefore mitigate such blanket taxation of winnings in Kenya’s gambling industry.