Time to quit: Calculating final benefits

Claris Ogangah

QUESTION: I have been employed since 2003 with a net pay of Sh8,000. My employer has been reviewing my salary annually and the figure now stands at Sh24,000. I want to resign but I don’t know how my employer will pay my services for the past six years.

ANSWER: It would be good to know ways in which employment can be terminated to understand whether you are even entitled to service pay.

A contract of employment as provided under the Employment Act can be terminated in two ways. First, is by giving the employee a notice of intention to terminate the contact, which will run for a given period the standard period being one month or salary is paid to the employee in lieu of the notice.

Second, is when an employee is summarily dismissed for misconduct.

In cases where either the employer or employee decides to terminate the contract for reasons other than misconduct, then the issue of service pay arises.

For instance, if the employee wishes to move to another job or the employer is not satisfied with the performance of the employee and wishes to terminate the contract, then the employee has to be paid service pay for the years worked.

You have stated that you want to resign after working for about six years and according to the Employment Act, you qualify to be paid service pay

Service pay basically refers to the payment given to an employee for years worked when the contract of employment is terminated. Service pay is paid on top of the other benefits an employee is entitled to.

Service pay is normally calculated based on the employee’s earnings and the period worked. The standard calculation is 15 days salary for every year worked and in your case it is for three years.

Your other question was which rate your employer will apply on calculating the service pay, whether it is the one at the time of employment or the current salary.

Ideally what should be applied is the current rate and not what you earned at the time of employment.

The payment of service is in line with section 35, which provides that an employee whose contract has been terminated shall be entitled to service pay for the years worked.

It is, however, important to note that service pay is not given to employees who are members of a gratuity scheme established under a collective agreement or any other scheme established by the employer.