Performance-Based employees: Are they entitled to annual leave?

The right to annual leave is provided for under section 28 of the Employment Act 2007. It stipulates that this right accrues in two ways;
An employee shall be entitled:

  1. After every 12 months of service with his employer not less than 21 working days of leave with full pay; or
  2. Where employment is terminated after the completion of 2 or more consecutive months of service during any 12 months’ leave – earning period, to not less than one and three – quarter days of leave with full pay, in respect of each completed month of service in that period, to be taken consecutively.

As per the Employment Act, annual leave, as an employee’s right, accrues to all employees who have a contract of service with an employer. It is an irreducible minimum regardless of the nature of the contract signed between the employee and the employer.

What is a performance-based employment contract?
A performance-based contract is a contract that seeks to pay an employee for the work done regardless of the time worked. Performance-based employment contracts state that employees will be employed and paid based on their performance. Most performance-based contracts are signed for short periods of time, to complete specified jobs/works.
For purposes of this alert, we shall look at how to compute the annual leave for the performance-based contracts to be signed between employers and employees. In this regard;

Are the employees entitled to statutory leave?

Section 28 of the Employment Act entitles ALL employees to annual leave regardless of the nature of the employment. Courts have interpreted this provision to state that the nature of the contract or the term of the contract notwithstanding, each employee is entitled to annual leave.
The Court in BENARD CHEGE V MAWE MBILI LIMITED (2014) eKLR stated that employees employed on term contracts are entitled to statutory employment entitlements such as leave. Additionally, the Court in MAKORI ORINA JACKSON V M/S VEE VEE ENTERPRISES (2020) eKLR held that the proposition that a casual employee is not entitled to annual leave is unlawful. It reiterated the position that the right to annual leave applies to all employees with no distinction as to whether one is or is not a casual or permanent employee.

How many leave days are the employees entitled to?
The Employment Act provides that an employee accrues 21days of leave after serving for 12 months, while they accrue One and three-quarter leave days in each month if the contracts are terminated after serving 2 or more consecutive months.
The courts have interpreted the computation of leave days as per the Employment Act to mean that employees accrue 1.75 leave days in each month of service.
The Court in STEPHEN M. KITHEKA V KEVITA INTERNATIONAL LIMITED (2018) eKLR while computing the accrued leave days for an employee who had been employed for three months, stated that the employee was entitled to an annual leave of 1.75days per month. Similarly, the court in MAKORI ORINA JACKSON V M/S VEE VEE ENTERPRISES (2020) eKLR interpreted section 28 of the Employment Act and stated that each employee is entitled to a minimum of 21days leave for each year worked which is earned at 1.75days for every completed month of service.

It, therefore, follows that all the employees, regardless of being employed on a performance basis, are entitled to annual leave.

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