The contract an employer hands to a new hire decides most of what comes next. It sets who can be let go and how, what notice runs, which statutory deductions apply and whose complaint will stand at the Employment and Labour Relations Court. Kenyan employers who treat the question as paperwork pay for it later, usually in a tribunal award or a redundancy that unravels on procedure. This article walks through the three types of employment contracts in Kenya recognised by the Employment Act, 2007, when each applies, and the written-contract and probation rules that sit on top.

Why the choice of contract matters more than employers realise

Three costs sit behind getting the contract type wrong:

• Section 37 exposure. A casual engagement that runs past the threshold flips to a monthly-wage contract by operation of law, whether the paperwork says so or not.
• Termination risk. A fixed-term contract cut short before its expiry can be a breach; a permanent contract terminated without procedure invites a section 41 and 45 claim at the ELRC.
• Statutory deduction gaps. PAYE, NSSF, SHIF and the Housing Levy apply differently across the three types, and an employer that under-deducts spends the next three years answering KRA and NSSF demand letters.

The contract type is the first compliance decision of the employment relationship. Get it right and the rest falls into place. Get it wrong and nothing downstream will fix it.

Casual employment contract in Kenya

Section 2 of the Employment Act defines a casual employee as one who is engaged for no more than 24 hours at a time and whose wages are paid at the end of each day. The daily cycle is the defining feature. The contract is not a month-to-month arrangement paid in daily instalments; it is a fresh engagement each working day.

• When it applies. Short-term operational labour where the work and the pay are genuinely daily: harvest work, event setup, short-run production overflow.
• What a casual contract must still carry. Statutory deductions apply (PAYE where the earnings are taxable, NSSF, SHIF and the Housing Levy). A register of casual workers is a defensive document, not an optional one.
• The section 37 trap. Casual work that runs continuously for one month, or work that could not reasonably be expected to be completed within three months, is deemed a monthly-wage contract by the Act. The casual label falls away even if the daily pay cycle continues.
• Where employers get caught. Peak-season production, construction site teams and agricultural harvests routinely cross the threshold without the paperwork being updated. The employer continues to issue daily pay while the law has already converted the relationship.

For employers that depend on volume casual labour, a labour outsourcing company in Kenya is often the practical answer, because the register, the day-count and the contract conversion all sit on one system rather than a paper book.

Fixed-term contract in Kenya

A fixed-term contract has an agreed end date or an agreed completion event, written into the contract itself.

• When it applies. Project work, maternity cover, seasonal professional roles, a short-term specialist engagement.
• The core rule. A fixed-term contract ends on its expiry date without notice, provided the contract was clear about it from the start and was not extended beyond its term by the employer's conduct.
• Renewal risk. Successive fixed-term contracts for the same role can be challenged as a device to avoid the protections of a permanent contract. ELRC decisions in Kenya have treated repeated renewal as evidence of indefinite employment in substance.
• Notice during the term. Terminating a fixed-term contract before its agreed end requires lawful grounds and procedure. The expiry date is not a free termination route if the employer chooses to end the contract earlier.
• Statutory deductions. The same as a permanent contract. PAYE on taxable earnings, NSSF, SHIF and the Housing Levy.

Fixed-term is the right tool for work that is genuinely time-bound. It is the wrong tool for a permanent need dressed up as temporary.

Permanent employment contract in Kenya

A permanent contract, or a contract of indefinite duration, is the default under the Employment Act. It runs until either party terminates it in line with the Act.

• When it applies. Any role that is ongoing in nature and open-ended in duration. If the work is permanent, the contract should be.
• Termination. Governed by sections 35 (notice), 41 (procedure), 43 and 45 (fairness). A termination that cuts corners on any of these is vulnerable to a claim at the ELRC, with awards running to twelve months' pay or more.
• Statutory deductions. All standard: PAYE, NSSF, SHIF, the Housing Levy and NITA where applicable.
• Why employers hesitate. The termination procedure is more structured than a casual or fixed-term exit. This is often read as a burden; it is more accurately read as protection, for both sides, against unilateral action.

The permanent contract is the correct default for most mid-market Kenyan hiring. Defaulting to casual or fixed-term because the termination route looks easier is usually the error that produces the most expensive claim.

Written employment contract in Kenya: sections 9 and 10

The Employment Act makes the written contract mandatory above a threshold.

• Section 9. A contract for a period of three months or more, or for a task that cannot reasonably be completed within three months, must be in writing. The employer is responsible for ensuring the written contract is drawn up and consented to by the employee.
• Section 10. The particulars that must be stated include the employer's and employee's names, the job description, the start date, the form and duration of the contract, the place of work, hours of work, remuneration and how it is calculated, pay intervals, leave entitlements, notice periods, and the date continuous employment began.
• Timing. Particulars can be given in instalments but no later than two months after the employment begins.
• Burden of proof. If the employer cannot produce the written contract, the employer carries the burden of proving or disproving an alleged term.

The written-contract obligation is where the compliance exposure starts. A verbal arrangement for a three-month-plus engagement is already in breach on day one.

Probation period in Kenya

Probation is governed by the Act's definition of a probationary contract.

• Form. A probationary contract must be written and must expressly state that it is probationary.
• Length. A probationary contract runs for not more than 12 months in total. Common practice is a six-month initial probation extendable to twelve with the employee's written consent.
• Termination during probation. Simpler notice applies during the probationary period. An employee whose services are terminated or who is summarily dismissed during probation cannot bring an unfair-termination complaint under section 47(6).
• Implicit probation does not exist. A probationary period that is not written into the contract does not have the protections of a probationary contract. The employee is on a permanent contract by default.

The probation-period mistake most Kenyan employers make is treating it as a verbal understanding. Without writing, it is not a probation; it is a permanent engagement that the employer mistakenly thinks they can exit at will.

How to choose between the types of employment contracts in Kenya

Work through these in order. The first "yes" sets the contract:

• Is the work genuinely daily, with pay at end of day and no reasonable expectation of more than 24 hours at a time? Casual.
• Does the engagement cross one month of continuous work, or is the task one that cannot reasonably end within three months? Permanent (by section 37), regardless of what the original paper said.
• Is there a genuinely time-bound reason — a project, a cover role, a fixed-length engagement — with a defined end date? Fixed-term.
• Is any of the above over three months? It must be in writing, with the section 10 particulars.
• Is there a probation period? Write it in, state it expressly, and keep it inside 12 months total.

If the answer at the top of the list conflicts with how the employee is being paid or managed in practice, the Act will follow the practice, not the paperwork.

Common contract mistakes and how to avoid them

Four patterns show up in almost every HR audit that ACCUREX runs:

• Rolling casual engagements that have already converted. Workers past the section 37 threshold still on daily pay without the paperwork being updated.
• Back-to-back fixed-term renewals. Three consecutive six-month contracts for the same role, then a termination on expiry that an ELRC claim pulls apart.
• Probation written as a verbal understanding. Managers using a six-month "probation" that is not in the contract, then dismissing without procedure.
• Written particulars missing or incomplete. Contracts with a job title and a salary but no notice period, no leave entitlement and no record-keeping clause.

Any one of these turns a simple exit into a tribunal case. Our employee relations consulting team is most often called in after one of these four patterns has produced a claim; the smarter buyer calls before.

Frequently asked questions

Which of the three types of employment contracts in Kenya is the default?

Permanent, by operation of the Employment Act, 2007. Casual and fixed-term are the exceptions, each with its own definition and conditions. Where none of the exceptions applies, or where the facts have outgrown the exception, the contract is permanent in law whatever the paperwork says.

Can a casual contract roll on indefinitely?

No. Section 37 of the Employment Act converts continuous casual work that runs past one month, or work that cannot reasonably end within three months, into a monthly-wage contract automatically. The daily pay cycle can continue, but the employment relationship is no longer casual and the protections of a monthly-wage contract apply.

Does a probation period have to be in writing?

Yes. The Act defines a probationary contract as written and expressly probationary. An employer who treats probation as a verbal arrangement has no probationary contract in law. The employee is on an indefinite contract and the usual termination procedure applies.

Conclusion

Three contract types, two statutory rules (sections 9 and 10) and one default (permanent) cover most Kenyan hiring. The practical test is simple: match the contract to the work, write it down, state probation expressly when it applies, and check that the day-count has not quietly converted a casual engagement into something else. Employers that do this move three of the most common ELRC claims off their desk.

Before building the contract pack, see our review of the top HR consultancy firms in Kenya for HR policy development.

Review your employment contracts with ACCUREX

Start with a review of your current contract templates against the Employment Act, 2007. An ACCUREX consultant will read the casual, fixed-term and permanent templates you issue, map them to how your business actually hires, and come back with the gaps.

Contact ACCUREX today to book a free contract review. Call +254 715 767 676, email info@accurex.co.ke, or use the button below to send your brief.

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