10.6092/issn.1561-8048/10952
The Kenyan government has implemented some measures to counter the impact of the Covid-19 pandemic on the economy and labour market. However, the most significant shortcoming lies in the lack of targeted protection for the informal economy. The national curfew and partial lockdown –in some areas –disrupted economic activities for informal workers who are mainly daily wage earners. In addition, the government has not developed rescue measures for businesses that have ceased operations as a result of the pandemic. 
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1561-8048
10952
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Abigail Osiki
Italian Labour Law e-Journal
Informal economy
COVID-19 and Labour Law: Kenya
Text.Serial.Journal
https://illej.unibo.it/
13
National Reports
2020-05-11
2020-05-08
2020-04-15
2020-09-15
ILLeJ
Abigail Osiki
2020/05/11
10.6092/issn.1561-8048/10952
University of the Western Cape
1561-8048
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Informal economy
en
COVID-19 and Labour Law: Kenya
https://illej.unibo.it/article/download/10952/10824
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COVID-19 and Labour Law: Kenya                                                     Italian Labour Law e-Journal
Abigail Osiki                                                                     Special Issue 1, Vol. 13 (2020)
osikiabigail@gmail.com                                              Covid-19 and Labour Law. A Global Review
                                                                                                ISSN 1561-8048
                                                                 https://doi.org/10.6092/issn.1561-8048/10952




                   COVID-19 and Labour Law: Kenya
                           Abigail Osiki*


                                                  Abstract
     The Kenyan government has implemented some measures to counter the impact of the
     Covid-19 pandemic on the economy and labour market. However, the most significant
     shortcoming lies in the lack of targeted protection for the informal economy. The national
     curfew and partial lockdown – in some areas – disrupted economic activities for informal
     workers who are mainly daily wage earners. In addition, the government has not developed
     rescue measures for businesses that have ceased operations as a result of the pandemic.


     Keywords: Covid-19; Labour Law; Tax relief; Micro, Small and Medium enterprises; Informal
     economy.



 1. Introduction

    The world is currently grappling with the Covid-19 virus which first emerged in Wuhan,
 China and rapidly expanded its global reach. As this public health emergency began to take
 hold in Kenya, from the middle of March 2020, the national government responded with
 measures to curb the spread of the disease and protect the community1. President Uhuru
 Kenyatta declared the Covid-19 virus an emergency on the 25th of March, 20202. The
 restrictions that followed this pronouncement began with the Public (State Curfew) Order,
 2020 on the 27th of March, which instituted a curfew for all Kenyans (except essential
 workers) between 7pm and 5am daily. This progressed further to a three weeks partial
 lockdown in regions most affected by the pandemic3. These regions were Nairobi,


 *
   Research Associate, Centre for Transformative Regulation of Work, Social Law Project, Faculty of Law,
 University of the Western Cape, South Africa.
 1 Within this context, Kenya is also dealing with a locust invasion which is expected to significantly impact

 agricultural output.
 2 “Uhuru's speech in full as more Covid-19 measures announced” Daily Nation (25th March, 2020)

 https://www.nation.co.ke/news/Coronavirus-in-Kenya-Uhuru-full-speech-/1056-5504094-
 80g9lqz/index.html.
 3 “COVID-19: Kenya bans travel in and out of Nairobi, other areas” Aljazeera News (6th April)

 https://www.aljazeera.com/news/2020/04/covid-19-kenya-bans-travel-nairobi-areas-
 200406163601579.html: Public Health (Covid-19 Restriction Of Movement Of Persons And Related
 Measures) Rules, 2020.
    Abigail Osiki                                                         Italian Labour Law e-Journal
                                                                         Special Issue 1, Vol. 13 (2020)
                                                            Covid-19 and Labour Law. A Global Review
                                                                              Section: National Reports




Mombasa and the counties of Kwale and Kilifi. Within these regions, citizens were required
to stay at home unless they had to go to the shops for food.
   The introduction of the curfew across Kenya and partial lockdown in certain regions
had devastating effects on both the formal and informal economies. This also laid bare the
gaps in the social security and labour law framework. Consequently, on the 25th of March,
the government announced some measures aimed at cushioning Kenyans from the impact
of Covid-19. In accordance to the Constitution of Kenya, some of these proposals which
required mainly amendments to the tax legal framework were sent to the National
Assembly for deliberation and approval. The President signed these amendments into law
on the 25th of April, 2020.4 This article considers relevant measures implemented to
counter the problems which emerged in labour relations and the world of work as a result
of the disruptions caused by the Covid-19 pandemic.


2. Tax relief for workers

   To cushion workers against the effects of the Covid-19 pandemic, the government
amended the Income Tax Law to provide 100% percent tax relief for low-income earners.
This affects employees earning less than Ksh 24,000 per month. The implication of this
new threshold is that more low-income earners will be shielded as it significantly increases
the scope of employees to be covered. Those earning above this new threshold will benefit
from a PAYE tax relief, charged a maximum of 25% tax rate. Furthermore, personal relief
has been increased from Ksh 16,896 to Ksh 28,800.5 Overall employees are expected to
have more disposable income and they will be cushioned further in the event of salary
reductions during this pandemic.


3. Tax incentives for Micro, Small and Medium enterprises (MSMEs).

   To cushion the economic impact of Covid-19, the government reduced the turnover tax
rate from three per cent to one per cent.6 Small businesses whose annual income is less
than five hundred thousand shillings have been exempted from paying the new turnover
tax rate.7 However, the cap for SMEs liable to pay the turnover tax has been increased
from the previous five million shillings to fifty million shillings during any year of income.8
This overhaul of the turnover tax regime expands the tax base and is expected to capture
most of the SMEs in the country.


4 “Kenyan leader signs tax bill to help fight coronavirus” 25th April, 2020
https://www.aa.com.tr/en/africa/kenyan-leader-signs-tax-bill-to-help-fight-coronavirus/1818747
5 Section 29(1) & Paragraph 1, Head A, Third Schedule of the Income Tax Act (CAPE. 470), Tax Laws

(Amendment) Bill 2020.
6 Paragraph 9, Third Schedule of the Income Tax Act (CAPE. 470), Tax Laws (Amendment) Bill 2020.
7 Section 12C (1) of the Income Tax Act (CAPE. 470), Tax Laws (Amendment) Bill 2020.
8 Ibid.



https://doi.org/10.6092/issn.1561-8048/10952                                                           2
 Abigail Osiki                                                           Italian Labour Law e-Journal
                                                                        Special Issue 1, Vol. 13 (2020)
                                                           Covid-19 and Labour Law. A Global Review
                                                                             Section: National Reports




4. Large Businesses and Tax Incentives

   To support employers during this pandemic, the government reduced the corporate tax
to 25% for the year 2020 and subsequent years of income. This affects all resident
corporations in Kenya. Through this tax reduction, the government is hoping employers
will retain employees during the Covid-19 pandemic. Many businesses in Kenya’s hardest-
hit-sectors – floriculture, accommodation, food services, aviation as well as the
entertainment industry – have been struggling to remain afloat amidst the disruptions
caused by the Covid-19 pandemic.


5. Health and safety of workers

  The government directed all civil service employees aged 58 years and above in job
Group S and below or their equivalent, to take leave or work from home.


6. Temporary suspension of listing

    The government temporarily suspended the listing with Credit Reference Bureau of any
citizen, Micro, Small and Medium Enterprises (MSMEs) and corporate firms whose loan
facility falls overdue or is in arrears. This was made effective from the 1st April, 2020. This
is to buffer Kenyans from an already battered economy which has been weakened by the
movement restrictions adopted to curb the spread of Covid-19.


7. Vulnerable workers: the self-employed and informal workers

   To mitigate the effects of the Covid-19 pandemic, the national government
appropriated additional Ksh. 10 billion to pilot a cash transfer program that will support
the elderly, orphans and vulnerable children, and people living with severe disabilities.
However, this does not specifically include vulnerable workers such as the self-employed
and informal workers. Apart from donations from large corporations and non-
governmental organisations, this vulnerable category of workers has been largely left from
any coordinated additional form of social assistance protection by the government.


8. Conclusions

  Kenya’s existing social security and labour regulations are insufficient to deal with the
Covid-19 pandemic. While the above measures are commendable, Kenya’s shortcoming in


https://doi.org/10.6092/issn.1561-8048/10952                                                          3
 Abigail Osiki                                                    Italian Labour Law e-Journal
                                                                 Special Issue 1, Vol. 13 (2020)
                                                    Covid-19 and Labour Law. A Global Review
                                                                      Section: National Reports




respect of the informal economy and lack of rescue measures for businesses that have
ceased operation as a result of the impact of Covid-19 need to be addressed.




Copyright © 2020 Abigail Osiki. This article is released under a Creative Commons
Attribution 4.0 International License




https://doi.org/10.6092/issn.1561-8048/10952                                                   4
