Career advice · Updated October 2026

When Your Employer Goes Bust in Kenya: Unpaid Salary, Administration and Your Rights

Salaries arrive late, then stop. A notice goes up saying the company is “under administration”, or a liquidator is appointed. For employees, the first questions are simple: will I be paid, and who pays me? Kenyan law gives some answers. Part VIII of the Employment Act, 2007 sets up a scheme for paying certain debts to employees of an insolvent employer, and other rules give wages priority. This guide explains employer insolvency in Kenya from the worker’s side, and the steps to take.

When is an employer “insolvent”?

Section 67 sets out when an employer is insolvent for the purposes of Part VIII:

• An individual employer who has been adjudged bankrupt, has made a composition or arrangement with creditors, or has died and whose estate is to be administered under the Law of Succession Act.
• A company where a winding-up order or an administration order has been made, or a resolution for voluntary winding up has been passed, or a receiver or manager has been appointed, or debenture holders under a floating charge have taken possession of property.

So a company placed under administration, as Business Radar reported for Convex Commodity Merchants under PwC administration, falls within the definition, as does a company in liquidation.

The Part VIII payment scheme

Section 66 says that if the Cabinet Secretary is satisfied, on a written application by an employee or their representative, that:

1. the employer has become insolvent;
2. the employee’s employment has been terminated; and
3. on the appropriate date, the employee was entitled to all or part of a debt covered by Part VIII,

then the Cabinet Secretary shall pay the employee the amount owed out of the National Social Security Fund, subject to the limits in section 69.

Which debts are covered

Section 68 lists five:

The limit

Section 69(1) caps the amount for any debt that relates to a period of time at KSh 10,000 or half of the monthly remuneration, whichever is greater, for each month, with a proportionate amount for a shorter period. Section 69(2) lets the Cabinet Secretary vary the limit by gazette notice.

For example, if your monthly pay was KSh 60,000 and you are owed three months’ wages, the cap for each month is the greater of KSh 10,000 and KSh 30,000, so up to KSh 30,000 a month, or KSh 90,000 for the three months, would be covered by the scheme. The rest of what you are owed remains a claim against the employer.

The role of the administrator or liquidator

Under section 70, where an administrator, liquidator, bankruptcy trustee or similar “relevant officer” has been appointed, the Cabinet Secretary must first receive that officer’s statement of how much the employee was owed and remains unpaid. The officer must give the statement on request. If the Cabinet Secretary is satisfied without it, payment can be made anyway.

If you are refused or underpaid

Section 71 lets you complain to the Employment and Labour Relations Court that the Cabinet Secretary failed to pay, or paid less than was due. The complaint must be presented within three months of the decision being communicated to you, unless the court finds that was not reasonably practicable.

What happens after you are paid

Under section 72, once the Cabinet Secretary pays you, your rights against the employer for that amount pass to the Cabinet Secretary, including any priority the debt had. Any sum recovered goes back to the NSSF. You keep your own claim for any balance above what the scheme paid.

Other protections for wages

• Priority on attachment. Under section 17(6), when an employer’s property is attached to satisfy a court decree, the proceeds cannot go to the decree-holder until a decree for employees’ wages is satisfied, up to six months’ wages. Section 17(8) says this does not apply where the employer is insolvent under Part VIII, which then applies instead.
• Preferential claims. In a liquidation, the Insolvency Act gives some employee claims priority over ordinary unsecured creditors. Lodge a proof of debt with the liquidator or administrator for everything you are owed.
• Your pension and NSSF savings. Contributions already in your NSSF account or in a registered pension scheme are held separately from the employer’s assets. Check that deductions shown on your payslips were actually remitted; Business Radar explains current NSSF rates, and our guide to NSSF, SHIF and the Housing Levy explains how to check your statement.

Is administration the end of your job?

Not automatically. An administrator’s aim is often to keep the business going or sell it, so staff may keep working. If you are kept on, you should be paid for work done during the administration. If you are made redundant, the usual rules apply: notice, payment for untaken leave, and severance pay of at least 15 days’ pay for each completed year of service under section 40(1)(g). Our redundancy guide explains the process, and the terminal dues calculator works out the amounts.

Step-by-step: what to do if your employer is insolvent

1. Confirm the status. Find out whether there is an administration order, a winding-up order, a voluntary liquidation or a receivership, and who the officer is. Insolvency appointments are published in the Kenya Gazette.
2. Write down what you are owed. Unpaid months, notice, untaken leave days and any severance. Use your contract, payslips and bank or M-Pesa records.
3. Lodge a claim with the administrator or liquidator. Ask for their proof of debt form and the deadline.
4. Apply in writing under section 66. Write to the Cabinet Secretary for Labour, through your county labour office, setting out the insolvency, your termination date and the debts covered by section 68. Attach evidence and the officer’s details.
5. Ask the officer for a section 70 statement. It speeds up the Cabinet Secretary’s decision.
6. Diary the deadlines. Three months to complain to the ELRC under section 71, and generally three years for other employment claims under section 89.
7. Ask for your certificate of service. Section 51 applies, and the officer can issue it. See our certificate of service guide.

If you are filing in court, our guide to filing a case at the ELRC explains the documents you need.

Key takeaways

• Administration, liquidation, receivership and bankruptcy all count as insolvency under section 67.
• Part VIII lets employees apply to the Cabinet Secretary for payment from the NSSF of up to six months’ wage arrears, notice pay, leave pay and some other debts.
• Each month is capped at KSh 10,000 or half your monthly pay, whichever is greater.
• You can complain to the ELRC within three months if the payment is refused or too low.
• Lodge a claim with the administrator or liquidator for the full amount you are owed.

For your wider rights, read our plain-English guide to the Employment Act, and browse new jobs in Kenya if you need to move quickly.

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