In hospitality, we don't have "normal" working hours. We work when others are resting — early breakfasts, late check-outs, Easter weekend rush, December high season.

But the Employment Act, 2007 doesn't have a "hospitality exception." That disconnect is where most hotels, restaurants, lounges, and Airbnbs in Kenya get into trouble.

At Hocan Holdings, we audit dozens of hospitality businesses every year and we see the same pattern: passionate owners, hardworking staff, but HR practices that are one resignation, one labour officer visit, or one WhatsApp rant away from a costly legal dispute.

This blog breaks down the Act the way it actually applies to you.

1. The Casual Labour Trap - Your Biggest Risk

What the law says: Under Section 37, if a casual employee works continuously for more than 3 months, or works for more than 24 hours a week for more than 2 months, they are deemed to have converted to a term contract.

The hospitality reality: You hire 5 casual waiters for the festive season. January becomes low season, you tell them "we'll call you." In April, you call 3 back. You think they are still casuals.

Legally, they are not. They are now term employees entitled to full benefits, and if you stop calling them, that's unfair termination.

What compliant businesses do: They have a proper casual register, clear casual contracts stating daily rate, and a formal conversion process after the threshold. We help you structure this so you stay flexible without creating liabilities.

2. Working Hours, Overtime and Night Work

What the law says: Section 27 caps working hours at 52 per week (45 hours is the norm in the hospitality sector under the Regulation of Wages Order for Hotels and Catering). Any hour beyond that is overtime at 1.5x, and double on rest days and public holidays. Night work requires specific allowances.

The hospitality reality: Your chef works 6 days a week, 10 hours a day. Your housekeeper works on Madaraka Day without extra pay because "that's peak." Your night auditor works 7pm to 7am with no night allowance.

That payslip is a time bomb. The Employment and Labour Relations Court is awarding overtime backdated for 3 years plus penalties.

What compliant businesses do: They implement shift rosters that respect the 52-hour rule, track clock-in/out, and have a written overtime policy signed by staff.

3. Wages, Payslips and the Service Charge Question

What the law says: Sections 35, 40 & 44 - You must pay at least the minimum wage gazetted under the Hotels and Catering Order, you must provide an itemized payslip, and you can only make lawful deductions. You must also remit NSSF, SHIF, and PAYE by the 9th.

The hospitality reality: Paying a consolidated "Ksh 25,000" with no payslip. Deducting breakages, lost towels, or till shortages directly from salary. Treating service charge as a "bonus" you can withhold.

Both are illegal. Deductions for breakage require written employee consent and cannot exceed 50% of wages. Service charge, once collected from customers, becomes part of the employment benefit if it's in the contract or custom — you cannot use it to top-up minimum wage.

4. Leave - Not a Favour, a Right

  • Annual Leave: 21 working days after 12 months. You cannot pay it off unless the contract ends. "We are too busy for leave in December" is not a legal reason to deny leave.
  • Sick Leave: 7 days full pay + 7 days half pay after 2 months of service.
  • Maternity/Paternity: 90 days maternity and 14 days paternity at full pay. You cannot send a pregnant waitress home unpaid.

We see many businesses lose cases because they had no leave records at all. Section 74 requires you to keep them for 5 years.

5. Housing, Meals and Uniforms

The Regulation of Wages for this industry is clear: If you do not house your staff, you must pay a house allowance - at least 15% of basic pay. If your staff works in a restaurant, you must provide a free meal on duty or a meal allowance. And if you require a specific uniform, apron, or black-and-whites, YOU provide it and launder it. Deducting uniform costs is non-compliant.

6. Discipline and Termination: The WhatsApp Firing Will Cost You

Section 41 and 45: Even if a waiter insults a guest, you cannot fire them on the spot. You must issue a Notice to Show Cause, hold a hearing, allow a witness of their choice, and allow an appeal. Summary dismissal is only for gross misconduct and must follow procedure.

The average award for unfair termination we see in hospitality? 6-9 months' gross salary plus 12 months compensation for procedural unfairness. For a Ksh 40,000 supervisor, that's over Ksh 600,000.

7. Sexual Harassment and Safety - A Non-Negotiable for Licensing

Section 6 requires every establishment with 20+ employees to have a Sexual Harassment Policy. In hospitality, with alcohol, night shifts, and power imbalances, this is critical. County liquor licensing and Tourism Regulatory Authority (TRA) inspectors now ask for it. Without it, you won't get or renew your license.

This ties directly into WIBA and OSHA - you must have insurance and a safe workplace. A kitchen burn without a documented safety training is your liability.

The Cost of "We Have Always Done It This Way"

Non-compliance doesn't just mean a court case. It means:

  • Failed TRA and County licensing audits
  • KRA penalties for unremitted PAYE
  • Demotivated staff, high turnover, and theft - because unfairness kills loyalty
  • Bad online reviews from ex-employees

You didn't start your hotel or restaurant to become a labour lawyer. You started it to host.

How Hocan Holdings Takes This Off Your Plate

We built Hocan Holdings specifically for businesses like yours - where compliance, people, and operations collide every single day. We don't just give you advice; we implement it.

1. Licensing & Compliances: We handle your TRA licensing, County Single Business Permit, liquor licenses, food hygiene, fire safety, NEMA, Music Copyright (KECOBO/MCSK), and ensure your HR file meets the requirements of Section 74 of the Employment Act.

2. Overall HR Management: From drafting compliant contracts (casual, fixed-term, permanent), HR manuals, and payslips to managing your payroll, NSSF, SHIF, PAYE remittances and leave trackers. We become your outsourced HR office.

3. Logistics: We streamline your supply chain - from kitchen stock, beverage procurement, linen logistics to last-mile delivery - so your wage bill isn't eaten by wastage and stock-outs.

4. Staff Training: We train your team on customer service, food safety, sexual harassment awareness, disciplinary procedures, and supervisory skills. Compliant staff are confident staff.

5. Business Advisory & Business Management: We audit your labour costs, optimize your rostering to control overtime, and advise on the right staffing model for high and low season. We help you grow profitably, not just legally.

In hospitality, compliance IS good business.

Let us audit your current HR and licensing status - free. We'll show you where you are exposed and give you a clear 30-day roadmap to full compliance.

Ready to make your business inspection-proof and staff-loyal?

Contact Hocan Holdings Limited today!