Kenya Legal Implications of the COVID-19 Pandemic

Background information

COVID-19 (Coronavirus) is a virus that affects humans and animals. Some of the severe coronaviruses that have been reported by various agencies before are severe acute respiratory syndrome (SARS) and the Middle East respiratory syndrome (MERS).

The first novel COVID-19 was first reported in Wuhan City in China in December 2019. It has since spread more widely in China and many other countries including Kenya. The World Health Organization (WHO) has categorized COVID-19 as a pandemic.

As of 17th March 2020, around 187,000 cases had been confirmed in more than 100 countries globally. While the crisis continues to evolve rapidly and Governments around the world dealing with the immediate threat, the long-term impacts of the virus require analysis and planning.

The team of B M Musau & Co., Advocates LLP has developed this article to support our clients in making the right decisions that affect our clients’ businesses. We have highlighted critical areas of interest that will help our clients to make informed business choices.

Implications of COVID-19 in Kenya 

On 13th March 2020, the Government of Kenya received confirmation of the first case of COVID-19. The Government has been working to monitor the spread of the virus by putting in place measures and protocols across the country aimed at combating the virus and possibly mitigating the devastating effects of the illness.

The Government has suspended travel for all persons coming into Kenya for 30 days from any country with reported Coronavirus cases. However, Kenyan Citizens and foreigners with valid residence permits will be allowed into Kenya provided they proceed on self-quarantine or to a Government designated quarantine facility.

Data Protection

We recently wrote an article on data protection where we highlighted the salient features of the Data Protection Act, 2019, which can is available here https://www.bmmusau.com/the-kenya-data-protection-act-2019/.

Data concerning the health of an individual is considered personal data. Strict compliance of the Act should be adhered to when it comes to data collection and processing.

Employment 

The COVID-19 has brought along some challenges in the employment sector. The Government of Kenya has advised that where possible, government offices, businesses and companies are encouraged to allow employees to work from home, except employees working in critical or essential services. It is now a matter of collective and individual responsibility to minimize the possibility of spreading COVID-19 in the workplace.

• Occupational health and safety

The Kenya Occupational Safety and Health Act, 2007, mandates an employer to ensure that a workplace is healthy and safe for visitors, clients and employees at the workplace. In these present circumstances, employers are encouraged to take reasonable measures at the workplace to protect employees from COVID-19 and ensure compliance with the Occupational Safety and Health Act. 

Employers should be pro-active in ensuring that employees’ health and safety is guaranteed. Employers should consider educating employees about the various precautions which people are required to take. Furthermore, employers may provide soap and water as well as sanitizers in a bid to curb the high spreading rate of COVID-19.

• Sick leave

Globally, Governments have been encouraging people who suspect to have the COVID-19 to self-quarantine. The Regulation of Wages (General) Order states that an employee is entitled to a sick leave of thirty days with full pay per year  and 15 days’ sick leave with half pay per year. On the other hand, the Employment Act, 2007 states that employees who have been in employment for two consecutive months are entitled to a seven-day sick leave with full pay and a further seven days with half pay each year. Based on practice, most employment contracts provide for the thirty days per year sick leave under the Regulation of Wages (General) Order.
The sick leave periods provided under the contract of employment or otherwise through legislation would apply given the COVID-19 pandemic.

• Place of work

The current Kenyan Labour Laws do not regulate the place of work. However, most employment contracts provide for the place of work of an employee. In most cases, it is the location of the business, company or organization. However, given the Government’s appeal in consideration of the spread of COVID-19, employers should make arrangements with employees to work from home for the safety and health of both the employers and employees.

The Kenyan labour laws are silent on the procedure to be followed by employers in case of an outbreak of an infectious disease. The Kenya Centre for Disease Control and Prevention (the “CDC”) published a manual called “the Interim Guidance for Businesses and Employers” The manual provides some measures that employers should adopt. The measures include:

1. Having work from home policies to allow employees to work remotely;
2. Communication to employees about the virus, symptoms, how it is spread and measures that employees should adopt to curb the spreading of the virus;
3. Limiting travel especially to high-risk areas;
4. Encourage employees who have travelled to high-risk to quarantine for at least fourteen days; and
5. Replacing physical meetings with conference calls.

Contracts 

One of the foundational principles governing contracts is performance. Performance means meeting obligations stipulated in a contract. If a party to a contract fails to perform the obligations stipulated in a contract, it amounts to non-performance.

However, most contracts have a “force majeure” clause embedded in them. “Force majeure” means unforeseeable supervening circumstances that prevent a person from discharging contractual obligations. The COVID-19 may be classified as an unforeseen event falling under the scope of force majeure. Given the various measures put in place by Governments around the world, it may be impossible to perform some contractual obligations.

Force majeure clauses offer relief to parties who are genuinely unable to perform their obligations. In most cases, the affected party should notify the other party of the possibility of non-performance. It is imperative to demonstrate that the non-performance is as a result of an unforeseeable circumstance such as COVID-19. The clause should not be used as mischief to shield parties who are cunningly looking for ways to avoid performing their contractual obligations.

The validity of invoking a force majeure clause depends on a contract. Some contracts provide for termination of the contract while other contracts provide for the suspension of the obligations.

Parties in existing contracts should review their contracts and see if the contracts have force majeure clauses and whether COVID-19 is as an unforeseeable circumstance. If a contract has a force majeure clause and COVID-19 would fall under it, the affected party should follow the procedure laid down in the contract as soon as possible.

If your existing contract does not have a force majeure clause, you should consider discussing it with the other party or parties to include an appropriate force majeure clause on the COVID-19 and other circumstances basis.

If you consider to enter into a new contract, we recommend that you should carefully negotiate the contractual terms and consider the importance of having an appropriate force majeure clause.

The economy

Without a doubt, the COVID-19 outbreak has already affected the economy. Based on reports by economic experts, the economy may encounter redundancies, profit warnings by companies, an increase in insolvency cases as well as auctions and a strain in the banking and finance sector.

Trade resulting from imports and exports trade will be affected. China, which is one of the largest manufactures closed down various industries. As a result, trade supplies which primarily originate from China have been declining. In the coming months, exports from China will be expensive due to the economics of demand and supply. As it is already, imports from China to Kenya over the past two months have significantly reduced by approximately US$579 million.

Taxes

The country’s economy will be prejudiced. The Kenya Revenue Authority (“KRA”) may have problems when it comes to collecting revenue. Unlike France which has suspended tax collection during this period, the Government of Kenya has remained silent on this area and the KRA offices are still open despite COVID-19. The KRA still expects businesses to file and submit their returns. The Tax Procedures Act states that persons that are unable or foresee challenges in submitting returns due to operational difficulties should seek for extension of time. It is advisable for a company or business that anticipates inability to file returns, to write to KRA asking for an extension of time.

Securities Exchange

Locally in Kenya, the Nairobi Securities Exchange (“the NSE”) halted trading on 13th March 2020 within a few hours after the Government confirmed the first COVID-19 case in Kenya. As a result, investors lost approximately KShs.119.6 billion. However, on 16th March 2020, the NSE shared a statement stating that trading had resumed with local investors taking up to 49.4 % of the market activity.

The Government has appealed to mobile money operators and banks to reduce transaction costs in a bid to support the Government’s plan encouraging Kenyans to use cashless transactions. Mobile money operators and banks are responding positively to the Government’s directive. On 16th March 2020, Kenya’s largest mobile money operator, Safaricom PLC issued a position statement stating that it has waived fees for transactions below KShs.1,000. On 17th March 2020, Absa Bank Group PLC waived its fees on some transactions to support cashless transactions.

The Judiciary

Globally, in the legal system, the last few days has seen a raft of cancellations and postponements of court hearings. On 15th March 2020, the Chief Justice of the Supreme Court of Kenya through a press statement suspended that court hearings and mentions for a period of four weeks unless the matter is coming up under a certificate of urgency. 

Court systems built around technology will surely go a long way to reduce the problems. The Judiciary has been proactive in making use of technology. The Judiciary made an announcement encouraging litigants to make use of the e-filing system when registering matters although the system is for the time being only available for the Nairobi Milimani Commercial Division of the High Court of Kenya.

The courts should make use of video conferences, teleconferences, and live conferences.

Other institutions

The Government suspended learning in all the educational institutions with immediate effect until further notice.

The Government has also encouraged citizens to avoid congregations, especially in places of worship, social gatherings, shopping malls, entertainment premises, hospitals and public transport.

Conclusion

The effect that the COVID-19 has had in the world remains unprecedented, and we should only hope for better times ahead.  In the meantime, our team of B M Musau & Co., Advocates LLP will continue providing high-quality legal services to our clients in line with the firm’s commitment. We will keep updating our clients on the unfolding occurrences resulting from COVID-19 both locally and internationally as they materially affect the Kenya legal system and operating circumstances.