Abstract: The study sought to examine the effect of compensation on performance of public secondary school teachers in Eldoret Municipality Uasin Gishu County,Kenya.Teachers in Kenya have always portrayed lack of devotion in their work places. This is evident in their instability in the teaching profession and low morale in performing their teaching tasks and hence unsatisfactory performance. Poor remuneration has often been given as a cause of low morale among teachers thus leading to numerous strikes. The problem of inadequate compensation makes the teachers dissatisfied, thus leaving the profession to other well or better paying jobs. The study was carried out among public secondary school teachers in Eldoret municipality; Uasin Gishu County. The study adopted descriptive survey design. Simple random sampling was used to select the teachers and purposive sampling to select the head teachers. The sample population comprising of 114 teachers and 14 head teachers, was selected for the study. Questionnaires and interview schedule were used to collect data.91 out of 114 questionnaires were returned for the teachers and 11 out of 14 questionnaires for the head teachers were returned. Data collected was then coded, analyzed and presented by use of descriptive statistics such as frequency tables, percentages, mean graphs and pie-charts. Based on the findings the study concluded that fair compensation has an effect on public secondary school teachers’ performance this is because the compensation policy in place demoralizes the teachers, does not enhance task performance and negatively affects the productivity of the teachers in the schools.