Kenya has one of East Africa’s most active hiring markets, and if you’re bringing on employees there, you’ll need to get payroll right from day one. The rules cover everything from how often you pay to which statutory contributions you’re on the hook for as an employer. This guide walks through what foreign companies need to know to run compliant payroll in Kenya.
How payroll works in kenya
Kenya’s payroll framework is governed primarily by the Employment Act and administered through the Kenya Revenue Authority (KRA). As an employer, you’re responsible for calculating and remitting several statutory deductions on behalf of your employees each month, in addition to your own employer contributions. All payroll is denominated in Kenyan Shillings (KES).
Before you can run payroll, you must register with the KRA and obtain a PIN (Personal Identification Number). The KRA’s iTax platform is where you’ll file monthly PAYE returns and remit all statutory deductions. Getting registered and set up on iTax before your first hire is essential because late filings carry penalties.
Employment contracts
Kenyan law requires that you deliver a written employment contract to each employee within seven days of their start date, with full terms provided within two months. Contracts must be written in English. The contract should cover salary, working hours, leave entitlements, and termination provisions.
Probation periods are capped at six months. With the employee’s written consent, you can extend probation for a further six months. During probation, either party can end the contract with just seven days’ notice. After probation, the minimum notice period is one month for employees with up to five years of service, rising to two months for employees who’ve been with you longer.
Pay frequency and deadlines
Employees in Kenya must be paid monthly, and wages must be paid before the end of the month. Delaying payment beyond the last day of the month puts you in breach of the Employment Act.
Kenya’s minimum wage varies by sector and location. In major cities, the minimum sits at approximately KES 16,113.75 per month as of 2026. Always check the applicable rate for your employee’s role and location, as sector-specific minimums can differ.
When an employee’s contract ends, their final pay must be settled on or before the next payday following the termination date. You’re also required to issue a certificate of service to any employee who has worked for you for more than four weeks. Failing to do so can result in a fine of up to KES 100,000 and/or up to six months’ imprisonment.
Statutory contributions
Kenya has three mandatory statutory schemes that affect payroll calculations. As an employer, you contribute to two of them directly and deduct and remit the third on the employee’s behalf.
Nssf (national social security fund)
The NSSF was reformed significantly, and the current framework (in effect from February 2026) applies a tiered contribution structure. Both employer and employee each contribute 6% of gross earnings, but contributions are capped by tier.
- Tier I covers earnings up to KES 9,000, with a maximum employer contribution of KES 540 per month at this tier.
- Tier II covers earnings between KES 9,001 and KES 108,000, giving a combined monthly ceiling on employer contributions of KES 6,480.
The maximum total employer contribution per employee is KES 6,480 per month. NSSF contributions are due to the NSSF by the 9th of the month following the payroll period.
Shif (social health insurance fund)
SHIF replaced the former NHIF and is funded entirely by employee contributions at a rate of 2.75% of gross monthly earnings. There’s no employer match, but you’re responsible for deducting the contribution from the employee’s pay and remitting it to SHIF. The minimum contribution is KES 300 per month. SHIF is also due by the 9th of the following month.
Affordable housing levy
The Affordable Housing Levy applies at 1.5% for the employer and 1.5% for the employee, calculated on gross monthly earnings. You deduct the employee’s portion and remit both contributions through the KRA on iTax alongside the monthly PAYE filing.
Paye income tax
Pay As You Earn (PAYE) is deducted from employee salaries and remitted to the KRA monthly. Kenya uses a progressive tax rate structure applied to monthly gross income:
| Monthly gross income (KES) | Rate |
|---|---|
| First 24,000 | 10% |
| Next 8,333 | 25% |
| Next 467,667 | 30% |
| Next 300,000 | 32.5% |
| Above 800,000 | 35% |
Every employee is entitled to a personal relief of KES 2,400 per month, which is deducted from their calculated tax liability before remittance.
PAYE returns are filed monthly on iTax and the tax must be remitted to the KRA by the 9th of the following month. Late payment attracts a penalty of 5% of the tax due, plus interest at 1% per month. Staying on top of the iTax filing calendar is one of the most operationally intensive parts of running Kenyan payroll from abroad.
Payroll records and compliance
You’re required to maintain accurate payroll records for each employee, including gross earnings, all deductions, and net pay. These records support your monthly KRA filings and must be available for audit.
Key compliance dates to track each month:
- End of month: Employee salaries due
- 9th of following month: PAYE, NSSF, SHIF, and Affordable Housing Levy all due
Missing these deadlines triggers penalties across multiple agencies simultaneously, so having a reliable payroll calendar is essential.
How an EOR handles kenyan payroll
Running payroll in Kenya as a foreign company means registering with the KRA, maintaining an entity or working through a local structure, filing monthly on iTax, and staying current with regulatory changes like the NSSF reform. For many companies hiring one or a handful of Kenyan employees, that operational overhead isn’t worth building in-house.
An Employer of Record (EOR) employs workers in Kenya on your behalf and takes on full payroll and compliance responsibility. The EOR handles KRA registration, monthly PAYE filings, NSSF, SHIF, and Affordable Housing Levy remittances, and all employment documentation. You manage the day-to-day work; the EOR manages the compliance.
If you want to understand how the model works in more detail before committing, read what is an Employer of Record. For a comparison of providers, see best EOR services.
If you’re working with independent workers in Kenya rather than employees, you’ll want to make sure the engagement is structured correctly. RemotePass also supports contractors and can help you determine the right classification from the start.
Ready to hire in kenya?
Kenya’s payroll rules are manageable once you know what’s required, but the monthly filing obligations and multi-agency remittance schedule add real administrative weight. Whether you’re hiring your first Kenyan employee or scaling a team, RemotePass can handle the compliance so you don’t have to.
Book a demo to see how RemotePass manages Kenyan payroll end to end.
