Kenya Employer of Record & Payroll
Africa Deployments Kenya offers our clients Employer of Record (EOR) services covering all the regions within. We offer full-time employment or fixed terms contracts based on your requirements in Kenya for locals or expatriates. ADS will take care of the work permit under our umbrella and will issue local work contracts to your contractors. We will also advise our clients on best Human Resource (HR) practices when setting up the employee’s locally in Kenya.
ADS takes care of the local tax & PAYE remittances to the Revenue Services on a monthly basis ensuring that they are fully compliant with the law. We will also ensure that their salaries are paid on time monthly and issue them with their pay slips. In addition to our services, we can offer you the employee in Kenya, Medical, Disability, Life, and Workmen’s Compensation Insurances.
Kenya is an East African nation that is the world’s best safari destination, with 50 epic national parks and reserves that are home to diverse wildlife, including the Big Five.
Kenya has 536kms of Indian-Ocean coastline, and being close to the equator, Kenyan temperatures are warm all year round. Production of tea, coffee, avocados, bananas and more thrive here, and Britain is the biggest importer of Kenyan tea.
Mount Kenya, Africa’s second-highest mountain, resides in The Great Rift Valley which was formed more than 25 million years ago and is ±6500 kilometres long.
The majority of Kenya’s population of ±57 million belong to ‘Bantu’ tribes such as the Kikuyu, Luhya and Kamba.
The largest coastal city is Mombasa, while most Kenyans in the interior live in Nairobi, the capital.
Kenya is the world’s third-largest exporter of cut flowers [especially roses and carnations] and supplies 10,000 tonnes to Britain.
What is the main language spoken in Kenya:
Kenya’s 2 official languages are Swahili and English.
Swahili [local name Kiswahili], is the native language of the Swahili people who are found primarily in Kenya, Tanzania and Mozambique, along the East African coast.
There are 62 other languages used by different ethnic groups across the country, including the Bantu and Nilotic languages.
What type of employment contracts can you offer in Kenya:
Through our employer of record (EOR) solutions in Kenya, we can offer the following types of employment contracts:
- Fixed Term
- Indefinite term
Contracts and Offer Letters must be:
- Be in writing
- Be in the official local language and the local currency
- Include salary/compensation, benefits and termination requirements
Full-time Employees:
- Have specific working terms and conditions
- Can be eligible for organizational perks and/or other benefits
- Tend to be more focused [as only one employer] and familiar with the specific business – due to e.g. ongoing company training etc.
- Probationary period is 6 months [maximum]
- Probationary period may be extended for a further period of not more than 6 months after deliberation with the employee
- A party to a contract for a probationary period may terminate the contract by giving not less than seven days’ notice of termination of the contract, or by payment, by the employer to the employee, of seven days’ wages in lieu of notice
WHAT INCOME IS TAXABLE IN Kenya:
Any individual who works and lives in Kenya will be subject to local taxes in Kenya. The tax years from effectively from 1st January to 31st December of the following year. Resident Employees are taxed on worldwide earned income in respect of any services rendered in Kenya or outside Kenya.
Any income earned in the form of cash, wages, salary, overtime, leave pay or payment in lieu of leave, commissions, gratuity, bonus, or any amount that has benefited the employee. All income will be taxed in accordance with the law and the final payroll issued monthly.
What income is exempt from taxes in Kenya:
- Alimony payments are deductible.
- Mortgage interest expenses are deductible.
- Taxes paid are deductible.
- Charitable contributions are not deductible.
- Childcare expenses are not deductible.
- Education expenses are not deductible.
- Healthcare expenses are not deductible.
- Life insurance premiums are not deductible.
Standard working hours: Number Overtime to be paid?
- Standard working hours in Kenya are 52 hours per week.
- This translates to 8 hours per day for 6 days a week.
- Any hours worked beyond the standard working hours are considered overtime.
- Overtime pay rate is at least 1.5 times the hourly rate for weekdays.
- Overtime pay rate is at least 2 times the hourly rate for rest days or public holidays.
Mandatory contributions?
Employee
| Contribution Type | Contribution Rate |
|---|---|
|
National Social Security Fund (NSSF) |
6% of monthly gross salary |
|
National Health Insurance Fund (NHIF) |
Fixed monthly rate based on salary range |
|
National Hospital Insurance Fund (NHIF) |
Varies based on employment sector and income level |
|
Pay-As-You-Earn (PAYE) Tax |
Progressive rates based on income |
Employer
| Contribution Type | Contribution Rate |
|---|---|
|
National Social Security Fund (NSSF) |
6% of employee's monthly gross salary |
|
National Health Insurance Fund (NHIF) |
Deduct and remit employee's NHIF contributions |
|
National Hospital Insurance Fund (NHIF) |
Varies based on employment sector and income level |
|
Pay-As-You-Earn (PAYE) Tax |
Progressive rates based on income |
Social
| Contribution Type | Employers | Employees |
|---|---|---|
|
National Social Security Fund (NSSF) |
Contribute 6% of employee's monthly gross salary |
Contribute 6% of monthly gross salary |
|
National Health Insurance Fund (NHIF) |
Deduct and remit employee's NHIF contributions |
Pay fixed monthly rate based on salary range |
|
National Hospital Insurance Fund (NHIF) |
Varies based on employment sector and income level
|
Varies based on employment sector and income level
|
|
Pay-As-You-Earn (PAYE) Tax |
Deduct and remit employee's income tax to the tax authorities |
N/A (Employee pays the tax directly to the tax authorities)
|
What is the Maternity and Paternity policy within Kenya:
- Women have a right to three months of paid maternity leave (in lieu of annual leave).
- A male employee is entitled to two weeks of paid paternity leave.
What type of leave is allowed in Kenya:
Annual leave
- Every fixed-term and permanent employee is entitled to at least 21 working days of paid time off per year. When an employee’s job is terminated after two or more months of service, they are paid for one and a half days of leave for each month that they have worked.
Sick leave
- An employee becomes eligible for sick leave (at least 7 days with full pay, followed by 7 days with half-pay) after serving their employer for two consecutive months.
- Above is as per Section 30 of the Employment Act, 2007.
- However, employers may be expected to apply the Regulations under the repealed Employment Act (Cap 226) which provide for 30 days full pay and 15 days half pay.
Do I need to pay a mandatory bonus annually OR is it discretionary in Kenya:
There is no statutory requirement to pay a 13th or 14th month salary / bonus in Kenya.
However, bonuses are fairly common for employees and usually based on performance and/or length of employment. Usually the amount equates to 1 month’s salary.
What Gratuity / Severance payments do you need to provide for Kenya:
- Gratuity is not mandatory in Kenya, and it is not a statutory requirement for employers to provide gratuity payments to employees.
- However, some employment contracts or collective bargaining agreements may include provisions for gratuity payments. It depends on the terms negotiated between the employer and employee.
- If the employee has been employed for less than 12 months, they are not entitled to severance pay.
- If the employee has been employed for at least 12 months but less than 5 years, they are entitled to 15 days of pay for each completed year of service.
- If the employee has been employed for 5 years or more, they are entitled to 30 days of pay for each completed year of service.
CAN YOU GIVE FRINGE BENEFITS IN Kenya:
Yes, you can but keep in mind that Fringe Benefits will be subject to employee PAYE tax. Only benefits that cannot be converted to cash will not be subject to tax. Only if the total value of all non-cash fringe benefits, excluding housing and company cars, reaches 3,000 Kshs per month or 36,000 Kshs per year is the total liable to employee tax.
Mandatory Probation period of Kenya:
- The probationary period is determined by the employer and stated in the employment contract or company policies.
- The duration of the probationary period can vary, typically ranging from 3 to 6 months.
- At the end of the probationary period, the employer may confirm the employee’s permanent employment or terminate their contract based on performance and conduct.
Is 13th month pay (Bonus) mandatory?
Not mandatory, applicable as per contract.
What are the Corporate and VAT / Sales tax rates in Kenya:
Corporate Tax Rates: 30% [in general]
VAT / Sales Tax Rates: 16% [on most goods and services]
Public Holidays in Kenya:
- January 1 - New Year's Day
- January 2 -New Year's Day
- April 07 - Good Friday
- April 10 - Easter Monday
- April 21 - Idd-ul-Fitr
- May 01 - Labour Day
- June 01 - Madaraka Day
- June 28 - Idd-ul-Azha
- October 10 - Utamaduni Day
- October 20 - Mashujaa Day
- December 12 - Jamhuri Day
- December 25 - Christmas Day
- December 26 - Boxing Day
What Industries we support in Kenya:
- Non-Governmental Organization’s (NGO) / Non- profit
- Engineering & Construction
- Government / Development Agencies
- Oil & Gas
- FMCG & Manufacturing
- Private Equality, Finance, Insurance & Banking
- Mining
- Agriculture
The information provided above is for an “informative decision” and may change at any given time without prior notice. We always suggest speaking to one of our Sales Consultants before engaging in country.
