Kenya Payroll — Complete Guide to Statutory Payroll Processing

Running payroll in Kenya requires more than calculating salaries. Every employer must deduct and remit KRA PAYE on a progressive scale, contribute to NSSF, remit SHA levies, manage NITA training levies and comply with the Employment Act 2007 on leave and payslip obligations. This guide covers the full Kenya statutory payroll cycle from gross-to-net calculation through to annual KRA employer returns.

Quick facts: Kenya statutory payroll

• KRA PAYE follows a progressive band system; remitted by the 9th of the following month
• NSSF contributions apply under the NSSF Act 2013; both employee and employer contribute
• SHA (Social Health Authority) replaced NHIF from October 2023; contributions are 2.75% of gross pay, employer-remitted
• NITA levy of KES 50 per employee per month applies to eligible employers
• The Employment Act 2007 mandates minimum leave entitlements and payslip provision

Step 1 – Calculate Gross Pay

Gross pay includes basic salary plus all cash allowances (housing, transport, meals), the taxable value of benefits and any commission or variable pay in the month. All recurring cash payments are included in the gross for KRA PAYE purposes.

Step 2 – NSSF Contribution

NSSF contributions are deducted from the employee and matched by the employer. The applicable rate follows the NSSF Act 2013. NSSF is remitted monthly.

Step 3 – SHA Contribution

The Social Health Authority levy replaced NHIF from October 2023. The SHA contribution rate is 2.75% of gross pay, with the employer deducting from the employee’s salary and remitting the total monthly.

Step 4 – KRA PAYE Calculation

Taxable pay is gross pay minus NSSF employee contribution and any approved pension deductions. KRA PAYE is then applied using the progressive band rates published annually by the Kenya Revenue Authority (KRA). The tax payable is reduced by the personal relief (KES 2,400 per month). PAYE is withheld monthly and remitted by the 9th of the following month.

Step 5 – Employer Contributions Summary

Step 6 – Issue Payslips

The Employment Act 2007 requires every employer to provide employees with a written statement of earnings and deductions at each pay period. Payslips must show gross pay, all deductions (PAYE, NSSF, SHA) and net pay. Digital payslips are permitted.

Step 7 – Remit by the 9th

KRA PAYE, NSSF and SHA contributions are all due by the 9th of the month following the payroll month. Late remittance triggers KRA penalty notices and interest at 2% per month on overdue PAYE.

Step 8 – Annual KRA Employer Return

By 30 June each year, employers must file the annual PAYE return with KRA reconciling total PAYE deducted against total chargeable income for each employee during the year. This is in addition to the monthly employer returns filed with each PAYE remittance.

Frequently Asked Questions

What are the KRA PAYE bands in Kenya?

KRA PAYE follows progressive bands published annually. As a general guide: the first KES 24,000 per month is taxed at 10%, with higher bands attracting higher rates up to 35%. The personal relief of KES 2,400 per month reduces the tax payable for resident employees.

What replaced NHIF in Kenya?

The Social Health Authority (SHA) replaced NHIF from October 2023 following the Social Health Insurance Act 2023. SHA contributions are 2.75% of gross pay (employee-borne but employer-remitted). Bergmont Employer of Record Limited applies the current SHA rate in every monthly payroll run.

Is there a minimum wage in Kenya?

Yes. Kenya’s minimum wages are set by order by the Ministry of Labour and Social Protection, with different rates by sector and job grade. Bergmont Employer of Record Limited applies the current minimum wage rates for each employee category.

About Bergmont Employer of Record Limited

Registered Company Name: Bergmont Employer of Record Limited

Address: Mercantile House, Koinange Street 2nd floor, Office 202, P.O Box 4979-00200, Nairobi, Kenya

BRS: PVT-BEUE3LMJ | KRA PIN: P052386396W

Website: kenyadeployments.com

Kenya payroll compliance runs on a tight monthly calendar – KRA, NSSF and SHA all due by the 9th. Bergmont Employer of Record Limited processes payroll for every employee category and manages every filing deadline so Kenya employers never face late-payment penalties.

Reviewed by: Africa Deployments Compliance Team