NSSF is 6% from you and 6% from the employee (on a tiered basis). NHIF is tiered by salary — employee pays; employer has no direct NHIF contribution. The Housing Levy is 1.5% from the employer and 1.5% from the employee on gross salary (subject to the current legal framework; confirm status as it has been contested). Add that up: employer statutory cost is roughly 7.5% plus your share of any pension above NSSF. Budget 8–10% on top of gross before PAYE.

Payroll and tax

PAYE runs on bands. First KES 24,000 at 10%, next KES 8,333 at 25%, next KES 467,667 at 30%, next KES 400,000 at 32.5%, and above KES 900,000 at 35%. Personal relief and other deductions apply. Monthly PAYE, NSSF, NHIF, and Housing Levy go to KRA (Kenya Revenue Authority) and the respective bodies. NSSF has a ceiling; NHIF tiers mean higher earners pay more. Late filing triggers penalties.

The Employment Act 2007 sets the floor: written contract, maximum 52 hours per week (or 12 hours’ overtime in a week with consent), overtime at 1.5× for weekdays and 2× for rest days and holidays. Leave: 21 days annual, 14 weeks maternity at full pay (first 2 months) then 2/3, 2 weeks paternity, and sick leave as per contract or practice.

Employment law and contracts

Written contracts are required. Probation is allowed (max 6 months, extendable once to 12 in some cases). Termination: notice as per contract (minimum 28 days for monthly paid) or payment in lieu. Dismissal for cause requires a fair process — hearing and chance to respond. Unfair termination can lead to reinstatement or up to 12 months’ pay in compensation. Redundancy requires notice, consultation, and often severance (at least 15 days’ pay per year of service for those on contract).

Avoid casual employment for ongoing roles; the Act restricts casual engagement and can deem long-term “casuals” to be permanent. Use proper indefinite or fixed-term contracts and document everything.

Statutory benefits

NSSF (pension/savings), NHIF (health), and Housing Levy are the main statutory items. Employer provides 6% NSSF and 1.5% Housing Levy; employee pays 6% NSSF, NHIF (tiered), and 1.5% Housing Levy. Maternity and paternity leave are as above. Ensure your EOR is registered with NSSF, NHIF, and KRA and remits on time; KRA is strict on deadlines.

EOR considerations

Your EOR must run Kenyan payroll with PAYE, NSSF, NHIF, and Housing Levy and issue Employment Act–compliant contracts. Confirm they handle KRA filings and NSSF/NHIF remittance and have a clear process for termination and disputes. Industrial Court and Employment and Labour Relations Court are active; the EOR should carry employment liability and have local legal support. Check who bears the cost if Housing Levy or NSSF rules change mid-contract.

Frequently Asked Questions

What does an employer pay on top of salary in Kenya? NSSF 6% and Housing Levy 1.5%. Total employer statutory add-on is about 7.5%. NHIF is employee-only (tiered).

Is the Housing Levy mandatory? As of the current framework, yes — 1.5% employer and 1.5% employee. Its legal status has been challenged; confirm with your EOR or advisor.

What notice period applies for termination? Minimum 28 days for monthly paid employees, unless the contract specifies more. Payment in lieu is acceptable if agreed.

Can we use casual contracts for long-term work? No. The Employment Act limits casual engagement. Long-term casuals can be deemed permanent; use proper contracts.

Who handles unfair termination claims when using an EOR? The EOR is the employer of record and should handle disputes and liability. Ensure the contract states they handle Labour Court matters and have local legal backup.