Definitive Guide to Hiring in Kenya

Hiring in Kenya

Hiring employees compliantly in Kenya means doing it yourself or using an Employer of Record like Global Expansion. You should be careful using independent contractor agreements in Kenya so that you don’t run afoul of employment laws. To hire an employee compliantly and offer them mandatory benefits and compliant agreements, you can:

(a) Establish your own new legal entity, banking, accounting and payroll service in Kenya; or

(b) use an Employer of Record like Global Expansion who can handle all of the details for you.

Labor Laws in Kenya

Employment laws in Kenya are uniquely suited to the country’s way of life, and crucial to understand if you want to employ local talent in this country. Get the details on Kenya employment laws and Kenya policies here.

Employee Probation Period

Annual Leave in Kenya

Holidays in Kenya

Maternity Leave Kenya

Paternity Leave Kenya

Sick Leave in Kenya

• Employees are generally entitled to 14 days of paid sick leave per year. 
• Employees must provide a medical certificate. 
• The first 7 days are paid at 100%, the remaining days are paid at 50%.

Working Hours in Kenya

Overtime in Kenya

• An employer is required to pay at least 150% of the wage if overtime work is performed during normal working hours. 
• Overtime payment for the workers that are not employed on hourly basis, is calculated on the basis of the basic hourly rate of at least one two-hundred-and twenty-fifth of the employee’s basic minimum monthly wage. 
• The Wages Order also specifies that overtime plus time worked in normal hours per week may not exceed 116 hours in total in any period of 2 consecutive weeks. 
• Thus a worker can work only 6 hours of overtime in a week. 
• For night workers this limit is 144 hours per week. 
• For night workers, 12 hours of overtime is allowed.

Termination of Employment in Kenya

• Termination of employment is regulated under the Employment Act. 
• A worker may be terminated after serving due notice or paying in lieu of notice. 
• Length of notice period depends on the type of employment contract.
• Notice period is not provided for a worker hired on daily basis; contract may be terminated at the end of working day without any prior notice
• At least seven days’ notice for workers during the probationary period (or payment in lieu of notice)
• Length of notice period may be set in employment contract by mutual consent of employer and worker, provided that the period is more than that is provided by the Act. 
• Notice should be written in language easily comprehended by the worker, otherwise someone has to explain it to the worker, orally, in language that he/she could comprehend.
• There is no provision for severance pay in legislation for reasons other than redundancy.
• Redundancy means the loss of employment by involuntary means through no fault of a worker, involving termination of employment at the initiative of the employer, where the services of a worker are superfluous and the practices commonly known as abolition of office, job or occupation and loss of employment.
• Severance pay, paid by the employer, in Kenya is equivalent to 15 days’ basic wages for each completed year of employment.

Notice Period in Kenya

• Length of notice period depends on the type of employment contract.
• 7 days notice for workers during the probationary period (or payment in lieu of notice)
• Workers who get paid periodically for intervals shorter than one month (e.g. on weekly or fortnightly basis), a notice of equivalent period (a week or 15 days) may be served prior to contract termination
• If workers are paid on a monthly basis or longer interval, a 28-day notice must be served before contract termination

Severance in Kenya

• There is no provision for severance pay in legislation for reasons other than redundancy.
• Severance pay, paid by the employer, in Kenya is equivalent to 15 days’ basic wages for each completed year of employment.

Kenya Salary and Wages

Accurately estimate your costs when employing in Kenya in 2023. Includes base salary, dependents, benefits, taxes, social contributions, and payroll costs. Monthly or yearly calculation period.

13th/14th Month Salary in Kenya

• No
• There is no statutory requirement to pay the 13th or the 14th month salary.
• Employees are entitled to 21 days full pay.

• National Social Security Fund (NSSF) contributions

• The NSSF has to undergo drastic transformation following the enactment of the NSSF Act 2013, which became effective from 10 January 2014. 
• However, the implementation of the new Act awaits conclusion of a pending court case.
• In the meantime, NSSF contributions are as per the provisions of the old Act (i.e. KES 200 for employer and KES 200 for employee).

• National Hospital Insurance Fund (NHIF) contributions

• Employees in Kenya are required to contribute to the NHIF. 
• There is no corresponding employer contribution.
• The contributions are graduated, with the maximum contribution currently being KES 1,700 per employee for employees earning more than KES 100,000 per month.

Immigration Kenya

• Certain classes of entry permits allow foreign nationals to work in Kenya and are generally referred to as work permits. 
• An entry permit that allows a foreign national to work in Kenya is obtained by an employer on behalf of a foreign national. 
• Employers are required to justify employment of a foreign national instead of a Kenyan. If the foreign national changes employment, his or her new employer is responsible for obtaining a new work permit. 
• Individuals requiring entry permits may enter Kenya on visas or visitors’ passes while their applications for the permits are being processed, but they cannot engage in any work-related or income generating activities. 
• Foreign nationals who are over 18 years of age and stay in the country for more than 90 days are required to register as foreigners. 
• Different classes of entry permits are issued in Kenya including permits for the following categories of expatriates:
  • Class A, which is issued to a person engaged in prospecting for minerals and mining in Kenya. 
  • Class C, which is issued to a member of a prescribed profession who intends to practice that profession in Kenya, alone or in partnership. 
  • Class D, which is issued to a person who is offered specific employment by a specific employer. 
  • Class G, which is issued to a person who intends to engage, alone or in partnership, in a specific trade, business or profession (other than a prescribed profession) in Kenya.
• The permits are issued only to persons whose employment, business or presence will benefit the country. 
• A foreign national wishing to carry out business in Kenya must obtain the necessary licenses and registrations required and must have sufficient capital or resources for investment.

Value Added Tax (VAT) in Kenya

• VAT is levied at a standard rate of 16% on the supply of taxable goods and services in Kenya, as well as on the importation of taxable goods and services into Kenya.
• Exempt supplies include financial services provided by banks and most agricultural produce in their processed or preserved state.
• Petroleum products are subject to VAT at a rate of 8%.

Payments And Invoicing 

• The year of income is a calendar year.
• Individual self-assessment tax returns must be filed by 30 June in the year following the year of income. 
• Spouses can file separate self-assessment returns.
• The majority of tax on employees is paid by withholding from salaries and benefits under the PAYE system. 
• Any further tax liability is based on self-assessment, and it must be paid by 30 April following the year of income to which the liability relates.
• An individual (other than one whose total taxable income has been subjected to tax at source) whose tax liability exceeds KES 40,000 per annum is required to pay four instalment taxes by 20 April, 20 June, 20 September, and 20 December. 
• The instalment tax payable on each due date is 25% of the lower of 110% of tax assessed in the prior year or the taxpayer's estimate of the current year's tax liability.

Payroll Accrual in Kenya

Country Accruals Additional Information

Description

The NSSF was set to undergo drastic transformation following the enactment of the NSSF Act 2013, which became effective from 10 January 2014. However, the implementation of the new Act awaits conclusion of a pending court case. In the meantime, NSSF contributions are as per the provisions of the old Act (i.e. KES 200 for employer and KES 200 for employee).

Payroll Accruals Additional Information

Accrued Benefits in Kenya

Why use Global Expansion to hire in Kenya

Establishing a branch office or subsidiary in Kenya can be time-consuming, expensive and complex. With such a robust labor market in place, one must pay great attention to detail when structuring employment because Kenya's labor laws are complex.

The company also has a responsibility to comply with specific employment practices dictated by Kenya law to maintain its good standing as an equal opportunity employer.

Global Expansion makes it easy for you to expand into Kenya. We'll help you hire your candidate of choice, handle HR matters and payroll, and ensure that you comply with local laws without the burden of setting up a foreign branch office or subsidiary. In addition, you'll have complete control and direction over your employees.

We enable you to stay in control of everything. Our Kenya Global Professional Employer Organization (PEO) and Employer of Record (EOR) solution provides you with peace of mind to focus on running your company and the security to enter new markets.