Hire Employees in Kenya

Your own entity is normally a private limited company registered with the Business Registration Service. Incorporation is quick, but it commits you to Kenyan corporate tax, monthly iTax filings and registration with three separate contribution bodies.

An Employer of Record inverts the sequence: the Kenyan entity signs the written contract, registers the employee with NSSF, SHIF and the housing levy, withholds PAYE and files by the ninth, while you direct the day-to-day work.

Kenyan employment law applies to work performed in Kenya. The Employment Act is prescriptive about process, and the Employment and Labour Relations Court applies its procedural requirements strictly regardless of the merits of a dismissal.

Kenya's employer cost has moved every year since 2023 and most published guidance is at least one revision behind. NSSF is now in its fourth year of a phased expansion: from February 2026 both sides contribute 6%, with a lower earnings limit of KES 9,000 and an upper limit of KES 108,000, giving a maximum of KES 6,480 per side. Calculators still showing the KES 400 flat rate or 5% are describing Year 1.

On top sits the Affordable Housing Levy at 1.5% from each side, introduced in 2023. It is uncapped, which means it keeps growing while NSSF plateaus, so employer cost ranges from about 3% on a high salary to around 9% at the lower end.

The tax treatment of the housing levy changed in December 2024. The relief that previously applied was repealed, so the levy is no longer deductible in the way earlier guidance describes. Payroll configured on the original rules over-relieves the employee.

SHIF replaced NHIF in October 2024 at 2.75% of gross, employee-only with no employer share, a genuine structural change from the old graduated NHIF bands, and one that removes an employer cost rather than adding one.

Break-even rule of thumb: EOR fees begin to exceed the running cost of a small Kenyan entity somewhere between 15 and 20 employees. Model both before committing, see EOR vs Entity for the full comparison, and plan any later migration so employees keep seniority.

Kenyan employer cost has moved every year since 2023, and most published guidance is at least one revision behind. NSSF is now in its fourth year of a phased expansion: from February 2026 both sides contribute 6%, with a lower earnings limit of KES 9,000 and an upper limit of KES 108,000, giving a maximum of KES 6,480 per side. Calculators still showing the KES 400 flat rate or 5% are describing Year 1.

The Affordable Housing Levy adds 1.5% from each side and is uncapped, so it keeps growing while NSSF plateaus. Employer cost therefore ranges from about 3% on a high salary to around 9% at the lower end, the percentage falls as pay rises, which is the opposite of the pattern in most of the region.

SHIF replaced NHIF in October 2024 at 2.75% of gross, employee-only. That removed an employer cost rather than adding one, since the old NHIF graduated bands carried an employer share in many arrangements.

The NSSF ceiling moved sharply on 1 February 2026 and the employer share moved with it. Year 4 of the phased NSSF Act raised the upper earnings limit from KES 72,000 to KES 108,000, taking the maximum employer contribution from KES 4,320 to KES 6,480 a month per employee. For a team of fifty above the limit that is roughly KES 1.3 million a year of additional cost. Note what is capped and what is not: NSSF caps at KES 6,480, but the Affordable Housing Levy at 1.5% employer runs on gross with no ceiling at all, so senior salaries keep accruing it. NITA adds a flat KES 50 per employee per month and WIBA cover is rated by risk class. Two figures are worth confirming directly with NSSF and SHA before relying on them at scale: one source still reports the upper limit as KES 72,000, and one describes SHIF as split between employer and employee rather than employee-only.

Four representative profiles, costed with the 2026 contribution rates above. Salaries are illustrative market midpoints, not GX operating data, use them to see how the on-cost percentage behaves as pay rises, not as a salary benchmark for a specific role. For real market data on your roles, ask for a costing.

Watch the on-cost percentage rather than the absolute figure. 5 of the charges here are capped and 2 are not, so the effective employer rate falls as salary rises, but it flattens rather than disappearing. The senior rows below show where it settles.

Four representative profiles costed on 2026 statutory rates. Salaries are illustrative market midpoints, not GX operating data.

Payroll runs monthly in shillings. PAYE, NSSF and the housing levy are all due by the ninth of the following month, which concentrates the cycle into a single deadline.

The tax treatment of the housing levy changed in December 2024. The relief that previously applied was repealed, so the levy no longer reduces taxable pay in the way earlier guidance describes. Payroll configured on the original rules over-relieves the employee and under-remits PAYE.

PAYE is progressive from 10% to 35%, with a personal relief and additional reliefs for insurance premiums, mortgage interest and post-retirement medical contributions. The affordable housing relief and the pension contribution deduction both apply before the rate is struck.

Thresholds and ceilings are uprated periodically, so a figure correct in January may not hold later in the year. Where a row below is flagged, published sources disagreed and the conflict is recorded rather than resolved.

Thresholds move on a local cycle that does not always fall in January, so a figure correct at the start of the year may not hold through it. Where a row below carries a flag, published sources disagreed and the conflict is recorded rather than resolved, there are 1 such rows on this page.

The sections that follow set out contracts and probation, working time, leave, termination and immigration in that order. Where an entitlement comes from a collective agreement rather than statute it is marked as such, because that distinction determines whether it is negotiable.

A written contract is required for any employment exceeding three months, and where one is absent the burden of proving the terms falls on the employer. That reversal makes the written contract an evidential necessity rather than a formality.

Probation is capped at six months and may be extended once, to a maximum of twelve, with the employee’s written consent. During probation either party may terminate on seven days’ notice.

Fixed-term contracts are permitted without a statutory justification requirement, which distinguishes Kenya from much of Latin America and Europe. They expire by their terms, though successive renewals for work that is manifestly permanent invite a finding that the arrangement is indefinite in substance.

Fifty-two hours a week spread over six days, or 60 for night workers, among the longer statutory weeks. Overtime is paid at 1.5 times the hourly rate on a normal day and twice on a rest day or public holiday, and total hours including overtime may not exceed 116 in any two consecutive weeks.

Overtime is where payroll disputes usually start. Record hours from day one even where the role is salaried and the expectation is that overtime will not arise, reconstructing records after a complaint is far harder than keeping them.

Overtime is where payroll disputes usually begin, and the burden of proving hours worked generally sits with the employer. Record hours from the first day even for salaried roles where overtime is not expected, reconstructing a record after a complaint is considerably harder than keeping one.

Public holidays sit on top of the annual leave entitlement. Where a holiday falls at a weekend, practice varies, some markets move it, some grant a substitute day and some do neither, so check the position before assuming a day in lieu.

The 12 dates below are the statutory position. Employers in many markets grant more by policy or collective agreement, and sector agreements sometimes add local or patronal days that do not appear in a national list.

Kenya observes 12 paid public holidays in 2026. Dates that fall at a weekend and any substitution rules are set out below; entitlement is separate from annual leave.

Maternity: 3 months. Full pay, employer-funded. The employee must give seven days’ written notice. Paternity: 2 weeks. Full pay, employer-funded. Pre-adoptive leave: 1 month. Full pay, from the date the child is placed. Sick leave: After 2 consecutive months of service. 7 days at full pay and 7 at half pay in each 12-month period, with more under many collective agreements.

Compassionate leave: Deducted from annual leave. Not a separate statutory entitlement.

The question that matters for budgeting is who funds each entitlement. Where the state or a social insurance fund pays, the employer carries administration but not cost; where the employer pays, it is a direct charge that headcount models routinely omit. Both patterns appear above.

Kenyan termination requires both a valid reason and a fair procedure, and the Employment Act sets the procedure out explicitly. The employee must be notified of the grounds in a language they understand, given an opportunity to respond, and permitted to have a fellow employee or union representative present at the hearing.

Skipping the hearing makes the termination unfair regardless of the merits, and the Employment and Labour Relations Court applies this strictly. Compensation for unfair termination can reach twelve months' gross salary, on top of notice and accrued entitlements.

Redundancy has its own additional procedure: one month's notice to the employee and to the labour officer, selection on fair criteria including seniority and skill, and severance pay of at least fifteen days' pay for each completed year of service. That severance is specific to redundancy, it is not payable on ordinary termination.

Notice is one month for monthly-paid employees, or payment in lieu.

A foreign national needs a work permit, most commonly Class D for employment with a specific employer. The employer must show the role cannot be filled locally and, in most cases, name a Kenyan understudy to be trained into the position.

Allow two to four months. Permits are issued for up to two years and renewable, and a Special Pass covers short-term work while an application is pending, but working on a visitor visa is a breach with consequences for both parties.

East African Community nationals benefit from simplified access under the common market protocol, though the practical position varies by member state and is worth confirming rather than assuming.

Kenya requires both a valid reason and a fair procedure, and the procedure is set out explicitly. The employee must be notified of the grounds in a language they understand, given an opportunity to respond, and permitted a fellow employee or union representative at the hearing. Skipping the hearing makes the termination unfair regardless of the merits.

Compensation for unfair termination can reach twelve months’ gross salary, on top of notice and accrued entitlements.

Practical controls: hold and document the hearing before any termination decision, apply the current NSSF year rather than a carried-forward rate, configure the housing levy without the repealed relief, and follow the separate redundancy procedure, notice to the employee and the labour officer, fair selection criteria, and fifteen days’ pay per completed year.

Work backwards from the start date. For a Kenyan national through an EOR, one to two weeks is realistic. A foreign national needs a Class D work permit, adding two to four months, and the employer must show the role cannot be filled locally.

Confirm before making an offer: that a written contract will be issued, since employment for more than three months without one is a breach and the burden of proving terms falls on the employer; which NSSF year applies, as the rates change each February; and that the housing levy is configured without the repealed relief.

NSSF, SHIF and the housing levy all require registration before the first payroll. NSSF and the levy are due by the ninth of the following month, and PAYE by the ninth as well, so a single deadline governs most of the cycle.