Taking on your first employee turns a business into an employer, with monthly duties to KRA, NSSF and SHA. None of it is difficult once set up. For staff working in your home, see Hiring household staff.

1. Register as an employer

  • PAYE - add the PAYE obligation to your business’s (or your own) KRA PIN on iTax.
  • NSSF - register as an employer and register the employee if they are not already a member.
  • SHA - register as an employer for SHIF contributions.
  • Housing Levy - declared and paid alongside PAYE on iTax.
  • NITA - the National Industrial Training Authority levy, a small monthly amount per employee.

2. The contract

The Employment Act requires a written contract for anyone employed for three months or more. It should set out the job, pay, hours, leave, probation, notice and place of work. See the employment contract checklist and Working in Kenya.

Pay at least the minimum wage for the job. See Minimum wage in Kenya.

3. Monthly payroll

From each month’s gross pay:

  • PAYE - income tax, after personal relief.
  • NSSF - 6% from the employee and 6% from you, up to the upper earnings limit.
  • SHIF - 2.75% from the employee.
  • Housing Levy - 1.5% from the employee, and the same again from you.

Work out the figures with the salary calculator. Your cost is the gross pay plus your share of NSSF and the Housing Levy.

4. Deadlines

PAYE, the Housing Levy and SHIF are due by the 9th of the following month, and NSSF contributions monthly too. Late payment brings penalties and interest, and unpaid deductions you took from an employee’s pay are treated seriously.

Give the employee a payslip every month, and a P9 after the end of the year for their tax return. See Filing your return with a P9.

5. Insurance

Employers must insure employees against injury at work under the Work Injury Benefits Act (WIBA). Buy a WIBA policy from a licensed insurer before the employee starts.

6. Records

Keep contracts, payslips, leave records and proof of payments for at least several years. Labour officers and KRA can ask for them.

Payroll help

For one or two employees, a spreadsheet and iTax are enough. As you grow, payroll software or an accountant saves time and mistakes.

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