Kenya payroll and benefits guide
What global businesses need to know about payroll in Kenya
Did you know that Kenya is the third-largest economy in sub-Saharan Africa, behind only Nigeria and South Africa? That its GDP has grown by 80% in the last ten years? And that foreign investment only accounts for 9.5% of that GDP?
This former British colony has been independent for more than six decades now. But despite relative stability compared to others in the region, this country of more than 50 million people can still be considered an untapped source of potential for international enterprises.
Although agriculture remains the backbone of its economy, thanks to exports like tea and coffee, more than 50% of its economy is now services, and Kenya has invested in technology education and innovation as it aims to grow in financial services, manufacturing and other industries.
Kenya’s payroll and employment laws are relatively straightforward, but it’s still important that you’re aware of your responsibilities. This guide sets out the key facts around running payroll in Kenya.
Getting Started
Registering a business in Kenya starts with searching for and reserving a unique company name using the eCitizen portal. Once this has been secured, you have 30 days to prepare and submit the required documents, including Memorandum and Articles of Association; notice of registered office address; and the residential address of the named directors (along with their identification).
Once these documents have been approved, you’ll receive a Certificate of Incorporation, after which you can register with the tax and social security authorities, and open a business bank account. Depending on your industry, you may need to obtain a business license (for example, if in financial services, you’ll need regulatory approval from the Central Bank of Kenya).
Employment Considerations in Kenya
Oral contracts are allowed for employment that lasts less than three months, but written contracts are recommended. As well as setting out all the key terms of employment, contracts should also comply with Kenya’s anti-discrimination laws and be free of gender, race or disability bias.
The standard working week in Kenya is 45 hours, which can be spread over a five-day or six-day working week. There is a hard limit on total hours worked of 52 per week (36 for employees under the age of 16), and no employee should work more than four hours of overtime per day. Overtime is paid at 150% of salary, increasing to 200% on rest days (normally Sundays) or public holidays, although this can be increased further through collective bargaining.
Notice periods in Kenya are effectively ‘one payroll’: that means one month for employees paid monthly, two weeks for employees paid biweekly and one week for employees paid weekly. There is no notice period for employees paid daily. Probation periods in Kenya generally run for a maximum of six months, but can be extended for a further six months with the agreement of the employee. If an employee is dismissed during probation, they should be given a minimum of seven days’ notice or pay in lieu.
Compensation, Bonuses and Severance
As of 2025, the standard minimum wage in Kenya is KES 15,201.65 per month (approx. £85; $115; €100). However, significantly higher rates are applied to some industries and jobs, especially those that are more manual in nature.
The payment of employee bonuses and benefits in Kenya is entirely discretionary, and is up for negotiation between employer and employee (or through collective bargaining).
Severance pay entitlement in case of redundancy is 15 days salary per year of service.
Tax and withholding considerations
Like many countries, Kenya has a progressive income tax regime, where higher earnings are taxed at a higher rate. There are five bands at present, with the lowest of 10% applying to the first KES 288,000 earned each year (approx. £1,650; $2,230; €1,910). Further rates of 25%, 30% and 32.5% are applied as earnings increase, and the highest rate of 35% covers all earnings over and above KES 9.6 million per year (approx. £55,000; $74,300; €63,600). Payroll is normally run monthly, on the last day of each month.
The main social security payment is into the National Social Security Fund (NSSF). Employers and employees each contribute 6%, but each party’s contribution is capped at a maximum of KES 4,320 per month (approx. £25; $35; €30). Employers and employees also contribute 1.5% each into the National Housing Development Fund. There is also a National Industrial Training Levy, where employers pay KES 50 per employee per month (approx. £0.30; $0.40; €0.35), while employees pay 2.75% to the Social Health Authority. Employers are responsible for withholding these amounts and remitting them to the relevant authorities.
The standard rate of corporation tax is 30%, although enterprises operating in an Export Processing Zone are exempt for the first ten years. VAT is levied at 16%.
Holidays and Leave in Kenya
Paid leave entitlement in Kenya is relatively generous at 21 days per year (after 12 months of service), and within that, employees are entitled to take one long break of at least ten calendar days per year. Unused leave at the end of the year can be rolled over for a maximum of 18 months.
Kenya has approximately 11 days of public holidays each year, and any holidays that fall on a Sunday are moved to the following day for leave purposes. Employees should receive time off on full pay on public holidays, and double pay if they’re required to work.
Medically certified sick leave entitlement is 14 days per year, as long as an employee has at least two months’ service. Employers are required to cover the first seven days at full pay, and the following seven days at 50% of salary.
The same applies to sick pay, where employers can choose whether or not to provide paid sick leave entitlement, or leave employeMaternity leave is three months at full salary, covered by the employer, although expectant mothers are required to give their employer a minimum of seven days’ notice before starting their maternity leave. Paternity leave is two weeks, also covered by employers at full salary.es to claim social insurance. It’s not unusual for Japanese employees to use some of their annual leave entitlement when they’re ill.
Payroll in Kenya: a summary
Compared to many other African countries, Kenya’s payroll and employment regulations are relatively straightforward, and not too different to those that you’d find in Western markets. However, that doesn’t mean that there won’t be any change in the future, especially as it’s a developing country that is still growing economically. For that reason, we recommend working with a global payroll partner that can connect you to Kenya-specific payroll expertise, so that you can stay on the right side of compliance in the long term.
This article is for informational purposes only and not intended to convey or constitute legal or any other advice. It is not a substitute for advice from a qualified professional. Click here to see more country payroll guides from CloudPay.