Managing payroll as an employer in Kenya means staying on top of moving compliance targets. Under Section 19(1) of the Employment Act, employers are legally required to deduct and remit specific statutory cuts from their workers' pay every month.
1. PAYE (Pay As You Earn): Applies to all employees earning KSh 24,000 and above per month. Deducted progressively up to 30% or 35%. Employees receive a monthly personal tax relief of KSh 2,400. Deadline: Remitted by the 9th day of the following month.
2. SHIF (Social Health Insurance Fund): Has completely replaced the old tiered NHIF system. Calculated at a flat rate of 2.75% of the employee’s gross salary, with a baseline minimum of KSh 300 per month and no upper cap. Deadline: 9th day of the following month.
3. NSSF & Housing Levy: NSSF requires a combined 12% deduction (6% from employee, 6% matched by employer). The Affordable Housing Levy (AHL) requires 1.5% from the employee, matched with 1.5% from the employer (totaling 3% per worker). Both are due by the 9th day of the following month.
4. NITA Levy: A flat rate of KSh 50 per employee per month. Crucial Note: Unlike other cuts, the NITA levy cannot be deducted from the employee's salary—it is paid entirely as a direct overhead expense by the employer by the 9th day.
