Kenyan payroll means deducting PAYE income tax, NSSF pension contributions, SHIF health contributions and the affordable housing levy from each salary, and paying them over by their deadlines. PAYE is due to KRA by the 9th of the following month, and employees receive a P9 at year end.
PAYE is income tax withheld from employees according to the graduated bands in the Income Tax Act, after personal relief and any allowable deductions such as pension contributions within limits. The rates and bands are changed through finance legislation, so load the current KRA tables each year instead of reusing last year's spreadsheet.
NSSF contributions are paid by both employee and employer on pensionable earnings under the NSSF Act 2013, in tiers that rise over a phased schedule. SHIF, administered by the Social Health Authority, replaced the NHIF contribution scheme and is calculated as a percentage of gross salary.
The affordable housing levy is charged to the employee and matched by the employer, at a percentage of gross pay set by law. Each deduction has its own base, ceiling and payee, so a payroll that treats them as one lump will produce wrong figures.
Taxable pay is not the same as gross pay. Allowable deductions such as pension contributions within limits reduce the amount on which PAYE is computed, while benefits in kind such as company cars or housing are added to taxable income at values set by the rules. Check the treatment of each allowance before it appears on a payslip.
Before the first salary, add the PAYE obligation to your KRA PIN on iTax and register with NSSF as an employer and with the Social Health Authority for SHIF. Housing levy is remitted through KRA. Keep each employee's PIN, national ID, NSSF number and SHIF number on file.
Every employee must have a written contract or terms of employment as required by the Employment Act 2007, setting out pay, hours, leave and notice. Pay statements must itemise earnings and deductions, so employees can see how the net figure was derived.
Casual and fixed-term staff are not exempt from deductions. The tax treatment depends on the engagement, so classify freelancers versus employees carefully, because misclassification can result in PAYE assessments plus penalties on payments you treated as fees.
Keep a personnel file for every employee: signed contract, identity and PIN copies, NSSF and SHIF numbers, bank details, leave record and any warnings or variations. When a dispute reaches the Employment and Labour Relations Court or a labour officer, the file is the employer's principal evidence.
Collect attendance, overtime, allowances and leave by a fixed cut-off, calculate gross pay, apply the deductions, and approve net pay. Pay salaries on the agreed date by bank transfer or mobile money, and issue payslips the same day.
PAYE and the housing levy go to KRA through iTax, with PAYE due by the 9th of the following month. NSSF and SHIF contributions have their own due dates under their rules, and each fund has a portal and payment reference. Missing any date creates penalties and interest.
Reconcile each month: total deductions on the payroll must equal the sum of payments to KRA, NSSF and SHA. Differences usually come from late joiners, leavers mid-month or a wrong base for NSSF, and they are far easier to fix in the month they arise.
Run a second pair of eyes over the payroll before payment. Compare headcount with last month, check each new joiner and leaver, and review the largest variances in gross pay. Most large payroll errors are caught by asking why a figure changed, not by recalculating every payslip.
After the tax year ends, employers issue each employee a P9 form, the tax deduction card, so the employee can file an annual return. The employer's end-of-year PAYE return, historically referred to as P10, summarises the year for KRA.
Employees need the P9 to claim reliefs and refunds, and many lenders ask for it as proof of income. Issuing it promptly is a courtesy that also protects you, because an employee with a missing P9 may file a wrong return.
Keep payroll records for at least five years. Include contracts, payslips, remittance receipts and records of leave or overtime approvals; an audit by KRA or a labour dispute will test them.
On termination, compute final pay including accrued leave and any notice pay due, apply deductions, and issue a certificate of service when the employee asks for one. Check the employment contract and the Employment Act 2007 for notice and payments.
Salary advances and loans to staff need a written agreement and a repayment schedule. Deductions from pay are restricted by law, so get written consent and keep within the limits instead of taking whatever remains after statutory deductions.
If a payroll error is discovered, correct it in the next run and document the adjustment, and amend returns where the error affected the amount paid to KRA, NSSF or SHA. Silent netting-off makes later reconciliations impossible.
Overpayments need a lawful path to recovery. Deducting the full overpayment from one month's pay without agreement can breach the Employment Act's rules on deductions, so discuss a repayment schedule with the employee, confirm it in writing and apply it in instalments.
4softhr.net keeps employee records, leave and timesheets, which feed the attendance and leave information you need to prepare payroll. It does not calculate PAYE, NSSF, SHIF or the housing levy for Kenya, since payroll calculation is available only for Romania.
Prepare the calculation using current KRA, NSSF and SHA tables, in a spreadsheet or a payroll tool that supports Kenya, and file and pay through the official portals. Never rely on a tool that you cannot trace back to the current rates.
Use the HR records to prove hours worked, leave taken and employment dates when questions arise. A clean record makes it far easier to answer an employee query or an inspector.
PAYE, NSSF and SHIF calculations are done in spreadsheets each month, leading to rounding errors and late remittances.
Use the current KRA PAYE bands, NSSF and SHIF rates and calculate payroll outside 4b2b. 4softhr.net keeps employee, leave and timesheet records; it does not calculate PAYE, NSSF or SHIF for Kenya.
Monthly employer returns to KRA and NSSF take half a day to prepare and submit.
Prepare and submit the monthly returns to KRA and NSSF yourself. 4b2b does not generate Kenyan pay slips or statutory returns.
Leave balances and attendance are tracked on paper, so final pay for leavers is disputed.
Record leave and timesheets in 4softhr.net and use them as evidence when computing final pay. It does not calculate the pay itself.
PAYE withheld from employees is due to KRA by the 9th day of the following month, filed and paid through iTax. If the date falls on a weekend or public holiday, check the adjustment in KRA notices. Late payment attracts a penalty and interest, so schedule the payment a few days before the deadline.
The Social Health Insurance Fund (SHIF), run by the Social Health Authority, replaced the NHIF contribution scheme. Contributions are a percentage of gross salary, deducted by the employer and remitted to the authority. Check the current rate and remittance method on the Social Health Authority's official channels before running payroll.
Yes. The affordable housing levy is deducted from the employee and matched by the employer, at a percentage of gross pay set by law. It is remitted through KRA. Because the rate and rules come from legislation, confirm the current percentage before setting up your payroll. Confirm the remittance route and deadline each year, because both are set by the authorities.
It is the tax deduction card an employer issues at the end of the tax year, showing an employee's pay and the PAYE deducted. Employees use it to file their annual returns and to claim reliefs or refunds. Employers should issue it promptly and keep a copy with their payroll records.
No. 4softhr.net keeps employee records, leave and timesheets, but payroll calculation is available only for Romania, so it does not compute PAYE, NSSF, SHIF or the housing levy for Kenya. You calculate payroll with current statutory tables and submit the returns to the relevant authorities yourself. Keep the output of your own calculation with the monthly payroll file for later audits.
This page is informational. Confirm requirements with the competent authority; 4b2b tools cover general invoicing and records only.
