Hiring Talent And Managing Payroll In Kenya?

Agreements

• The employee's name, age, gender, and permanent address.
• Name of the employer
• Start date of employment
• Job description of the position
• Format and timeframe of the contract
• Location and working hours
• Compensation
• Information on any benefits provided by law
• The period during which compensation is paid
• Any other important information

Onboarding Process

• An offer letter and employment contract
• Verification and documentation
• Orientation and training
• Introduction to team and stakeholders
• Provision of tools and resources
• Performance management and feedback
• Ongoing support

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• Maternity leave
• Paternity Leave
• Parental Leave in case of adoption
• Retirement benefits
• Health Insurance under NHIF
• Social Security under NSSF
• Housing Allowance/ Housing accommodation
• Clean water supply for housing accommodation
• Food, if agreed upon during the contract
• Medical help for illness

Working Hours and Overtime

• Work hours:The typical workweek consists of 5 days and 40 hours a week, starting from Monday to Friday. Although the working hours may be modified by collective agreements, they normally call for 40 to 52 hours of labor per week.
• Break:Meal and rest breaks during working hours are not strongly indicated in Kenyan law. Every employee is allowed a minimum of one day of rest every seven days.
• Overtime: On weekdays, overtime is paid at a rate of 1.5 times the employee's regular hourly rate; on weekends, it is paid at a rate of 2 times their regular salary.

Social Security

Taxes for Employees

• 1.5% - National Housing Development Fund (pending legal ratification)
• National Hospital Insurance Fund: 150 - 1,700 KES
• Income tax rates percentage for employees are as follows:

  • 10% for income Up to 288,000 KES
  • 25% - 288,000 for income upto 388,000 KES
  • 30% for income above 388,000 KES

Termination

Severance Pay

• In Kenya, there is no legal requirement for employers to provide severance pay to employees who are terminated. However, some employers may choose to offer severance pay as part of their employment contract or company policy.
• Employers are required to provide severance pay to their terminated employees, if applicable. The amount of severance pay is calculated based on the employee's basic wages and is equivalent to 15 days of wages for each completed year of employment.
• If an employee's contract of employment stipulates that they are entitled to severance pay, the employer is obligated to pay it upon termination. The amount of severance pay is typically calculated based on the length of service and the employee's salary at the time of termination.
• It is worth noting that severance pay may also be negotiated between the employer and employee in cases of dispute resolution or where the employer wishes to terminate employment without cause. In such cases, the amount of severance pay offered may depend on various factors, such as the reason for termination and the bargaining power of the parties involved.
• Overall, while there is no legal requirement for severance pay in Kenya, employers may choose to offer it as a way of providing financial support to employees who have lost their jobs.

Employees or Contractors

• According to the Employment Act, an employee is anyone who is paid a wage or pay, including trainees. An independent contractor is a person hired to complete work but whose method of doing so is not controlled or predetermined by the person hiring him/her; instead, he/she is free to utilize their judgment. The Act does not define independent contractors.
• It's crucial to examine beyond the language of the parties' contract to determine whether a person is an employee or an independent contractor. To determine if an employer/employee relationship exists, the full spectrum of facts and circumstances must be carefully examined.
• Misclassifying the contractors and employees might lead to penalties in Kenya.

Final Words