Employer of record in Kenya
Kenya, situated in East Africa, is a diverse and captivating nation known for its stunning landscapes, vibrant culture, and rich wildlife. With a mix of ethnic groups, it boasts a unique cultural heritage.
Kenya’s economy combines agriculture, manufacturing, and services, while tourism, particularly wildlife safaris, remains a major draw for visitors. The country has a complex history of colonialism and post-independence challenges but is making strides in political stability and economic development, promising a bright future.
Employee Benefits
Holidays
- 1 Jan New Year’s Day
- 2 Jan New Year Holiday
- 7 Apr Good Friday
- 10 Apr Easter Monday
- 22 Apr Idd ul Fitr
- 1 May Labour Day
- 1 Jun Madaraka Day
- 29 Jun Idd ul Azha
- 10 Oct Moi Day
- 20 Oct Mashujaa Day
- 12 Nov Diwali
- 12 Dec Jamhuri Day
- 25 Dec Christmas Day
- 26 Dec Boxing Day
Annual Leave
In Kenya, as per the Employment Act, employees are entitled to 21 days of paid annual leave after completing one year of continuous employment with the same employer. This annual leave is meant to provide employees with a break from work, allowing them to rest and rejuvenate. It’s important for both employees and employers to be aware of and adhere to these labor regulations to ensure that employees receive their entitled benefits and rights.
Maternity Leave
In Kenya, female employees are entitled to three months of paid maternity leave, which is provided in addition to any paid annual leave they are eligible for. This maternity leave is intended to allow female employees to take time off work to recover from childbirth and care for their newborns. Additionally, if a pregnant employee becomes ill and needs to take sick leave during her pregnancy, she can do so with her employer’s approval. These provisions are important for the well-being and health of expectant mothers and their children, ensuring that they have the necessary support and time off during this crucial period.
Paternity Leave
Under the Kenyan Employment Act, paternity leave is granted for a duration of two weeks or 14 working days. This leave is typically provided to male employees to support their partners during childbirth and the initial care of their newborns. During this time, the employee is entitled to receive compensation as part of their employment benefits. Paternity leave recognizes the importance of fathers in the family and aims to promote a supportive and balanced approach to parenting responsibilities.
Probation Period
Probationary contracts, as defined by the Employment Act, are employment agreements in Kenya that have a maximum duration of twelve months or less. These contracts must be documented in writing and must explicitly state that the employment arrangement is for a trial or probationary period. During this probationary period, both the employer and the employee have the opportunity to assess whether the job is a good fit for the employee’s skills and whether the employee meets the employer’s expectations before committing to a longer-term employment relationship.
Sick Leave
In Kenya, employees are generally entitled to 14 days of paid sick leave per year. However, there are specific conditions and compensation rates associated with sick leave:
- Employees must provide a medical certificate to their employer as evidence of their illness.
- The first 7 days of sick leave are paid at 100% of the employee’s regular salary or wages.
- The subsequent days, from day 8 to day 14, are paid at 50% of the employee’s regular salary or wages.
Salary & Wages
In Kenya, there is no legal requirement for employers to pay a 13th or 14th month’s wage, as is the case in some other countries. Instead, employees are entitled to 21 days of paid annual leave, as mentioned earlier. This paid annual leave is typically provided as a form of compensation for employees to take time off from work for rest and recreation. It is important for both employees and employers to understand and adhere to the labor laws and regulations concerning annual leave to ensure that employees receive their entitled benefits.
Immigration
In Kenya, the term “work permit” primarily refers to a category of entry permits that allow foreign nationals to legally work in the country. Here are some key points regarding work permits in Kenya:
- Employer’s Role: An employer in Kenya is responsible for obtaining a work permit on behalf of a foreign national they intend to hire. This work permit is essential for the foreign citizen to legally work in Kenya.
- Justification for Hiring Foreign Nationals: Employers must provide a justification for hiring a foreign national over a Kenyan citizen. This is to ensure that job opportunities are first offered to qualified Kenyan candidates before considering foreigners.
- Job Change: If a foreign national changes jobs in Kenya, they are required to obtain a new work permit from their new employer. Work permits are typically tied to specific job positions and employers.
- Entry on Visas or Visitors’ Passes: While their work permit applications are being processed, foreign nationals who need entry permits are allowed to enter Kenya on visas or visitors’ passes. However, during this period, they are not permitted to engage in any work-related or income-generating activities.
- Foreigner Registration: Foreign nationals who are 18 years of age or older and plan to remain in Kenya for longer than 90 days are required to register as foreigners with the relevant authorities.
- Types of Work Permits: Work permits in Kenya are issued for various groups of foreigners, including:
- Class A: For individuals involved in mining and prospecting for minerals in Kenya.
- Class C: For members of specific professions who wish to work alone or with others in Kenya.
- Class D: Issued to individuals with a specific job offer from a particular company.
- Class G: For individuals planning to engage in a specific trade, business, or profession, other than those specifically authorized.
- Investment and Business Operations: Foreign nationals looking to operate a business in Kenya must obtain the necessary permits and registrations. They are also required to have the required funds or resources for investment and business operations.
Overall, work permits in Kenya play a crucial role in regulating the employment of foreign nationals and ensuring that job opportunities are extended to Kenyan citizens first. The specific requirements and processes for obtaining work permits can vary depending on the type of work and the circumstances of the foreign national.
Severance
In Kenya, severance pay is generally not mandated by law except in cases of redundancy. When an employee is made redundant, the Employment Act requires the employer to provide severance pay. The amount of severance pay is calculated as follows:
15 days’ worth of the employee’s basic salary for every completed year of service.
Statutory Benefits
Under Kenyan labor legislation, several benefits and entitlements are required for employees. These statutory benefits include:
- Probationary Term: The law stipulates that during the probationary period, at least seven days’ notice must be given to workers before termination, or payment in lieu of notice may be provided.
- Yearly Leave: Employees are entitled to 21 days of paid annual leave per year after completing one year of continuous employment.
- Federal Holidays: While the term “federal holidays” may not be applicable in Kenya, employees are entitled to public holidays as specified by the government, and these are typically paid holidays.
- Sick Leave: Employees are generally entitled to 14 days of paid sick leave per year, with the first 7 days paid at 100% and the remaining days paid at 50%.
- Maternity Leave: Female employees are entitled to three months of paid maternity leave in addition to any paid annual leave they are eligible for.
- Overtime Pay: While not mentioned explicitly, overtime pay is often governed by labor contracts, collective agreements, or employment practices and should be in accordance with relevant labor laws.
- Notice Period: Employers are required to provide notice periods or pay in lieu of notice when terminating employment, as specified in the Employment Act.
- Severance Compensation: Severance pay is mandated by law in cases of redundancy, where it is equivalent to 15 days’ basic wages for each completed year of employment.
- Social Security Payouts: Social security benefits, such as contributions to the National Social Security Fund (NSSF), are statutory benefits aimed at providing financial support to employees in various circumstances, including retirement, disability, and death.
Overtime
In Kenya, overtime work is regulated by labor laws, and the following key points outline the regulations related to overtime pay and hours of work:
- Overtime Rate: If overtime work is completed during regular business hours, the employer is required to pay at least 150% (1.5 times) of the normal rate of compensation for the extra hours worked.
- Overtime Calculation for Salaried Workers: For workers who are not paid on an hourly basis, overtime is calculated using a baseline hourly rate. This hourly rate should be at least one-two-and-a-quarter times (1.25) the employee’s basic minimum monthly salary.
- Maximum Weekly and Bi-Weekly Hours: According to the Wages Order, the total number of hours worked per week, including both regular hours and overtime, should not exceed 116 hours in any span of two consecutive weeks. This means that a worker is only allowed to perform up to 6 hours of overtime per week.
- Night Workers: Night workers have slightly different regulations. Their maximum weekly hours, including overtime and regular hours, are restricted to 144 hours per week. Nighttime employees can work up to 12 hours of overtime per week.
Income Tax
Taxable Revenue (KES) | Rate of Tax % |
First 288,000 | 10 |
Next 100,000 | 25 |
Next 5,612,000 | 30 |
Next 3,600,000 | 32.5 |
Above 9,600,000 | 35 |
Social Security
National Social Security Fund (NSSF):
- NSSF Act 2013: The NSSF Act 2013, passed in January 2014, introduced significant changes to the NSSF. However, its implementation is pending the resolution of a legal battle.
- Contributions under the Old Act: In the interim, contributions to the NSSF are made based on the rules of the previous Act. Both employers and employees contribute 5% of the employee’s gross earnings, with each party contributing KES 200.
- Social Protection: The NSSF provides social protection for Kenyan employees. It offers benefits such as basic compensation for permanent disability, assistance to needy dependents in the event of the employee’s death, and a monthly life pension upon retirement.
National Hospital Insurance Fund (NHIF):
- Compulsory Contributions: Contributions to the NHIF are mandatory for all Kenyan employees. Unlike the NSSF, there is no comparable employer contribution to the NHIF.
- Tiered Contributions: NHIF contributions are tiered, with the amount paid based on the employee’s gross monthly earnings. The highest contribution currently stands at KES 1,700 per month for individuals earning over KES 100,000 per month.
- Healthcare Coverage: The NHIF provides healthcare coverage to its contributors, ensuring that they have access to essential medical services and hospital care.
Value Added Tax
As of my last knowledge update in September 2021, the standard rate of Value Added Tax (VAT) levied on the supply of taxable goods and services in Kenya, as well as on the importation of taxable goods and services into Kenya, was indeed 16%. However, tax rates can change over time due to government decisions and legislative amendments.
To ensure accuracy, it’s essential to verify the current VAT rate with the Kenya Revenue Authority (KRA) or consult the most recent tax regulations or official government sources, as tax rates and policies can be subject to change.
Termination
Termination of employment in Kenya is governed by the Employment Act, and the following key points highlight the regulations and considerations related to termination:
- Notice Period: A worker may be terminated after serving due notice or paying in lieu of notice. The length of the notice period depends on the type of employment contract.
- No Notice for Daily Workers: For workers hired on a daily basis, there is no requirement for a notice period. Their contract may be terminated at the end of the working day without any prior notice.
- Probationary Period: During the probationary period, at least seven days’ notice must be given to the worker before termination, or payment in lieu of notice may be provided.
- Customized Notice Period: The length of the notice period can be mutually agreed upon and set in the employment contract. However, it must be longer than the minimum period stipulated by the Employment Act.
- Language of Notice: Notice should be provided in a language that is easily comprehensible to the worker. If the worker does not understand the notice, it must be explained orally in a language they can comprehend.
- Severance Pay for Redundancy: Severance pay is not mandated by law except in cases of redundancy. Redundancy refers to the loss of employment due to factors beyond the worker’s control, often initiated by the employer when a worker’s services are no longer needed. Severance pay in such cases is equivalent to 15 days’ basic wages for each completed year of employment and is the responsibility of the employer.
Notice Period
In Kenya, the minimum notice period for termination of employment is influenced by the frequency of salary payments. As you mentioned:
- Weekly Payment: If an employee is paid on a weekly basis, the minimum notice period required for termination of employment is one week.
- Monthly Payment: For the majority of employees who are paid on a monthly basis, the minimum notice period for termination of employment is one month.
