The shape of a Kenyan payroll
Every month, for every employee, a compliant payroll answers four questions: what did the employee earn (gross pay), what must be deducted by law (statutory deductions), what may be deducted by agreement (loans, advances, benefits), and what reaches their bank (net pay). Kenyan law layers four statutory deductions on top of income tax rules, each with its own rate, base, and remittance account — which is why payroll done on a spreadsheet tends to drift out of date the moment a rate changes.
The four statutory deductions
PAYE is income tax on employment income, calculated on graduated bands and remitted to KRA. NSSF is the national pension contribution, matched by the employer, with the employee side capped at KES 6,480 per month from February 2026. SHIF is the Social Health Insurance Fund contribution at 2.75% of gross pay with a KES 300 monthly minimum. The Affordable Housing Levy takes 1.5% of gross from the employee and an equal 1.5% from the employer. Employers with trainable staff also remit the NITA levy of KES 50 per employee per month.
One deadline to remember
PAYE, NSSF, SHIF, and the Housing Levy are all due by the 9th of the month following the payroll month, largely through KRA's unified payroll return. One date, four obligations — and four separate penalty regimes if it slips. Force HRM prepares client returns by the 5th, leaving four days of review runway.
The order of operations matters
Since the Tax Laws (Amendment) Act 2024 took effect in December 2024, the employee's SHIF and Housing Levy contributions are deductible from taxable income before PAYE is calculated. Get the sequence wrong and every payslip overstates PAYE. The correct order: start with gross pay, subtract allowable deductions (NSSF, SHIF, Housing Levy, qualifying pension contributions), apply the PAYE bands to what remains, then subtract personal relief of KES 2,400 per month.
What employees must receive
Every employee is entitled to an itemised payslip each month, and a P9 tax deduction card at the end of the year showing annual gross pay, benefits, allowable deductions, and PAYE withheld — the document they need to file their individual return by 30 June.