Career advice · Updated November 2026

Cost of Hiring an Employee in Kenya: What Employers Pay on Top of Salary

The cost of hiring an employee in Kenya is more than the gross salary in the offer letter. On top of pay, a registered employer adds its own share of NSSF, the employer half of the Affordable Housing Levy, the NITA training levy, work-injury insurance and the time it takes to run payroll correctly. Some deductions people assume the employer pays, such as SHIF and PAYE, actually come out of the employee’s gross pay; the employer only deducts and remits them. This guide separates the two so a small business can budget honestly before it advertises a role.

Rates below were checked on 7 November 2026 against the NSSF Year 4 notice to employers (effective February 2026), the KRA PAYE page, KRA’s NSSF rate table and our existing payroll guides. They change through law and gazette notices, so recheck before you sign a contract.

What the employer pays on top of salary

These are amounts that come from the employer’s own pocket, not from the worker’s pay.

Cost item	Employer’s share	Where it goes
NSSF (Tier I and Tier II)	6% of pensionable pay, matching the employee; maximum KSh 6,480 a month per employee from February 2026	NSSF (Tier II may go to a qualifying registered scheme)
Affordable Housing Levy	1.5% of the employee’s gross monthly salary, matching the employee’s 1.5%	Remitted through KRA
NITA training levy	KSh 50 per employee per month	National Industrial Training Authority, filed on iTax
Work injury cover	Insurance premium priced by your insurer	WIBA policy for employees

The NSSF figures come from the fund’s notice on Year 4 contribution rates: a lower earnings limit of KSh 9,000 and an upper earnings limit of KSh 108,000, with 6% from each side. On the first KSh 9,000 the employer pays up to KSh 540 (Tier I); on pay between KSh 9,000 and KSh 108,000 it pays up to KSh 5,940 more (Tier II). Our NSSF, SHIF and Housing Levy guide explains the tiers in more detail.

What the employee pays, but you must deduct

An employer is responsible for getting these right even though the money comes out of the worker’s gross pay:

• PAYE: income tax under the monthly bands of 10% to 35%, less personal relief of KSh 2,400 for residents, remitted by the 9th of the following month according to KRA. See how PAYE works in Kenya.
• SHIF: 2.75% of the employee’s gross pay with a minimum of KSh 300. Salaried staff pay it; there is no matching employer contribution.
• Employee NSSF: the matching 6% share up to KSh 6,480.
• Employee Housing Levy: 1.5% of gross pay.

These do not raise the employer’s cash cost, but late or missing remittance does. KRA lists a late-payment penalty of 5% of the tax due plus interest of 1% a month for PAYE, and a late-filing penalty of 25% of the tax due or KSh 10,000, whichever is higher. A payroll mistake can therefore cost more than the deduction itself.

A worked example at KSh 50,000 gross

Here is the employer’s statutory cash cost for one worker on KSh 50,000 a month, using the rates above.

Item	Calculation	KSh per month
Gross salary	As agreed	50,000
Employer NSSF	6% of 50,000	3,000
Employer Housing Levy	1.5% of 50,000	750
NITA levy	Flat	50
Total before insurance and benefits		53,800

So the statutory add-on is roughly 7.6% of salary at this pay level, before work-injury insurance, medical cover, airtime, transport or other benefits you choose to offer. At KSh 150,000 a month the NSSF share stops rising at KSh 6,480 while the Housing Levy keeps growing at 1.5%, so the add-on works out to KSh 6,480 + KSh 2,250 + KSh 50 = KSh 8,780, about 5.9% of salary.

Costs that are not deductions but still matter

A realistic budget also includes items that never appear as a line on the payslip:

• Leave and sick days. Annual leave and paid sick leave are part of the minimum terms in the Employment Act. You are paying for days the person is away, so a small team needs cover.
• Notice and final dues. If the job ends, you may owe notice pay, unpaid leave and other final dues. Our final dues calculator shows how these add up.
• Recruitment time. Writing the advert, shortlisting and interviewing take management hours. A clear job advert and an interview scorecard reduce wasted rounds.
• Payroll administration. Software, an accountant’s time or an outsourced payroll provider. Get written quotes; prices vary by headcount and service level.
• Equipment and onboarding. A laptop, phone line, uniform, safety gear or training before the person is productive.

Register before the first payday

To pay these amounts lawfully you need the right registrations in place: a KRA PAYE obligation on iTax, NSSF employer registration, SHA employer registration for SHIF remittances and NITA registration for the levy. Our step-by-step guide on registering an employer with NSSF, SHA, KRA and NITA covers each office, and the NITA levy guide explains filing the KSh 50 levy.

Budgeting tips for small employers

1. Budget on the total, not the salary. When you set a pay range, add the employer NSSF, Housing Levy and NITA so you know the real monthly commitment.
2. Put the gross figure in the contract. State gross pay and list the statutory deductions so the worker is not surprised by net pay. Our guide to written employment contracts lists what must be in writing.
3. Diarise the 9th. PAYE, Housing Levy, NSSF and SHIF remittances have monthly deadlines. Missing one can trigger penalties larger than the amount due.
4. Watch for rate changes. NSSF limits moved in each of the four phase-in years, and the National Treasury has proposed PAYE changes that were not law at the time of writing. Recheck rates before each new financial year.
5. Check whether the role really is employment. If you hire a freelancer or consultant, different tax rules apply, but calling someone a contractor does not change an employment relationship that exists in practice.

Bottom line

For salaries up to about KSh 150,000 a month, statutory employer costs add roughly six to eight per cent on top of gross pay (less in percentage terms above that, because NSSF is capped), plus insurance, leave cover and administration. Budget for the full amount from the start, register before the first payday, and remit on time. When you are ready to recruit, you can post a job on JobInKenya or explore featured listings on the employers page.

Frequently asked questions

Does the employer pay SHIF in Kenya?

No. Salaried employees pay SHIF at 2.75% of gross pay, with a minimum of KSh 300. The employer deducts and remits it but does not add a matching contribution.

How much NSSF does an employer pay from February 2026?

The employer matches the employee at 6% of pensionable pay, up to KSh 540 on the first KSh 9,000 and up to KSh 5,940 more on pay up to KSh 108,000, so a maximum of KSh 6,480 a month per employee.

Is the NITA levy deducted from the employee?

No. The NITA training levy of KSh 50 per employee per month is an employer cost.

What does it cost to employ someone on KSh 50,000 a month?

Using current rates, the statutory employer add-ons are about KSh 3,800 (NSSF KSh 3,000, Housing Levy KSh 750 and NITA KSh 50), before insurance and benefits.