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Hiring Your First Employee in Kenya: The Complete 2026 Guide

📅 1 September 2026 · ✅ Last verified: 12 October 2026 · 📖 11 min · Registration & Legal

Your first hire brings a written contract, employer registration and monthly payroll duties. Set up those processes before the first filing and payment deadlines arrive.

This is your complete, step-by-step checklist for hiring your first employee in Kenya: from job offer to first payslip.

Step 1: Define the Role and Prepare the Job Offer

Before you post the job:

• Define the role, responsibilities, and reporting structure
• Determine the salary (must meet minimum wage for occupation/location)
• Decide: permanent, fixed-term, or casual?
• Prepare a written offer letter

Minimum Wage Compliance (2026):

General labourer in cities (Nairobi, Mombasa, Kisumu, Nakuru, Eldoret): KES 18,047.40/month

Other areas: KES 9,628.07/month

Rates vary by occupation. See our Minimum Wage guide.

Step 2: Conduct Lawful Recruitment

• Job adverts must not discriminate based on gender, ethnicity, religion, disability, or HIV status
• Interviews should be structured and documented
• Reference checks are recommended
• Limit background checks to what is necessary and proportionate for the role. Explain the checks to the candidate and document a valid lawful basis under the Data Protection Act. Obtain consent or authorisation where required for the particular check; do not assume that consent is the only lawful basis for every employment-data use.

Step 3: Issue a Written Employment Contract

Legal requirement: Sections 9–11 of the Employment Act require a written contract for employment lasting at least three months (or specified work expected to last that long). Written particulars are generally due within two months after employment starts. If, before that two-month period ends, the employee is to begin work outside Kenya for more than one month, give them the particulars no later than when they leave Kenya to begin that work.

Your contract must include:

• Full names of employer and employee
• Job title and description
• Date of commencement
• Duration (permanent or fixed-term)
• Place of work
• Working hours and overtime as set by the applicable Wage Order, contract or CBA
• Remuneration (basic salary, allowances, payment method)
• Leave entitlements (annual, sick, maternity, paternity)
• Notice period for termination
• Disciplinary rules
• Dispute resolution process

See our Employment Contracts guide for a detailed template.

Step 4: Register as an Employer with KRA

If you're not already registered:

1. Log into iTax
2. Go to "Registration" → "Employer Registration"
3. Submit business details and director/owner PIN
4. Receive employer PIN and P10 return access

Cost: Free

Timeline: 1-3 working days

Step 5: Register the Employee for Statutory Deductions

Your new employee needs to be registered for:

PAYE (Pay As You Earn)

• Add employee to your iTax payroll
• Employee needs a personal KRA PIN (if they don't have one, apply via iTax)
• You'll deduct PAYE monthly and remit to KRA by the 9th

NSSF (National Social Security Fund)

• Register employee on NSSF portal
• Both employee and employer contribute
• See our NSSF guide for Year 4 rates

SHIF (Social Health Insurance Fund)

• Register employee on SHA employer portal
• 2.75% of gross salary (deducted from employee, remitted by employer)
• See our SHIF guide

AHL (Affordable Housing Levy)

• 1.5% employee deduction + 1.5% employer contribution
• Filed through KRA iTax
• Remit by 9th working day of following month

Step 6: Set Up Payroll

You need to calculate and process:

Gross Salary = Basic salary + house allowance + commuter allowance + other allowances

Deductions:

• NSSF (employee portion)
• SHIF (2.75% of gross)
• AHL (employee 1.5%)
• PAYE (based on progressive bands after deductions)
• Pension (if applicable — NPS for civil servants, private schemes optional)
• HELB (if employee has outstanding loan)
• Other authorized deductions (with employee consent)

Net Pay = Gross Salary - Total Deductions

Employer's Additional Costs:

• NSSF (employer matching contribution)
• AHL (employer 1.5% contribution)
• WIBA insurance (mandatory — covers workplace injuries)
• NITA levy (KES 50/month per employee, remitted to KRA)

Step 7: Issue a Payslip

Legal requirement: Every employee must receive a payslip showing:

• Gross pay
• All deductions (itemized)
• Net pay
• Payment date
• Period covered

Step 8: Register with DOSHS (Workplace Safety)

If you have employees, your workplace must be registered with the Directorate of Occupational Safety and Health Services (DOSHS).

Requirements:

• Register workplace with DOSHS
• Conduct workplace risk assessment
• Provide first aid kit and trained first aider
• Display safety signage
• Keep accident/incident records

Cost: Varies by workplace size

Source: DOSHS

Step 9: Comply with Leave and Working Hours

Minimum Leave Entitlements (2026)

Working Hours

There is no single working-hours schedule for every job. The applicable Wage Order, employment contract or CBA determines the rules for the worker and sector.

Under the General Order, as one example, normal work is up to 52 hours over six days; night work may be up to 60 hours a week. This is not a rule for every sector.

• Ordinary overtime is paid at least 1.5 times the normal hourly rate; work on a rest day or public holiday is paid at twice the rate.
• Under this Order, combined normal and overtime hours may not exceed 116 hours for other adult workers or 144 hours for night workers over two consecutive weeks.

Step 10: Maintain Personnel Records

Required records (keep for 5+ years):

• Employee personal file (ID, PIN, contract, qualifications)
• Attendance records
• Payslips and payroll records
• Leave records
• Training records
• Disciplinary records (if any)
• Tax filings (P10 returns)
• NSSF and SHIF contribution records

Common First-Time Employer Mistakes

1. Verbal contracts only — Must be written. Employee can claim most favorable terms if no contract exists
2. Missing PAYE registration — You're liable for unremitted tax even if you deducted it
3. Forgetting employer AHL — 1.5% on top of salary, not deducted from employee
4. Using old NSSF rates — Year 4 limits are KES 9,000 (lower) and KES 108,000 (upper)
5. No payslip — Required by law, builds trust, reduces disputes
6. Not registering with DOSHS — Inspectors can shut down your premises
7. Casual worker ≠ exempt — PAYE, NSSF, and SHIF apply to employees in a qualifying contract-of-service relationship; do not use a blanket earnings threshold

First Employee Checklist

• □ Job offer issued and accepted
• □ Written contract issued and signed where section 9 requires one; written particulars supplied within the section 10 deadline
• □ Employee has personal KRA PIN
• □ Registered as employer with KRA (iTax)
• □ Employee registered on iTax payroll
• □ Employee registered with NSSF
• □ Employee registered with SHA (SHIF)
• □ Payroll system set up with correct rates
• □ Workplace registered with DOSHS
• □ First aid kit and trained first aider in place
• □ Payslip template prepared
• □ Personnel file created
• □ Monthly compliance calendar established

Frequently Asked Questions

Can I hire on probation first?

Yes. The initial period may not exceed six months. By agreement, it can be extended once for up to a further six months after you explain the need and consult the employee. Keep the written terms and statutory registrations in place.

Do I need to register for NSSF if the employee is casual?

It depends on the employment relationship and the applicable law. Do not use a blanket KES 1,000 earnings threshold; check the current NSSF and SHA guidance for the worker’s arrangement.

What if the employee doesn't have a KRA PIN?

They must apply via iTax. You cannot process PAYE without their PIN. Help them apply before their first payroll.

Is WIBA insurance mandatory?

Yes. Work Injury Benefits Act (WIBA) insurance is mandatory for all employers. Covers workplace injuries and diseases.

Can I deduct salary for damage or loss?

Section 19 permits a reasonable deduction for loss of or damage to property the employer entrusted to the employee, where the loss or damage resulted from the employee’s wilful default. Section 19 also limits aggregate deductions to two-thirds of wages, subject to statutory exceptions. This is not automatic permission to deduct; establish the facts and follow the Act.

What You Should Do This Week

1. [ ] Prepare job description and offer letter
2. [ ] Review our Employment Contracts guide
3. [ ] Register as KRA employer (if not done)
4. [ ] Set up iTax payroll access
5. [ ] Register with NSSF and SHA
6. [ ] Prepare workplace for DOSHS inspection
7. [ ] Draft payslip template
8. [ ] Buy first aid kit and train a first aider

Related Guides

• Employment Contracts in Kenya
• eTIMS Compliance Guide

Sources and update record

Updated 26 October 2026: Corrected adoption leave, probation limits and lawful deductions for employee loss or damage.

Employment-contract writing and particulars timing checked: 12 October 2026.

Minimum wage figures checked: 12 October 2026.

Working-hours rules checked: 12 October 2026.

PAYE filing and payment deadlines checked: 27 October 2026.

• Employment Act 2007
• Legal Notice No. 108 — Regulation of Wages (General) (Amendment) Order, 2026
• KRA PAYE Guidance
• NSSF Year 4 Notice
• SHA Employer Portal
• DOSHS
• Kenya Law — Regulation of Wages (General) Order, 1982
• Employment (Amendment) Act 2021 — pre-adoptive leave

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