Employer of Record (EOR) Kenya - Hire and Pay Employees and Contractors with a Global PEO | Employer of Record (EOR)

An Employer of Record (EOR) in Kenya is a company that takes on the responsibility of being the legal employer for a worker. This includes managing payroll, benefits, and other employment-related tasks on behalf of the worker's actual employer.

Discover the key considerations and essential details you should be aware of before you hire your remote team in Kenya.

Facts About Kenya

Thinking of hiring in Kenya? Here are some interesting facts about the country’s economy, tech scene, and talent landscape that make it a great place to do business.

Nairobi is Kenya’s capital and leading business hub, driving the country’s economy and innovation. It hosts 97% of Kenya’s startups and serves as a regional base for global companies like Google, Microsoft, and Visa, making it one of Africa’s top tech cities.
Kenya has a growing pool of skilled tech talent, particularly in software development, mobile apps, data science, and Fintech. Innovation hubs like Nairobi’s iHub and strong digital infrastructure have made the country a top destination for sourcing remote-ready professionals.
Mombasa is the fastest-growing city in Kenya, with a growth rate of over 104%, driven by trade, tourism, port expansion, and real estate development. It ranks second nationally and recently rejoined the global top 1,000 cities.
Kisumu is an important city in western Kenya, known for agriculture and trade. However, its growth rate of 8.5% has been modest, and it has fallen out of the global top 1,000 city rankings.
Kenya is a Fintech pioneer in Africa, with platforms like M-Pesa revolutionizing mobile payments and startups like M-Kopa delivering innovative solutions in clean energy and digital finance.
The Kenya Innovation Bridge is a government-backed digital platform that connects startups and innovators with investors, partners, and customers—boosting entrepreneurship and economic inclusion.
Kenya launched a Digital Nomad Visa in October 2024, allowing remote workers earning at least US$55,000 annually to live and work in the country. Applicants must work for non-Kenyan employers and meet basic eligibility criteria.

Employment Contracts in Kenya

Before hiring in Kenya, it’s important to understand how employment contracts work. Here are the key rules and requirements every employer should know:

Contract of Service: All employees in Kenya must be employed under a contract of service, in line with the country’s labor laws.
Oral and Written Contracts: Both oral and written contracts are legally recognized. However, contracts lasting 3 months or more (or involving work that cannot be completed within 3 months) must be in writing.
Employer’s Responsibility: The employer is responsible for preparing the written contract and ensuring the employee understands and consents to its terms—especially important if the employee is illiterate or doesn't understand the language used.
Consent to Written Contracts: An employee can consent by signing the contract or providing a thumb/fingerprint in the presence of a witness.
Required Employment Details: A written contract must include key details such as:

Employee and employer names and addresses
Job title and start date
Contract type and duration (fixed-term or indefinite)
Place and hours of work
Salary, benefits, and payment frequency
Leave entitlements, sick pay, pensions (if applicable)
Notice periods and termination conditions

Foreign Assignments: If the employee is to work outside Kenya for more than one month, the contract must specify:

Duration abroad
Payment currency
Additional benefits and return terms

Updates and Recordkeeping: Any changes to contract terms must be agreed upon and updated in writing. Employers must keep contract records for at least 5 years after employment ends.
Burden of Proof: If a dispute arises and the employer cannot produce a written contract, the burden of proving or disproving the terms falls on the employer.

Employment Laws in Kenya

Minimum Wages

The minimum wage for employees in Kenya is typically 15,201 Kenyan Shillings (KES) per month, though it may vary based on the employee’s role, location, and industry.

Working Hours

Employees in Kenya are generally allowed to work up to 52 hours per week across six days. Those engaged in night work may work up to 60 hours weekly. Regardless of work type, all employees must receive at least one full day of rest after every seven consecutive working days.

Payroll Cycle

Salaries in Kenya are typically paid once a month, with payments made on or before the last working day. While monthly pay is standard, some sectors—particularly construction and agriculture—may opt for weekly or bi-weekly cycles based on the nature of the work and industry norms.

Probation Period

Under Kenyan employment law, the probation period typically ranges from 3 to 6 months, with 6 months being the maximum allowed. During this time, either party may terminate the contract with shorter notice, as specified in the agreement.

Notice Period

Notice periods in Kenya vary based on the type of employment and payment frequency:

Daily Workers: No notice is required; contracts can end at the close of any working day.
Probationary Employees: A minimum of 7 days’ notice or payment in lieu of notice is required.
Weekly/Fortnightly-Paid Workers: Notice must match the pay interval—1 week or 15 days, respectively.
Monthly-Paid Employees: A 28-day notice is required before termination.

If an employer does not provide proper notice, they must compensate the employee with wages and benefits equivalent to what would have been earned during the notice period. In cases of unjust termination, additional compensation may be awarded, including:

Wages for the required notice period
Pro-rated pay for days worked
Up to 12 months’ salary based on the employee’s gross monthly wage at the time of dismissal

All compensation is subject to statutory deductions.

Severance Pay

Severance pay is only required in cases of redundancy. When applicable, employers must pay severance equivalent to 15 days’ basic wages for each completed year of service.

Individual Income Tax & PAYE in Kenya

In Kenya, individual income tax applies to all income earned by residents and non-residents from employment or services rendered in Kenya. The most common method of collecting this tax is the Pay As You Earn (PAYE) system.

PAYE: Tax Withholding by Employers

Employers must register for PAYE with the Kenya Revenue Authority (KRA), deduct the applicable tax from employees’ salaries each month, and remit it to the KRA by the 9th day of the following month. PAYE returns must also be filed monthly via the iTax platform.

What is Taxable?

Taxable income includes:

Salaries, wages, bonuses, commissions, allowances, sick/leave pay, gratuities, and director's fees.
Non-cash benefits over KES 5,000/month.
Club fees and mileage allowances above AA Kenya rates.

Resident Income Tax Rates (Effective 1 July 2023)

Monthly Income (KES)	Annual Income (KES)	Tax Rate
First 24,000	First 288,000	10%
Next 8,333	Next 100,000	25%
Next 467,667	Next 5,612,000	30%
Next 300,000	Next 3,600,000	32.5%
Over 800,000	Over 9,600,000	35%

Personal relief: Residents are entitled to KES 2,400/month or KES 28,800/year.
Non-residents are taxed at the same rates but do not receive personal relief.

Work Permit in Kenya

When a company hires employees in Kenya through an Employer of Record (EOR), the EOR acts as the official local employer. This means the EOR is responsible for making sure any foreign employees have the right work permits or visas to work legally in Kenya.

The EOR handles all the paperwork and communication with Kenyan immigration authorities to get and renew these permits. This helps companies avoid legal problems and fines. Kenyan citizens don’t need work permits, but the EOR still manages their employment legally.

Using an EOR makes hiring foreign talent easier because the company doesn’t have to set up a local office or navigate complicated immigration rules themselves.

Types of Work Permits Relevant to EOR in Kenya

Class D Work Permit (General Work Permit)
For skilled foreign employees working in Kenya. Valid for 1 to 3 years and renewable.
Class G Work Permit (Intra-Company Transfer Permit)
For employees transferred within the same company from abroad to Kenya. Valid up to 3 years.
Class H Work Permit (Special Pass)
For short-term assignments or training lasting up to 6 months.
Class B Work Permit (Investor Permit)
For foreign investors running businesses in Kenya.

Employee Benefits in Kenya

In Kenya, employee benefits consist of both compulsory state-mandated provisions and additional private benefits offered by employers. While the government requires certain core benefits to protect workers’ welfare, many companies provide extra benefits to attract and retain talent, enhancing overall employee well-being and job satisfaction.

State and Compulsory Benefits

These are benefits required by law and generally provided or regulated by the government:

Retirement Benefits: Contributions to national pension schemes like the National Social Security Fund (NSSF).
Death in Service: Benefits paid to beneficiaries if an employee dies while still employed.
Short-Term Sickness Benefits: Temporary financial support during periods of illness.
Medical Benefits: Basic health coverage or medical insurance mandated by law.

Private Benefits

These are additional benefits offered voluntarily by employers to attract and retain talent:

Retirement Benefits: Employer-sponsored pension plans or gratuity schemes beyond the statutory requirements.
Death Benefits: Life insurance or additional compensation paid to families upon an employee’s death.
Medical Benefits: Private medical insurance or healthcare schemes that go beyond statutory minimums.
Disability Benefits: Insurance or support payments in case an employee suffers a disability.
Accidental Death and Dismemberment Benefits: Compensation for injuries or death caused by accidents at work or otherwise.
Other Benefits: This may include bonuses, allowances, club memberships, training, or any other perks provided by employers.

Public Holidays and Employee Leave Entitlements in Kenya

Public Holidays in Kenya

Kenya observes 11 official public holidays, including New Year’s Day, Good Friday, Labor Day, Madaraka Day, Eid al-Fitr, Mashujaa Day, Jamhuri Day, Christmas Day, and others. The exact dates for some holidays, like Eid, vary with religious calendars.

If a public holiday falls on a Sunday, it is observed on the next working day. Additionally, days of national importance such as election day or the president’s swearing-in may also be declared public holidays.

Employees are entitled to full pay on public holidays. If they work on a public holiday, they must be compensated at twice their normal pay rate.

Types of Leave in Kenya

1. Annual Leave

Minimum 21 days paid leave per 12 months of employment (about 1.75 days/month).
Public holidays and rest days don’t count as annual leave.
Employees can carry forward unused leave but must use it within 18 months or forfeit it.
Employers cannot compensate employees for unused leave except upon termination.

2. Sick Leave

Employees get 14 days of sick leave annually after at least two months of employment.
First 7 days paid at 100%, next 7 days paid at 50% of regular salary.
A medical certificate is required to validate sick leave.\

3. Maternity Leave

Female employees are entitled to 3 months of paid maternity leave.
Employees must notify employers at least one week before starting leave.
Returning to the same or equivalent job is guaranteed.
Discrimination related to pregnancy is prohibited.

4. Paternity Leave

Male employees receive 2 weeks of paid paternity leave.

5. Pre-Adoptive Leave

Employees planning to adopt a child are entitled to 1 month of paid leave.
Notice of 14 days and adoption documents must be provided.
Return to the same or equivalent position is guaranteed.

In summary, working with an Employer of Record (EOR) in Kenya is a smart solution for companies wanting to hire employees locally without setting up a legal entity. The EOR takes care of all employment responsibilities, including payroll, taxes, social security contributions, work permits, employment contracts, and compliance with Kenyan labor laws. Kenya’s employment regulations cover various benefits, public holidays, and leave entitlements, which the EOR manages to ensure full compliance and avoid legal risks. This simplifies hiring and onboarding local and foreign talent quickly while reducing administrative burdens. As Kenya continues to grow as a regional business hub in East Africa, partnering with an EOR offers a flexible, efficient, and cost-effective way to expand operations and scale with confidence.

Income Range	Contribution Rate	Employee Share (KES)	Employer Share (KES)	Total (KES)
Up to KES 8,000	6% of gross (Tier I)	480	480	960
KES 8,001 to 72,000	6% of difference (Tier II)	3,840	3,840	7,680
Maximum (Feb 2025)	—	4,320	4,320	8,640

Income Type	Contribution Rate	Responsible Party
Salaried Employees	2.75% of gross pay	Employee
Informal Workers	Fixed monthly rate	Worker (varies)

Contribution Rate	Responsible Party
1.5% of gross salary	Employee
1.5% of gross salary	Employer
Total	Both (3% combined)

Scheme	Employee Pays	Employer Pays	Total (Monthly Cap)
NSSF	Up to KES 4,320	Up to KES 4,320	KES 8,640
SHIF	2.75% of gross salary	—	Varies
AHL	1.5% of gross salary	1.5% of gross salary	3% of gross salary total

Employer of Record (EOR) Kenya - Hire and Pay Employees and Contractors with a Global PEO