True cost to employ
Gross plus employer NSSF and levy
Setting up payroll in Kenya means building a repeatable process for calculating earnings, paying employees and accounting for statutory deductions. A spreadsheet that produces a net salary is only one part of that process. Before the first pay run, confirm employer registrations, employee details, calculation rules, approvals and payment responsibilities.
Start with the employer cost calculator to budget gross salary and the employer-funded contributions it includes. Use the Kenyan employer payroll guide for the broader compliance framework.
1. Confirm the employer accounts
KRA requires a person paying employee emoluments to register for the PAYE obligation. Check that the correct employer PIN and obligation are active; an employee's personal PIN is not the employer account.
Set up the relevant NSSF and SHA employer access separately. NSSF's official employer service distinguishes new registration from activation of an existing employer. SHA's corporate registration page asks for a KRA PIN certificate and business registration certificate or Act of Parliament. Follow the current official workflow and keep the organisation's account recovery details accessible to authorised staff.
2. Define the pay rules before entering figures
Record the pay frequency, contractual salary, allowances, benefits, start date and payroll cut-off. Decide who approves overtime, unpaid leave, salary changes and corrections. The cut-off is an internal processing date; it does not replace a statutory filing or payment deadline.
Separate cash allowances from benefits in kind and supported business reimbursements. Use the cash allowances guide when deciding what belongs in gross pay. Never enter the quoted gross package and then add allowances already included in it.
3. Build and review the calculation
Your payroll register should show gross cash earnings, taxable benefits, each statutory contribution, allowable tax deductions, reliefs, PAYE and other authorised deductions. Keep employer contributions in separate columns so they cannot accidentally reduce employee take-home pay.
KRA's employer guidance requires applicable supported deductions, reliefs and exemptions to be reflected in payroll. Collect evidence before applying a claim and review its effective period. A tax deduction and a tax relief are different steps in the calculation.
4. Reconcile a test run before paying
For a simple control example, suppose gross cash pay is KES 100,000 and total employee deductions are KES 29,558.35. The bank payment must be KES 70,441.65. If separately calculated employer-funded costs are KES 7,500, the combined salary-and-contribution funding subtotal is KES 107,500. This reconciliation illustrates accounting relationships, not a universal deduction schedule.
Use the employer cost breakdown to understand what is included and what additional employment costs need a separate budget. Have another authorised person review joiners, changed bank details and unusual payments before release.
5. Close each month completely
- Approve the final payroll and issue individual payslips securely.
- Pay net salaries using the approved payment details.
- File each required return and remit the relevant deductions and employer amounts.
- Save submission acknowledgements and payment evidence separately.
- Reconcile the payroll, bank payments and agency records; investigate unmatched amounts.
KRA sets both PAYE filing and payment by the ninth day of the following month. Track each other obligation using its own current deadline. Follow the PAYE filing guide for the return stage, and keep a documented backup person for absences.
Sources and review date
Published and reviewed on 28 October 2026. Follow the official rules and service instructions for the relevant payroll period.