What a Kenyan pay statement must show
What the Employment Act says a Kenyan pay statement must show and when, which employees the rule leaves out, and how to deliver and explain payslips.
By Achekam · · 4 min read · For Running a business businesses in Kenya
In Kenya a payslip is not a courtesy. The Employment Act says when an employer must give one and what it must contain. It is also the first document an employee reaches for when something about their pay looks wrong, and the first one a labour officer asks to see when a complaint arrives.
A good pay statement settles most pay questions before they become disputes. This article covers what the law requires, who it leaves out, the limit on deductions that the statement makes visible, and how payslips are produced and delivered from Achekam.
At or before each payment of wages
The Employment Act requires an employer to give an employee a written pay statement at or before each payment of wages. This is section 20 of the Act.
"At or before" sets the timing. The statement goes out with the pay, or ahead of it, not a week later and not in a bundle at the end of the quarter. A business that pays weekly owes a statement every week; one that pays monthly, every month. If wages are paid early because of a holiday, the statement should be ready early too.
Gross pay, each deduction and its purpose, and how net pay is paid
Section 20 lists three things the statement must show.
Gross pay. Everything the employee earned for the period. KRA's description of taxable employment income is a useful checklist here: it includes all cash payments however described, such as wages, bonuses, commissions, leave pay and directors' fees. Each kind of payment the employee received should be visible, not folded into one figure.
Each deduction and its purpose. Not a single "deductions" total, but every item with its reason: PAYE, NSSF, SHIF, the Affordable Housing Levy, a salary advance being recovered, a loan instalment, a union subscription. An employee should be able to see where every shilling between gross and net went. Who collects each payroll deduction explains the statutory ones.
How the net amount is paid. By bank transfer, M-PESA or cash. Where pay is split, say so.
Who the rule does not cover
Section 20 does not apply to casual employees, piece-rate or task-rate employees, or engagements of six months or less.
That is a legal minimum, not a recommendation. A casual worker who receives cash with no statement has no way to see that NSSF was deducted for them, and the employer has no signed-off record of what it paid. Issuing statements to everyone, including those the section leaves out, costs little and protects both sides. What should be in the contract that sits behind the payslip is covered in the written employment contract.
The limit on deductions the statement makes visible
The Employment Act limits total deductions from an employee's wages at any one time to two thirds of the wages. It also makes it an offence for an employer to fail to remit deductions it has made, punishable by a fine of up to one hundred thousand shillings or two years' imprisonment, and a court may order the employer to refund the employee and pay the intended beneficiary from its own funds.
The pay statement is where both rules become visible. An employee whose deductions exceed the limit can see it on the slip, and a deduction shown on a slip but never paid over is evidence of the second offence. Check the deductions column against the limit whenever a new loan or advance is added; the limit on wage deductions works through the rule.
Payslips from Achekam
Achekam's Kenyan payroll calculates PAYE, the Affordable Housing Levy, SHIF, NSSF Tier I and II and the NITA levy for each run, posting each to its own liability account.
Payslips are PDFs carrying the business's logo and details. They can be downloaded or e-mailed one per person, and an employer setting sends them automatically when a run is approved, with a delivery log. E-mailing needs an e-mail service configured on the server.
Staff whose login is linked to their payroll record can also download their own payslips through self-service, which saves payroll from resending old statements every time someone applies for a loan.
Before relying on the template, check one Kenyan payslip against section 20's list: gross pay with each kind of payment shown, every deduction named, and how the net pay was paid. If anything the Act requires is not on the slip, give it to employees alongside, for example in the e-mail that delivers the payslip.
E-mail delivery and the delivery log
Automatic sending on approval fits the "at or before" rule neatly: approve the run before the money goes out, and the statements reach employees no later than their pay. The delivery log then shows who was sent a payslip and when.
Review the log after each run. An employee whose e-mail bounced has not received a statement, and the duty to give one has not been met. Fix the address, resend, and note the date.
Answering staff questions about their payslip
When an employee queries a payslip, work through it with them in order: gross pay first, item by item; then each deduction and its reason; then the net amount and how it was paid. Often the question answers itself on the way down. If one is not, check the period's variable inputs, such as overtime or an unpaid day, before looking at the tax calculation, and put any correction in writing.
The Employment Act, 2007 on Kenya Law sets out pay statements, deductions and the records employers must keep. Read section 20 there in full before you settle your payslip template.
General guidance only, not advice on your own circumstances. Tax and payroll rules change: check the current position with the authority or your adviser.
