---
title: "Kenya Employer Cost Breakdown 2026 | NSSF, AHL, Leave"
description: "Kenya employer cost 2026: NSSF at 6% capped at KES 108,000/month, plus 1.5% AHL. Full line-by-line breakdown of what a Kenya hire really costs."
canonical: https://www.teamed.global/country-hiring-guides/kenya/cost-breakdown
---

Kenya · Cost breakdown child

Served by Teamed vetted partner-entity network in Kenya

# How much does it really cost to *hire in Kenya* in 2026?

Kenya NSSF contributions are capped at KES 108,000/month per employee. Once a salary crosses that ceiling, employer NSSF stops rising. Add 1.5% Affordable Housing Levy on the full salary and no mandatory pension, and Kenya's statutory employer oncost is lower than most African peers once you understand the cap.

Last reviewed 13 June 2026 · Kenya guide

![Nairobi skyline at dusk with the Upperhill financial district lit up against a warm orange sky, viewed from a rooftop terrace.](/images/country-guides/kenya-cost-breakdown.webp)

Illustration · Nairobi, Kenya

Answer.cite this

Hiring in Kenya costs less on top of gross salary than most comparable markets. The NSSF cap is the key number. Employer NSSF is 6% of pensionable wages. It stops at the upper earnings limit of KES 108,000/month. Above that ceiling, no further NSSF applies.

The Affordable Housing Levy adds 1.5% on the full gross salary with no ceiling. There is no mandatory pension beyond NSSF. For a mid-to-senior hire, the two statutory employer contributions together add roughly 7 to 8 percent to gross salary.

Every employee gets 21 days of paid annual leave per year. Sick pay is employer-funded at 7 days on full pay followed by 7 days at half pay. These apply after the first two months of service. Maternity leave is 90 days on full pay.

![A Kenyan payslip and a pen resting on an open notebook on a bright office desk in Nairobi.](/images/country-guides/kenya-cost-breakdown-polaroid-1.webp)

Every shilling, counted

## The headline: what a Kenya hire actually costs

Start with gross salary. Add employer NSSF at 6% on pensionable earnings between KES 9,000/month and KES 108,000/month. Add the Affordable Housing Levy at 1.5% on the full gross salary.

The table below shows illustrative totals at a KES 1,500,000 annual salary (KES 125,000 per month). These are computed from verified statutory rates and labelled illustrative. They are not statutory figures.

Kenya's employer statutory add-ons are lower than many African markets because the NSSF contribution is capped. Once a salary exceeds the upper earnings limit, the employer's NSSF obligation stops growing. The Affordable Housing Levy has no ceiling, but at 1.5% it remains a modest line. There is no mandatory auto-enrolment pension beyond NSSF.

| Line | Illustrative cost on KES 1,500,000 annual salary | Source |
| --- | --- | --- |
| Gross salary | KES 1,500,000 | Contract |
| Employer NSSF at 6% on pensionable wages up to KES 108,000/month ceiling (max KES 6,480/month) | KES 77,760 (illustrative) | [NSSF: New Contribution Rates (Year 4, 2026)](https://www.nssf.or.ke/new-contribution-rates) |
| Affordable Housing Levy at 1.5% on full KES 1,500,000 | KES 22,500 (illustrative) | [KRA: Affordable Housing Levy](https://www.kra.go.ke/news-center/public-notices/2099-collection-of-the-affordable-housing-levy-by-kenya-revenue-authority) |
| Annual leave: 21 days per year (paid, employer cost built into salary) | Included in salary | Employment Act 2007, Section 28 |
| Statutory sick pay: 7 days full pay and 7 days half pay per year (event-driven, employer-funded) | Variable; typically modest per employee per year | Employment Act 2007, Section 30 |
| Mandatory pension beyond NSSF | None (no statutory auto-enrolment) | N/A |
| **Total illustrative employer cost** | **~KES 1,600,260 before the Teamed fee** | **~106.7% of gross (illustrative)** |

These figures are illustrative. They are computed from the 6% NSSF employer rate applied to pensionable earnings between KES 9,000/month and the KES 108,000/month ceiling, and the 1.5% AHL rate on full gross. They are not statutory figures. The NSSF maximum employer contribution of KES 6,480 per month applies once the salary reaches the upper earnings limit. Any salary above KES 108,000/month incurs no further NSSF on the excess.

Add Teamed from $599 per employee per month and the total rises. Use the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to run your own salary figures.

1. Start with gross salary Confirm the agreed gross salary in Kenyan shillings. This is the base number every other line builds on, including the AHL calculation which has no ceiling.
2. Apply NSSF up to the earnings limit Add the employer NSSF contribution on pensionable earnings between the lower and upper earnings limits. Any salary above the upper limit attracts no further NSSF from the employer.
3. Add the Affordable Housing Levy Apply the AHL employer rate to the full gross salary with no ceiling. This is a straightforward percentage of gross pay with no bands or caps.
4. Model leave and sick pay as event costs Annual leave, sick pay, and parental leave are employer-funded but event-driven. Budget them as variable costs that arise when used, not as fixed monthly charges on every payslip.
5. Plan for termination costs from day one Redundancy severance accrues from the first completed year of service. Unfair termination protection applies after thirteen months. Build fair-process documentation and a severance reserve into your headcount planning from the start.

## NSSF and the Affordable Housing Levy: the two employer contributions

Both contributions are mandatory. NSSF is 6% on pensionable earnings between KES 9,000/month and KES 108,000/month. The employer contribution caps at KES 6,480 per month regardless of salary level.

The Affordable Housing Levy is 1.5% of gross salary with no ceiling. It applies to every shilling of gross pay and is due by the 9th working day after each payroll month.

### NSSF (National Social Security Fund)

The NSSF Year 4 schedule took effect on 1 February 2026. The employer contributes 6% of an employee's pensionable wages. Pensionable wages are defined as gross earnings between the Lower Earnings Limit of KES 9,000/month and the Upper Earnings Limit of KES 108,000/month. Any earnings above KES 108,000/month do not attract additional NSSF contribution from the employer. The employee contributes the same 6% on the same earnings band. The combined maximum contribution is KES 12,960 per month.

NSSF Kenya · New Contribution Rates (Year 4, 2026)

Employer NSSF contribution: **6%** of pensionable wages. Pensionable wages run from the Lower Earnings Limit of **KES 9,000/month** to the Upper Earnings Limit of **KES 108,000/month**. The employer contribution caps at KES 6,480 per month. The Upper Earnings Limit increased from KES 72,000 to KES 108,000/month from February 2026.

Source: [NSSF Kenya: New Contribution Rates (Year 4, 2026)](https://www.nssf.or.ke/new-contribution-rates)

### Affordable Housing Levy (AHL)

The Affordable Housing Act 2024 introduced a levy of 1.5% on each employee's gross monthly salary, matched by 1.5% from the employee. There is no earnings ceiling. The employer contribution is 1.5% regardless of salary level. Payment is due by the 9th working day of the following month. Late payment attracts a penalty of 3% per month on the outstanding amount. Employees receive a tax relief of 15% of their own AHL contributions, capped at KES 9,000 per month.

### SHIF (Social Health Insurance Fund)

SHIF replaced the National Hospital Insurance Fund (NHIF) from October 2024. The employee contributes 2.75% of gross monthly salary to SHIF with no upper ceiling. The minimum contribution is KES 300 per month for lower earners. SHIF is an employee-only contribution. There is no matching employer contribution in the current statutory framework. The employer's obligation is to deduct and remit it correctly alongside PAYE by the 9th of the following month.

### No mandatory pension beyond NSSF

Kenya does not have a mandatory auto-enrolment occupational pension scheme beyond NSSF. Retirement fund contributions above the NSSF level are contractual and depend on the employment terms or any applicable collective bargaining agreement. For cost modelling purposes, treat the retirement contribution line as NSSF only, unless the role's contract specifies additional retirement benefits.

## PAYE: what the employer withholds from every salary

Kenya uses a progressive income tax system with five bands. The employer withholds PAYE from each monthly pay run and remits to KRA by the 9 daysth of the following month.

The bottom band starts at 10% on the first KES 24,000 per month. The top rate reaches 35% above KES 800,000 per month. Personal relief of KES 2,400 per month applies to all employees.

PAYE is the employer's main monthly compliance obligation in Kenya. Every pay run, the employer calculates and withholds income tax for each employee, remits it to the Kenya Revenue Authority, and files the return. The deadline is the 9 daysth of the month following the payroll month. Missing the deadline attracts a penalty of 25% of the tax due (minimum KES 10,000), plus 1% interest per month on the unpaid amount.

### The 2026 Kenya income tax bands

The five progressive bands below apply for the 2026 tax year. All employees are entitled to a personal relief of KES 2,400 per month (KES 28,800 per year), which reduces the tax liability on lower-band earnings.

| Annual taxable income band | Marginal rate |
| --- | --- |
| Up to KES 288,000 | 10% |
| KES 288,001 to KES 388,000 | 25% |
| KES 388,001 to KES 6,000,000 | 30% |
| KES 6,000,001 to KES 9,600,000 | 32.5% |
| Above KES 9,600,001 | 35% |

Source: [KRA: Individual Income Tax (PAYE)](https://www.kra.go.ke/individual/filing-paying/types-of-taxes/paye)

The top marginal rate is 35% on income above KES 800,000 per month. This is the employee's tax cost. The employer's obligation is to calculate, withhold, and remit it correctly and on time. Income tax is not an employer cost in cash terms. It becomes a liability only when the employer makes errors or misses the 9 days-day remittance window.

## Leave and sick pay: what the law requires

Every Kenyan employee gets 21 days of paid annual leave after each completed 12 months of service. Leave accrues at 1.75 days per completed month. All unused leave must be paid out on exit.

Sick pay is employer-funded. After two months of service, employees get 7 days on full pay and a further 7 days at half pay within each 12-month period. A medical certificate is required.

Kenya's leave entitlements sit in the Employment Act 2007. The employer funds them directly. They are not insurance-backed.

### Annual leave

The statutory minimum is 21 days of consecutive paid leave per completed 12-month period of service. The accrual rate is 1.75 days per completed month. Employees must take at least two uninterrupted weeks within the 12-month period. The leave year runs from the employment start date, not the calendar year. All accrued and unused leave must be paid out in full on termination of employment, including proportional leave where employment ends before a full 12-month cycle completes (after at least 2 months of service).

### Public holidays

Kenya has 12 gazetted public holidays per year under the Public Holidays Act Cap 110. Employees who work on a public holiday receive double pay for the day or a day off in lieu. This is separate from annual leave and is not subtracted from the 21 days entitlement.

### Sick pay

After completing two consecutive months of service, an employee is entitled to 7 days of fully paid sick leave per 12-month period, followed by a further 7 days at half pay. A certificate from a registered medical practitioner is required. The employer funds these payments directly. There is no reimbursement mechanism. Budget sick pay as an event-driven cost, not a fixed monthly charge.

### Maternity and paternity leave

Statutory maternity leave is 90 days with full pay. This is a calendar-day count including weekends and public holidays. The employee has the right to return to the same or equivalent position after the leave period. Statutory paternity leave is 14 days with full pay on the birth of a child. Both are employer-funded. There is no state reimbursement for either entitlement beyond the SHIF framework for health costs during pregnancy.

## The costs that do not appear on a salary sheet

Three items sit outside the standard employer levy calculation. They are real. They arrive when you least expect them.

Minimum wage compliance, redundancy severance, and unfair termination risk can each produce costs that far exceed the statutory contributions if they are not planned for from the start.

### Minimum wage and a pending gazette

The confirmed minimum monthly wage for general workers in Nairobi and major cities is KES 16,113.75/month under the Regulation of Wages (General) Amendment Order 2024. A 15% housing allowance is mandatory on top of this where the employer does not provide accommodation. President Ruto announced a 12% general wage increase on 1 May 2026. As at June 2026, no new gazette notice has been confirmed. Employers should verify the current rate against the Kenya Gazette before any hire near the minimum wage level. The KES 16,113.75/month figure is the last confirmed statutory rate.

### Redundancy severance

Statutory redundancy severance is 15 days of basic wages for each completed year of service. There is no statutory cap on the total amount. Severance applies only on redundancy, not on resignation or performance-based termination. It is payable in addition to any outstanding notice pay and accrued leave. For a five-year employee on a mid-market salary, this can be a meaningful six-figure KES sum. Budget it as a termination cost from year one, not a surprise at year five.

### Unfair termination exposure

An employee who has been continuously employed for 13 months or more can file an unfair termination complaint with a labour officer. The complaint must be filed within three months of the termination date. The Employment and Labour Relations Court may award compensation of up to 12 months of gross wages, or order reinstatement or re-engagement. A poorly documented dismissal can produce an award that runs multiples of the annual contribution cost. Good process from day one is the cheapest form of protection.

### PAYE filing accuracy

PAYE returns and payments are due to KRA by the 9 daysth of the month following each payroll. The same deadline applies to NSSF, SHIF, and AHL remittances. Late PAYE filing attracts a penalty of 25% of the tax due (minimum KES 10,000) plus 1% interest per month. Late NSSF or AHL remittance compounds on top. Getting the filing right is more important than the contribution rate for most Kenya payroll budgets.

## How Teamed handles Kenya employment costs for you

Teamed becomes your legal [employer of record](/lp/employer-of-record) in Kenya for [**from $599 per employee per month**](/pricing), with **zero FX mark-up** in any currency.

PAYE, NSSF, SHIF, AHL, and the full Kenya employment compliance stack run on **one platform**.

**Real HR and legal experts** handle your Kenya hires from the first offer letter through every KRA PAYE remittance and annual compliance return. **An actual person**, not a chatbot or a pooled queue. There is **no setup fee** and **no exit fee**. Every employer cost **passes through at cost, itemised** on every invoice. You see the NSSF line, the AHL line, and any leave liability. Nothing is hidden inside the management fee.

EOR payroll, contractor onboarding, and entity setup all live on **one platform**. A Kenya contractor who converts to employment keeps their record. That same employee can **graduate** from EOR to your own Kenyan entity without switching systems. EOR is the right structure for a first Kenya hire, **until it isn't**. Teamed does not lock you in. Start from the Kenya hiring overview or run the [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost) to see the full picture.

## Frequently asked questions

What does it cost to hire an employee in Kenya in 2026?

For a professional hire in Nairobi, the statutory employer add-ons run roughly 7 to 8 percent of gross salary. You pay NSSF at 6% on pensionable earnings up to KES 108,000/month, and the Affordable Housing Levy at 1.5% on the full gross with no ceiling. There is no mandatory pension beyond NSSF. For a salary above the NSSF upper earnings limit, the contribution cost is largely fixed. Add Teamed from $599 per employee per month for the full employer-of-record service.

How does the NSSF contribution cap work for employers?

Employer NSSF is 6% on pensionable earnings between KES 9,000/month and KES 108,000/month. Once an employee's salary reaches or exceeds KES 108,000/month, the employer's NSSF contribution is capped at KES 6,480 per month and goes no higher. Any salary above the upper earnings limit does not attract further NSSF. This makes NSSF a predictable fixed cost for mid-to-senior hires.

What is the Affordable Housing Levy and who pays it?

The Affordable Housing Levy was introduced by the Affordable Housing Act 2024. The employer contributes 1.5% of each employee's gross monthly salary. The employee contributes a matching 1.5%. There is no upper earnings ceiling on either side. Payment is due by the 9th working day of the month following each payroll run. Late payment attracts a penalty of 3% per month on the outstanding amount.

What annual leave is a Kenya employee entitled to?

Every employee is entitled to 21 days of consecutive paid annual leave after each completed 12-month period of service. Leave accrues at 1.75 days per completed month. At least two uninterrupted weeks must be taken within the 12-month period. All unused and accrued leave must be paid out in full when employment ends, including proportional leave if the employee has completed at least two months of the current cycle.

What is the redundancy severance pay formula in Kenya?

Statutory redundancy severance is 15 days of basic wages for each completed year of service. There is no statutory cap on the total sum. Severance applies only to redundancy. It does not apply to resignation or performance-based termination. It is paid in addition to any outstanding notice pay and all accrued annual leave, and must be paid on or before the last working day.

Teamed Legal Operations

The NSSF cap is the number that changes the Kenya cost model most. Once a salary crosses the upper earnings limit, employer NSSF stops at the maximum monthly contribution. For senior hires, the fixed-cost nature of NSSF actually makes Kenya more predictable to budget than markets where social insurance scales all the way up. The Affordable Housing Levy is the unbounded line to watch.

A note from Tom Price-Daniel

Kenya NSSF employer contributions cap at KES 108,000/month. Above that salary level, the contribution stops rising.  
Add 1.5% AHL on the full gross and no mandatory pension, and Kenya sits at roughly 107% of gross for most professional hires.  
Know the cap. Know the filing window. Know the severance formula before you sign the offer.

Tom Price-Daniel · Co-founder, Teamed

## Related Kenya guides

- Hiring in Kenya, overviewparent
- [Kenya tax and payroll](/country-hiring-guides/kenya/tax-and-payroll)sibling
- [Kenya termination and severance](/country-hiring-guides/kenya/termination-and-severance)sibling
- [Employer of Record overview](/lp/employer-of-record)core
- [Pricing, Zero FX Fixed](/pricing)core
- [Employer Cost Calculator](https://www.teamed.global/tools/employer-cost)tool
- [Talk to an expert](https://www.teamed.global/contact)CTA

A note on this page.

This is a guide, not legal, tax or accounting advice. Rules change and vary by jurisdiction. Verify current requirements with the Kenya Revenue Authority and the National Social Security Fund before relying on any specific figure. Worked examples in this guide are illustrative only and computed from statutory rates. They are not statutory figures. The confirmed minimum monthly wage of KES 16,113.75 reflects the Regulation of Wages (General) Amendment Order 2024. A further wage increase was announced on 1 May 2026 by President Ruto; employers should verify whether a new gazette notice has been published before hiring at or near the minimum wage.