How to Hire Remote Employees In 

Kenya

The Basics

Currency
Kenyan Shilling (KES)
Employer Taxes
6.5%
Payroll Frequency
Monthly
Official Language
Swahili,English

Employment in 

Kenya

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors
Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.
Disadvantages of Hiring Independent Contractors
Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.

Set up a subsidiary in 

Kenya

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Kenya can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Kenya, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Kenya.

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Paying Remote Employees

Paying employees in Kenya is not the same as paying workers in your own country. Employees have to be paid using Kenya’s employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

Kenya

 Specific Information

Working Hours

A full work week is 52 hours for daytime employees and 60 for employees who work nights.  

Hours worked cannot exceed more than 116 hours in any 2– week period for daytime employees and 144 hours for nighttime employees.

Overtime

Overtime is paid at the rate of 150% of the regular pay.

Payroll Tax

Employer

Employer

  • National Social Security Fund
  • National Housing Development Fund

Minimum Wage

Kenya monthly minimum wage ranges between industry as well as geographical location and ranges from 7,240.95 KES for a cleaner or gardener to 30,627.45 KES for a cashier or heavy commercial driver.

Payroll

Pay Cycle

Casual employees- Wages are paid at the end of the workday.  

Employees with an indefinite term employment contract-  Wages are paid monthly and must be paid by the last working day of the month.  

13th Salary

No 13th Salary.

Leave

Paid Time Off (PTO)

PTO is calculated by the:

  • An employee is entitled to 21 days of paid annual leave after the completion of 12 months of employment.

Public Holidays

There are 13 public holidays. If a holiday falls on a Sunday, then the proceeding Monday is observed.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

  • For every 12–month period, an employee is entitled to a total of 14 days of sick leave.
  • The first 7 days are paid at 100% of the regular pay rate and 50% for the remaining 7 days.
  • To be eligible for this leave, the employee must have completed at least 2 months of employment.
  • Also, the employee must be able to provide a medical certificate.

Maternity Leave

Women are entitled to 91 days of maternity leave paid at 100% of the regular pay rate. 

To be eligible, the woman has to give at least 7 days’ notice to their employer when the leave is intended to be taken and must be able to provide a medical certificate.  

Paternity Leave

Fathers are entitled to 2 weeks paid paternity leave.

Parental Leave

In the event of adoption for married employees, the same laws for maternity and paternity leave apply, however, instead of 7 days’ notice for the mother, 14 days’ notice must be given to the employer.  

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

The employer must first conduct a hearing when termination is being considered for misconduct, performance, or physical incapacity to perform duties. The employee is entitled to have a union representative or another employee present in the hearing.  

A termination letter with just cause must be provided.   

When the employer initiates the termination of an employment agreement, final wages must be paid out on the termination date.   

If the employee has been employed for more than 4 weeks, the employer is obligated to provide a certificate of employment after the employment agreement has ended.  

Notice Period

The notice period in Kenya is:

When the employee receives wages on a daily basis, no notice is required.  

When the employee is paid on a monthly basis, a 28-day written notice must be given by either the employee or employer. It is also possible to give payment in lieu of notice.

Severance Pay

There are no provisions in the law regarding severance pay except for when the reason for termination is redundancy. 

In this case, severance pay is 15 days of wages for every year of employment.  

Probation Period

The probation period in Kenya is 6 months. If the employer dismisses the employee during this time, 7 days’ notice or payment in lieu must be given.