Employer of Record Guide in 

Kenya

Annual Leave

• Entitlement: 21 working days per year after 12 months of continuous service
• Accrual: Earned monthly at 1.75 days per month
• Cash Conversion: Can be converted to cash payment with employee consent
• Carry Forward: Up to 10 days may be carried to the following year

Sick Leave

• Paid Sick Leave: 7 days per year on full pay, 7 days on half pay
• Medical Certificate: Required for absence exceeding 3 consecutive days
• Chronic Illness: Special provisions for employees with long-term conditions
• Accumulation: Unused sick leave may accumulate up to 126 days

Maternity Leave

• Duration: 4 months (approximately 17 weeks)
• Pay: Full salary for the entire period
• Eligibility: After 12 months of continuous service
• Job Protection: Guaranteed return to same or similar position

Paternity Leave

• Duration: 2 weeks
• Pay: Full salary
• Timing: Must be taken within 12 months of child's birth
• Eligibility: After 12 months of continuous service

Compassionate Leave

• Duration: Up to 7 days for immediate family bereavement
• Pay: Full salary
• Extension: Additional unpaid leave may be granted
• Definition: Covers spouse, children, parents, and siblings

Study Leave

• Entitlement: Employees may request study leave for approved courses
• Conditions: Usually unpaid unless specified in contract
• Job Protection: Position held open for agreed period

Summary

Termination Types

Termination for Cause (Summary Dismissal):

• No notice required for serious misconduct
• Must follow disciplinary procedures
• Examples: theft, fraud, gross insubordination, breach of trust

Termination Without Cause:

• Requires proper notice or payment in lieu
• Must be fair and follow due process
• Cannot be discriminatory or retaliatory

Redundancy:

• Due to operational requirements
• Requires consultation with employees
• Selection criteria must be fair and objective

Notice Period Requirements

Notice periods are based on length of service and payment frequency:

Note: Senior employees and those earning above KES 500,000 annually may require longer notice periods as per contract.

Severance Pay

Redundancy Pay:

• 15 days' pay for each completed year of service
• Minimum of one month's pay regardless of service length
• Based on basic salary plus regular allowances

Unfair Termination Compensation:

• Up to 12 months' salary if termination is deemed unfair
• Additional compensation for loss of benefits
• Reinstatement may be ordered in some cases

Final Pay Requirements

Employers must pay all outstanding amounts within 7 days of termination:

• Outstanding salary
• Accrued annual leave
• Any other contractual benefits
• Severance pay (if applicable)

Required Documentation

• Termination letter stating reasons and effective date
• Certificate of service detailing employment period and role
• Final pay statement showing all calculations
• Clearance form for company property return

National Public Holidays (2025)

Note: When a public holiday falls on a Sunday, the following Monday becomes a public holiday.

Holiday Pay Rules

• Eligibility: All employees entitled to public holiday pay
• Rate: Normal day's pay for the holiday
• Working on Holiday: 2× normal rate plus compensatory day off
• Part-time Workers: Pro-rated holiday pay based on normal working pattern

Required Documents for Employment

Employment Contract Must Include:

• Job title and description
• Salary and benefits
• Working hours and location
• Leave entitlements
• Disciplinary procedures
• Termination clauses

Employee Documentation:

• National ID or passport
• Kenya Revenue Authority (KRA) PIN certificate
• NSSF number
• NHIF number
• Academic certificates
• Professional licences (if applicable)

Work Permits & Visas

For Foreign Employees:

• Work Permit: Required for all non-Kenyan citizens
• Categories: Various classes (A, B, C, D) based on role and investment
• Processing Time: 30-90 days
• Renewal: Annual renewal required for most categories

Language Requirements

• Official Languages: English and Kiswahili
• Business Language: English is predominantly used in business
• Documentation: Employment contracts typically in English
• Communication: Workplace communication generally in English

Background Checks

Permitted Checks:

• Criminal background verification
• Academic qualification verification
• Employment history confirmation
• Professional licence validation

Requirements:

• Written consent from employee
• Checks must be job-relevant
• Results must be kept confidential

Data Protection Compliance

Kenya's Data Protection Act 2019 requires:

• Consent: Clear consent for data collection and processing
• Purpose Limitation: Data used only for stated purposes
• Security: Appropriate technical and organisational measures
• Rights: Employee rights to access, correct, and delete data

Probationary Periods

• Standard Duration: 6 months (can be extended to 12 months with agreement)
• Performance Review: Regular assessments during probation
• Termination: Shorter notice periods apply during probation
• Confirmation: Written confirmation required at end of probation

Onboarding Timeline

Worker Classification

Employee vs. Independent Contractor:

• Control Test: Level of supervision and direction
• Integration Test: How integral the work is to the business
• Economic Reality Test: Who bears the financial risk
• Mutuality of Obligation: Ongoing relationship expectations

Misclassification Risks:

• Back payment of statutory benefits
• Tax penalties and interest
• Labour court disputes
• Loss of legal protections

Trade Unions & Collective Bargaining

Kenya has a strong tradition of trade unionism:

• Right to Organise: Constitutional right to form and join unions
• Recognition: Employers must recognise unions with majority membership
• Collective Agreements: Negotiated terms override individual contracts
• Industrial Action: Strikes permitted following proper procedures

Major Union Federations:

• Central Organisation of Trade Unions (COTU-K)
• Federation of Kenya Employers (FKE)

Cultural Considerations

Communication Style:

• Respectful and hierarchical
• Indirect communication common
• Relationship-building important
• Patience valued in decision-making

Work-Life Balance:

• Family obligations highly respected
• Religious observances accommodated
• Community involvement encouraged
• Flexible arrangements increasingly accepted

Diversity & Inclusion

Legal Requirements:

• Constitution: Prohibits discrimination on multiple grounds
• Employment Act: Specific anti-discrimination provisions
• Equal Opportunities: Affirmative action for marginalised groups

Best Practices:

• Inclusive recruitment processes
• Reasonable accommodations for disabilities
• Gender equality initiatives
• Cultural sensitivity training

Remote Work Considerations

Legal Framework:

• No specific remote work legislation
• Employment Act provisions still apply
• Health and safety obligations continue
• Data protection requirements apply

Practical Considerations:

• Equipment: Employer responsibility for work tools
• Internet: Connectivity allowances common
• Workspace: Home office setup requirements
• Hours: Maintaining standard working time limits
• Communication: Regular check-ins and team meetings

Tax Implications:

• Remote work allowances may be taxable
• Home office expenses generally not deductible
• Cross-border remote work requires careful tax planning

What We Handle

Borderless AI manages all aspects of Kenyan employment compliance:

• Employment contract drafting and management
• Statutory registration and contributions
• Monthly payroll processing and tax remittance
• Leave management and tracking
• Termination procedures and documentation
• Ongoing compliance monitoring and updates