Kenya is a trading and economic hub in the Eastern and Central Africa along with growing transportation facilities, and thriving financial/communication services. The country has an innovative market-based economy with a liberal foreign trade policy. Kenya mainly relies on foreign assistance for developing its economy as more than 60% of its industries are owned by enterprises overseas. The combined value of imports and exports equals 40% of GDP, which again reflects the significance of foreign trade. Due to its fast-paced industrialization, Kenya is an ideal destination for foreign investors for setting up their operations.

Currency: Kenyan Shilling

Principal Languages: English, Swahili

Government: Presidential Republic

Capital City: Nairobi

Major Cities: Mombasa, Kisumu, Nakuru

Employment Contracts

Employment contracts in Kenya can be for a fixed duration or an indefinite period. The Employment Act allows a fixed duration contract to be extended up to 1 month if the work requires the employee to travel.

Contracts that extend for an uninterrupted period of 3 months or more or contracts for an assignment where labor is involved for 3 or more months need to be in writing. Employees must get a written contract within 7 days of commencing work.

Usually, the probationary period does not last more than 6 months, but it can be extended further for 6 months if employees give consent. Probationary employment is allowed to be terminated with a notice of 7 days or payment in lieu of the 7 days’ notice.

Work/Time Regulations

The standard work schedule for employees in Kenya comprises 8 hours per day during Monday to Friday and 5 hours on Saturday which equals 45 hours a week, although the law permits work up to 52 hours in a week, and 60 hours for night work. Collective agreements may revise the working hours but usually, allow for 40 to 52 weekly working hours.

Overtime is defined as time worked more than the regular number of hours per week. The overtime is paid at the rate of one and a half times the regular hourly rate on weekdays, and 2 times the regular hourly remuneration on Sundays and public holidays.

Varying regulations have an impact on overtime rates that apply to different sectors of the economy. Overtime plus regular hours cannot exceed 116 hours in total in any period of 2 successive weeks; 144 hours for night work.


The mandatory public holidays in Kenya are:

  • Jan. 1: New Year's Day
  • Good Friday
  • Easter Monday
  • May 1: Labor Day
  • June 1: Madaraka Day
  • Oct. 20: Mashujaa Day
  • Dec. 12: Jamhuri (Independence) Day
  • Dec. 25: Christmas Day
  • Dec. 26: Boxing Day
  • Idd-ul-Fitr

Public holidays that happen to fall on a Sunday are observed on the following Monday.

Annual Leave
After an employee completes 12 months of employment, employers need to provide paid annual leave of 21 days. Unless the agreement stipulates otherwise, this leave needs to be taken together. Contracts and collective agreements may entitle an employee to additional leave. On separation from the employer, an employee can “cash” the accrued leave.

If the employee agrees, the employer may break the annual leave into segments to be taken periodically in a year, but the employee must be allowed to take at least 2 consecutive weeks, which need to be taken during the employee's 12-month earning period. The remaining leave balance must be used before 6 months of the earning period.

Maternity Leave
The Employment Act provides for 3 months of maternity leave to female employees with full pay. Insured employees pay an amount from 30 shillings to 320 shillings per month to the National Hospital Insurance Fund (NHIF), for reimbursing the employer for maternity expenses. Annual leave keeps accruing during maternity leave.

Paternity Leave
Fathers of newborn children can take 2 weeks of paid paternity leave post-birth. The NHIF reimburses employers for paternity leave expenses.

Sick Leave
Employers need to provide employees 14 days of sick leave after two consecutive months of service. The minimum sick leave entitlement for full payment is 7 days which is followed by half-paid seven days of sick leave during 12 months of employment.

The maximum duration of benefits is 180 days a year, although this period can be extended in case of exceptional hardship.

Employees’ monthly contribution into the NHIF fund varies from 30 shillings to 230 shillings, and NHIF reimburses employers for their sick leave expenses. The fund reimburses insured employees and their dependents for expenses up to 432,000 shillings. Medical benefits for dependents are same as those of the insured.


All the employers with one or more employees need to register for the pension fund under the National Social Security Fund Act. Contributing to the fund is compulsory for all employed persons in the age group between 18 and 60 years.

Contributions to the pension fund are broken into 2 tiers. Tier I is based on the minimum wage while Tier II on the nation's average earnings. Funding for both the tiers is based on the urban and rural status of the workplace and some other factors. The lower earnings limit is adjusted from time to time by the cabinet secretary.

Old-age Pension
Insured workers become eligible for retirement benefits at the age of 60 provided they have contributed to the pension fund for 3 years. Employees can choose to retire early at the age of 50. Employees pay 6% of their monthly remuneration to the pension fund while employers need to pay 6% of their payroll.

Disability Pension
Insured employees need to pay 5% of their monthly income into the National Social Security Fund, and employers need to pay 5% of monthly payroll. Workers undergo an assessment to determine their total incapacity to be eligible for disability pension. On retirement, insured workers are entitled to a lump sum amount of the entire employee and employer contributions and interest.

Workers' Compensation
All employees are under the coverage of the system that makes employers liable for their insurance except those who earn less than 4,000 shillings a month, casual workers, self-employed persons, and family members working within the family. The entire cost of the system is borne by employers, and there is no restriction based on any qualifying period for eligibility.

For a temporary disability, the insured receives 50% of total income (not exceeding 540 shillings a day). There is a 3-day waiting period to receive the benefit, and if the disability remains more than 3 days, the award is paid retroactively. Compensation for a partial but permanent disability is a lump sum of 60 months of the insured's total income but not more than 240,000 shillings.

Survivors’ Pension
Payment of survivor benefits is a lump sum equal to 60 months of the deceased's income to dependent survivors. If there are no fully dependent survivors, the partial dependents receive a reduced benefit. The minimum amount of survivor benefit is 35,000 shillings; the highest is 240,000 shillings. The employer also reimburses dependents for the funeral expenses by paying a lump sum amount.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Kenya and hire their employees without having to establish a branch office or subsidiary in Kenya.

  • Your candidate is hired via our Kenya PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Kenya laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 150+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.

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