Kenya has a market-based economy. Located on the Indian Ocean coastline, Kenya opens the door to the eastern Africa Market for businesses, making it a hub of economic, commercial, financial, and logistics activities in East Africa. The country has a development programme named "Vision 2030" from 2008 to 2030. Under this, the Kenyan government has been making continuous efforts to improve the country's economic status. It has brought many law reforms that help Kenya get 56th rank globally in the ease of doing business 2019 report by World Bank. Major Industries in Kenya include agriculture, manufacturing, tourism, financial services, mining, etc.

Major economic hubs:

Nairobi, Mombasa

Skills in demand:

Accounting And Finance, Human Resource Management, Business Administration, Marketing, Material Procurement And Management, Law, Education, Medicine, And Architecture

Resident Tax Information

Resident tax means tax applicable to resident employees on the income earned by them  for their services in Kenya or outside Kenya.  

Additional Information on Resident tax

• Resident person is the one who either has a permanent home in Kenya or who was  present in Kenya for more than 183 days in that year of income, or present in Kenya  for 122 days/year in that year of income and preceding two years of income.
• For non-resident employees, tax is only calculated on their income in Kenya.

Social Security

As per Article 43(e) of the Constitution of Kenya, every person has the right to social  security, and the government has to take necessary measures to provide the same for  citizens. In Kenya, employees are offered the following mandatory social security.

Statutory Benefits

Employers must provide statutory benefits to all their employees as per the laws.

Statutory benefits include –

Work hours

Working hours per week should be 56 hours or less. The maximum overtime period per day cannot exceed 4 hours. Over has to pay at 1.5 times of regular pay.

Employers have to offer extra pay for night workers (10 pm to 6 am) if time off in lieu is not given at the rate of 1.2 times.

Statutory leaves

Employers have to follow labor law and provide all the statutory leaves such as:

1. Weekly off
2. Sick Leaves
3. Paternal leave
4. Annual leaves
5. Maternity leaves
6. Public Holidays
7. Paternity leave
   

Social security

As mentioned above, some are mandatory deductions that employers have to do to provide social security to employees. These are

• National Social Security Fund
• National Hospital Insurance Fund
• National Housing Development Fund (Not implemented yet)
  

Fringe Benefits

Employers commonly provide fringe benefits that do not form a part of an employee’s compensation. Fringe benefits are provided to an employee in addition to their regular salary.  

Housing

• Employers have to offer housing accommodation for the employees or pay rent amount in addition to basic pay.

• It is not applicable if, in the employment contract, it is mentioned that housing rent is included in the basic wage or salary.

Water

• The employer must provide a sufficient water supply for office and housing accommodation offered to employees.

Food

• If agreed at the time of signing the employment agreement, the employer has to provide food and cooking utensils and means of cooking.
• The same provision cannot be imposed if not mentioned in the agreement.

Medical Attention

• Employers should take necessary steps to stay notified about employees’ illness and ensure proper medical care is provided during illness

Exempt Benefits

There are certain exempt benefits in Kenya that include the following —

• Medical cover by the employer
• Pension contribution paid by a tax-exempt employer to an unregistered plan below  Ksh 20,000 per month
• Pension contribution paid by the employer to a registered plan below Ksh 20,000 per  month
• Amount paid by the employer to reimbursement of expenses done by the employee  for the company
• Amount paid by the employer as a gratuity or for a registered pension scheme
• Education fees paid through employee income that the employer has already taxed
• The meal offered by employers below Ksh 4000 per month Night-out of Ksh 2000 per day

Long-term Incentives

Long-term incentives are provided to employees that either complete 12 months of  employment period or probation period as per the employment contract. Long-term incentives include:

• Annual Leave benefits
• Social Security Benefits
• Bonus
• Performance-based incentives
• Some fringe benefits such as car loan

Termination Process

As per Employment Act, employer needs to follow fair termination procedure as per the law or as per the contract signed between employee and employer. Employer has to give notice in writing and give a valid reason for termination.

Notice Period

The Notice period for Kenyan employees will be up to 28 days.

Severance Pay

Yes, in case of redundancy, the employer has to pay a severance of not less than 15 days’ pay for each year completed of service.