Kenya, the leading economy in East and Central Africa, boasts consistent economic growth, transitioning from a low to middle-income status. It ranks among Africa's top 10 economies, driven by agriculture, small-scale consumer goods, and tourism. Agriculture alone generates a third of Kenya's GDP and employs most of the workforce, with tea and horticultural products as key exports. This robust economic landscape makes Kenya an attractive destination for businesses looking to tap into a skilled workforce and diverse market opportunities.

What you need to know before hiring employees in Kenya

Job market in Kenya

• From 2024 to 2029, Kenya's real GDP is expected to cumulatively increase by 0.3 percentage points, peaking at a growth rate of 5.26% in 2029. This growth, although not continuous every year, reflects a generally positive economic trajectory.
• Notable years of stagnation or minor declines are predicted for 2026, 2028, and 2029, suggesting periods where strategic planning and resilience will be crucial for businesses.
• The labor participation rate in 2022 was approximately 74.07%, indicating a high level of engagement in the workforce. This rate shows stability and a promising potential for workforce utilization.
• The consistent labor force participation rate, coupled with projected GDP growth, indicates ongoing economic resilience. This environment is conducive to business initiatives, ranging from startups to established companies looking to expand.
• The combination of GDP growth and a stable labor market creates a fertile environment for launching new ventures and expanding existing operations. Kenya's economy offers diverse opportunities in sectors driven by a vibrant production and service industry.

Kenya Hiring Trends

Several key developments across various sectors influence Kenya's hiring trends in 2024:

• Companies are increasingly embracing flexible work arrangements, adapting to global shifts towards remote employment. This trend allows businesses to attract top talent who prefer flexibility in their work environment.
• Heightened by the pandemic's impact, there is a noticeable increase in investment within the healthcare sector. This growth is expected to continue, leading to a higher demand for healthcare professionals and associated roles, contributing to sectoral expansion.
• The technology and e-commerce industries in Kenya are experiencing rapid growth, generating significant demand for IT professionals, software developers, digital marketers, and e-commerce specialists. This trend supports the country's positioning as an emerging hub for tech innovation and digital commerce.

How to hire employees from Kenya

1. Set up an entity in the country

Establishing a legal entity in Kenya is essential for companies aiming for sustainable growth or a lasting presence in the market. This approach allows direct management of employees and offers long-term cost benefits.

The process involves selecting a business structure, such as a Private Limited Company or a Public Limited Company, and registering with the Kenyan Registrar of Companies. Additionally, obtaining a Tax Identification Number (TIN) is necessary for tax compliance.

However, setting up an entity in Kenya can be complex and costly, requiring a deep understanding of Kenyan business laws and efficient management of HR and payroll. Hence, thorough planning or expert assistance is vital to navigate these intricacies effectively.

2. Hire independent contractors

In Kenya, engaging talent as contractors entails forming agreements with individuals or firms to fulfill specific tasks or projects. This approach provides notable flexibility, ideal for short-term assignments or project-specific needs. However, precise worker classification is crucial to prevent legal complications and potential penalties under Kenyan labor regulations.

Furthermore, contractors may not exhibit the same level of dedication or loyalty as full-time, permanent employees a key aspect to bear in mind when employing this hiring model in Kenya.

3. Partner with an EOR in the country

Employing an Employer of Record (EOR) service in Kenya provides a streamlined entry into the market, bypassing the intricacies of setting up a legal entity. This method reduces liabilities and improves cost-effectiveness. Teaming up with an EOR guarantees compliance with Kenyan labor laws, tax obligations, and regulations, mitigating legal risks and ensuring smooth business operations.

Employment Laws You Must Know Before Hiring in Kenya

Compliance risk while hiring in Kenya

Navigating compliance risks when hiring in Kenya is crucial due to intricate labor laws and regulations. Factors such as worker classification, contract agreements, and tax obligations must be carefully managed to avoid legal consequences and penalties, ensuring smooth operations and adherence to Kenyan employment standards.

Key Aspects of Kenya Labor Law:

Employment Contract: In Kenya, employment contracts are not universally utilized, except for casual employees who work up to 24 hours and are paid daily without a formal agreement. However, continuous engagement beyond one month or tasks extending beyond three months necessitate transitioning to full-time employment.

For all other employees, an employment contract is mandatory, whether oral or written. Employers must reduce contracts to writing within two months of hiring. The contract must include essential particulars such as personal details, job description, commencement and termination dates, work hours, location, employment duration, remuneration details, and legally recognized benefits. Additional terms may be included as long as they comply with minimum legal requirements.

Working Hours: In Kenya, the typical workweek consists of 45 hours. According to the updated Labor Law, employees are now restricted to a maximum of 56 hours weekly, with a cap of 4 hours for overtime per day. New regulations also address shift work arrangements.

Overtime: 

Employers in Kenya compensate overtime at 150% of the regular wage. As per the updated Labor Law, additional compensation is mandatory for employees working night shifts (between 10pm and 6am) if they do not receive compensatory time off. The pay must be at least 1.2 times the standard hourly rate to comply with legal requirements.

Minimum Wage:The monthly minimum wage in Kenya differs based on the industry and geographic area, spanning from 13,572.90 KES for roles like cleaners or gardeners to 30,627.45 KES for positions such as cashiers or heavy commercial drivers. Wage rates are determined by industry standards and regional factors, ensuring equitable compensation across various sectors and locations.

Payroll laws in Kenya

In Kenya, payroll is processed monthly, with wages for work conducted from the first to the last day of the month usually disbursed on the month's final day. Casual employees receive payment at the conclusion of their workday, adhering to standard payment practices ensuring timely and fair compensation for all workers.

Employment benefits in Kenya

Leave Policies in Kenya

Paid Time Off:

In Kenya, employees accrue a minimum of 21 days of paid annual leave following one year of service. According to the updated Labor Law, new hires become eligible for annual vacation starting from their 7th month of employment. Employers can, with employee agreement, split the minimum leave entitlement into various segments, but the law mandates at least one period of 10 consecutive calendar days out of the minimum 15-day leave allocation.

Public Holidays:

There are 13 national holidays in Kenya.

Sick Days:

In Kenya, employees become eligible for sick leave after two consecutive months of service. They are entitled to up to 30 days of full salary followed by 15 days at half salary within each 12-month period of service. A certified medical document confirming the incapacity to work is mandatory for all sick leave requests.

Maternity Leave:

In Kenya, women are entitled to three months of fully paid maternity leave, receiving 100% of their regular salary. To qualify, the woman must notify her employer at least seven days in advance and provide a medical certificate. In cases of adoption, the same maternity and paternity leave laws apply. However, for adoptions, a 14-day notice period to the employer is required instead of seven days.

Paternity Leave:

Men are granted a two-week paid paternity leave.

Public Health Insurance 

Public health insurance in Kenya is primarily managed through the National Hospital Insurance Fund (NHIF), which provides medical cover to all its members and their declared dependents. It is mandatory for all salaried employees to be registered with the NHIF, with contributions deducted from the monthly salary. The NHIF covers a broad range of health services including inpatient, outpatient, maternity, and dialysis, among others. Members can access these services in a wide network of accredited health facilities across the country. The fund aims to ensure that all Kenyans have access to affordable and quality health care services.

Filing tax in Kenya

Income Tax:

In Kenya, income tax rates are progressive, starting at 10% for lower income levels and rising to 35% for the highest earners. This tiered structure ensures that individuals contribute to national development based on their earning capacity, with higher earners paying a larger percentage of their income in taxes. For a comprehensive view of Kenya’s tax structure, please refer to our detailed guide.

Other Tax and Social Security Contributions:

In Kenya, employers and employees contribute to various social security and tax funds. Employers pay into the National Social Security Fund (NSSF) and National Industrial Training Levy (NITA), while the National Housing Development Fund (NHDF) contributions are currently suspended. Employees also contribute to the NSSF and the National Hospital Insurance Fund (NHIF), which offers tax relief of 15% on contributions for those earning over 100,000 KES monthly. These contributions ensure coverage for social security, health, and training. For a complete overview of the tax and social security contributions in Kenya, please refer to our detailed guide.

Business culture in Kenya

• Business culture in Kenya places a strong emphasis on building personal relationships and trust before formal business dealings. It's common for meetings to start with informal discussions as a way to build rapport.
• Kenyan businesses typically observe a clear hierarchy, with respect and authority given to senior members of the company. Decisions are often made at the top and communicated down through the ranks.
• Punctuality is valued, although starting times can be flexible. Formal greetings are customary, and using titles plus surnames is expected until a more familiar relationship is established.
• Kenyans are generally polite and non-confrontational in their negotiation style. They often use indirect ways to say 'no' or express disagreement, preferring diplomacy over direct conflict.
• While English is widely used in business settings, incorporating some Swahili phrases can be seen as a sign of respect and effort to embrace local culture. Communication can sometimes be indirect, with an emphasis on maintaining harmony and avoiding offense.

Top sectors to hire from in Kenya 

1. Tourism and Hospitality

Demonstrated significant growth with a 29% increase in tourist arrivals and a 26% quarterly growth rate in accommodation and food services. This sector shows robust demand and expansion, making it prime for hiring in roles ranging from hotel management to tourist guides and service staff.

2. Agriculture

Agriculture remains a cornerstone of the Kenyan economy, contributing 21.17% to the GDP. With strong growth in food production, such as maize, wheat, and beans, this sector offers potential for roles in agronomy, farm management, and agricultural technology.

3. Financial Services

With a notable growth rate of 14.7% in Q3 2023, the financial sector is a key player in Kenya's economy. Positions in banking, insurance, and financial analysis are likely to be in demand as the sector continues to expand.

4. Manufacturing

While this sector faced challenges, the anticipated rebound in consumer demand and lower input costs due to increased food production could stimulate growth. Opportunities for hiring may increase, especially in food processing and consumer goods manufacturing.

5. Construction

Despite a stagnant performance in early 2023, the construction sector is expected to benefit from improved economic conditions and increased consumer spending. Roles in project management, civil engineering, and architectural services will be critical as the sector recovers.

Top cities to hire from Kenya

1. Nairobi

As the capital and largest city in Kenya, Nairobi is the primary economic and financial hub. It houses many multinational corporations, tech startups, and is a center for international diplomacy. The city offers a vast pool of professionals in various sectors including technology, finance, and services.

3. Mombasa

Known for its strategic location as a major port city on the Indian Ocean, Mombasa is vital for international trade and tourism. It is an excellent place to hire for positions in logistics, maritime operations, and hospitality.

4. Kisumu 

Located on the shores of Lake Victoria, Kisumu is an important regional and national hub for commerce, and agriculture. Its proximity to agricultural zones makes it ideal for hiring in agro-based industries and related supply chains.

5. Nakuru

Positioned in the agriculturally rich Rift Valley Region, Nakuru supports a variety of industries including manufacturing and farming. It is rapidly growing and evolving into a significant urban center, making it a good spot for recruiting skilled labor, especially in agriculture and manufacturing sectors.

6. Eldoret

Known as a home to various educational institutions including Moi University, Eldoret is pivotal in the region for education and healthcare services. It is also an agricultural trade center, making it suitable for hiring in education, health, and agribusiness sectors.

Hire in Kenya  compliantly with Gloroots

Gloroots, as an Employer of Record (EOR) in Kenya, provides an efficient gateway for businesses looking to enter and thrive in the Kenyan market. Our EOR platform offers swift candidate onboarding, ensuring a quick operational setup while adhering strictly to both local and international compliance standards. Designed to accommodate businesses of all sizes, Gloroots simplifies the complexities of payroll management, benefits administration, and tax handling, thus eliminating the necessity for establishing a local entity. This service allows companies to effectively build and manage a remote team in Kenya. For more information on how Gloroots can support your hiring needs in Kenya, please contact us.

Frequently Asked Questions 

What are the primary legal requirements for hiring in Kenya?

Employers must adhere to the Kenyan Employment Act, which governs the terms of employment, including contracts, working hours, and termination procedures. It is mandatory to register with both the National Social Security Fund (NSSF) and the National Hospital Insurance Fund (NHIF) for social security and health insurance contributions. Employers also need to comply with the Occupational Safety and Health Act (OSHA) to ensure workplace safety.

How do I handle employment contracts in Kenya?

In Kenya, employment contracts can be either oral or written, but it is advisable to have a detailed written contract to avoid disputes. The contract should specify the terms of employment such as job description, salary, work hours, probation period, leave entitlements, and termination conditions. All contracts should comply with local labor laws and be understandable to the employee.

What should I know about the payroll cycle and tax contributions in Kenya?

The payroll cycle in Kenya is typically monthly, and employers are responsible for deducting Pay-As-You-Earn (PAYE) tax, NSSF, and NHIF contributions from employees' salaries. Employers must also contribute to the NSSF and NHIF on behalf of their employees. It is crucial to ensure compliance with the Kenyan Revenue Authority (KRA) guidelines to avoid penalties.

Can foreign nationals be employed in Kenya, and what are the requirements?

Yes, foreign nationals can be employed in Kenya if they obtain the necessary work permits and visas. Employers must justify hiring a foreign national by proving that the skills required are not readily available locally. The process involves submitting a comprehensive application to the Department of Immigration Services, including details of the job and qualifications of the foreign national. Work permits are usually valid for two years and can be renewed.