Payroll management is one of the most compliance-intensive functions in any Kenyan business. SHA (Social Health Authority) Explained is a core aspect of employer obligations under the Employment Act, the Tax Act, and NSSF/SHA regulations.
A single payroll error can trigger back-payment obligations, KRA penalties, and employee disputes. Given that payroll typically represents the largest cost for service businesses, accuracy and compliance are not optional.
Your Statutory Obligations as a Kenyan Employer
Every employer with at least one employee must register with KRA (for PAYE), NSSF (for retirement contributions), and the Social Health Authority (SHA, formerly NHIF). Failure to register or remit deductions is a criminal offence under Kenyan law.
- PAYE: Due on the 9th of the following month. Charged at graduated rates from 10% to 35% on employee income.
- NSSF: Tier I and Tier II contributions based on income bands under the NSSF Act 2013.
- SHA: Monthly health levy replacing NHIF — contribution rates apply to gross salary.
- Housing Levy: 1.5% of gross salary from both employer and employee, remitted monthly.
Best Practices for Payroll Management
Maintain a payroll register with a full audit trail for every payment period. Issue payslips to all employees — this is a legal requirement. Archive P9 forms annually and ensure PAYE reconciles to your annual returns. If you have casual workers, understand the different threshold rules that apply.
Avatechtax processes payroll for businesses of all sizes — from 5 to 500 employees. Our payroll specialists ensure every statutory deduction is correct, all remittances are made on time, and your employees receive accurate payslips every cycle.
Automate and Delegate
Payroll is time-consuming and error-prone when done manually. Outsourcing to Avatechtax gives you a reliable, compliant payroll function at a fraction of the cost of an in-house finance officer — with the added assurance of professional liability.
