What a hire actually costs in Kenya

Every hire has three figures attached to it, and confusing them is how a payroll budget goes wrong:

Employer cost — what leaves your account. Gross salary — the number on the contract. Net pay — what reaches the employee.

Here is what those look like on real figures, computed from the same rules Mavuno HR runs payroll on:

Two things pull in opposite directions, and the net effect surprises people.

PAYE is progressive. It is charged in bands, and each additional slice of salary is taxed at a higher rate than the one below it. So as gross rises, the employee keeps a steadily smaller share of each extra shilling.

But your own contributions do not rise in step. NSSF is capped: above a certain earnings level the employer contribution stops growing entirely. The Housing Levy has no such ceiling, and NITA is a flat charge per employee. Put together, your on-cost as a share of gross actually falls as salary rises:

So the widening gap between what you pay and what they receive is not driven by your contributions. It is almost entirely tax. By the time you are paying someone 200,000 a month, the difference between your cost and their take-home is over 72,000 — and only about 9,500 of that is yours. The rest went to the KRA before the employee saw it.

Plenty of Kenyan hiring conversations happen in take-home terms. "I need to clear 50,000." It is a reasonable thing for a candidate to say, and it is a dangerous thing to agree to casually, because the number you have actually committed to is not 50,000 and cannot be worked out in your head.

You cannot arrive at that by adding the deductions back on, either. The statutory deductions come out before PAYE is calculated, so raising the gross raises the tax, which raises the gross needed again. It settles, but only by searching for it — which is what the net to gross calculator does.

The figures above cover statutory deductions only. A realistic hiring budget also carries things payroll never sees: recruitment, equipment, any medical cover you provide above SHIF, training, and leave — statutory annual leave means you are paying for roughly eleven months of attendance and receiving twelve months of salary cost.

There is also the employer's obligation that does not appear as a deduction at all: you must be able to produce the records. P9s, P10s and the returns behind them can be asked for years after an employee has left, which makes payroll history something to keep rather than something to run and forget.

Three practical habits, none of which need software to adopt:

Budget from employer cost, not from gross and certainly not from net. It is the only one of the three numbers that matches what leaves your account.

Quote gross in offers, and say so. If a candidate negotiates in take-home terms, convert it before you agree rather than after — and tell them what the gross will be, so nobody is surprised by their first payslip.

Recheck after every Finance Act. The bands, the NSSF ceiling and the levies all move, and they move independently. A cost model built on last year's rules will be wrong in a direction you did not choose.

You can check any figure in this article yourself with the PAYE calculator — it shows the employer total alongside take-home. What each deduction is and which return it ends up on is set out on the compliance page.

Figures computed 15 September 2026 using Kenya FY2026/27 (NSSF Year 4 limits), for a resident employee on a full month with no pension, HELB or insurance relief. They are an estimate to illustrate the shape of the problem, not tax advice, and your own numbers will differ. The filing obligation stays with you as the employer.