As a business operating in Kenya in 2025, payroll compliance is no longer just a best practice—it’s a legal obligation. With new laws such as the Social Health Insurance Act, 2023, which replaced NHIF with SHIF (Social Health Insurance Fund), employers must stay updated to avoid penalties and maintain employee trust.
This blog provides a practical payroll compliance checklist to help your business meet its obligations to KRA, SHIF, NSSF, and other regulatory bodies in Kenya.
Why Payroll Compliance Matters
Payroll compliance ensures:
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Accurate deductions and remittances
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Avoidance of legal penalties or audits
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Employee confidence and satisfaction
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Alignment with labor laws and financial regulations
Failure to comply can result in fines, business disruptions, or reputational damage.
2025 Payroll Compliance Checklist for Kenyan Employers
Use this list to review and improve your payroll process.
1. Employee Registration
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All employees must have valid KRA PINs.
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Ensure employees are registered with:
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SHIF (Social Health Insurance Fund)
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NSSF (National Social Security Fund)
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HELB (for loan repayment if applicable)
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2. Correct Statutory Deductions
Your payroll must accurately compute and deduct:
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PAYE (Pay As You Earn) – Based on progressive tax brackets defined by KRA
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SHIF – As per contribution bands outlined under the Social Health Insurance Act
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NSSF – Tier I and Tier II deductions (as per the NSSF Act 2013)
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HELB – For employees with outstanding student loans
3. Timely Remittances to Authorities
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PAYE: Submit to KRA by the 9th of every month via iTax
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SHIF: Submit to the Social Health Authority portal or designated channels
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NSSF: Remit through eCitizen or NSSF’s online system
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HELB: Remit through HELB Employer Portal
Delays in remittances may attract penalties and interest.
4. Statutory Report Generation
Generate and file:
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P9 Forms – For all employees annually
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P10 Returns – Monthly PAYE summary
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SHIF Compliance Reports – Contribution summaries and receipts
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NSSF Returns – Employer and employee contribution summaries
5. Use a Compliant Payroll System
Manual calculations are error-prone. A payroll system like FaidiHR helps ensure:
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Automatic SHIF, PAYE, NSSF, and HELB calculations
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Integration with KRA iTax
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Statutory reports (P9, P10, SHIF summaries, NSSF returns)
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Audit trails and digital employee records
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Employee self-service for payslips and leave management
6. Data Security and Access Control
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Ensure payroll software uses encrypted data storage
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Set up role-based access for HR, finance, and auditors
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Keep employee data up to date and securely backed up
7. Stay Updated with Legal Changes
2025 may bring further changes in rates or processes from:
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KRA
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Social Health Authority (SHIF)
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Ministry of Labour
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NSSF and HELB
Your payroll software should be regularly updated to reflect changes.
Why FaidiHR Makes Payroll Compliance Easier
FaidiHR is a Kenyan-built payroll and HR software platform that automates the entire compliance process:
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Calculates and remits PAYE, SHIF, NSSF, and HELB
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Generates all necessary reports
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Integrates with iTax, eCitizen, and banking systems
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Provides real-time updates on legal changes
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Affordable and scalable for SMEs and large companies
Ready to Simplify Payroll Compliance?
Let FaidiHR handle the heavy lifting so you can focus on your business.
Call: +254 702 339 699
Email: sales@faidihr.com
FaidiHR – Helping Kenyan businesses stay compliant by automating payroll and HR processes.