January payroll will be processed based on the existing NSSF contribution rates, as the new deductions are scheduled to take effect on February 1st, 2025. For now, the upper limit for NSSF contributions remains at Sh2,160 for high-income earners, with salaries capped at Sh36,000 for contribution calculations.
However, starting in February, businesses and employees must adjust to the new NSSF rates. Both employers and employees will each contribute 6% of the employee’s gross salary, with the new upper limit of Sh4,320. This increase will apply to salaries within the expanded range of Sh8,000 to Sh72,000. For employees earning above Sh72,000, contributions will be capped at the maximum rate.
Will January Payroll Be Affected by the New NSSF Deductions?
No, January payroll will not be directly impacted by the updated NSSF contribution framework, as these changes take effect in February. However, HR professionals should use January to prepare for the adjustments by:
- Updating Payroll Systems: Ensure systems are configured to calculate the new contribution rates accurately.
- Employee Communication: Inform employees of the impending changes to avoid surprises in February pay slips.
How FaidiHR Can Help Businesses Stay Compliant
The new NSSF framework increases the complexity of payroll calculations, especially for companies with large teams. FaidiHR’s automated payroll system simplifies this by:
- Ensuring accurate deductions under the updated rates.
- Providing detailed payslips reflecting all statutory contributions.
- Automating compliance reports to avoid penalties.
With FaidiHR, businesses can confidently transition to the new NSSF structure while minimizing errors and administrative burden. Book a FREE DEMO today to see how FaidiHR can streamline your payroll processes and keep you compliant with the changing regulations.