Three Ways to Hire in Kenya
Each path has a distinct risk, cost, and speed profile. Choose based on your timeline, headcount, and strategic commitment.
Employer of Record (EOR)
No entity required. Employee active in 48–72 hours. Full statutory compliance managed end-to-end. Two Max Group is your EOR — we are the legal employer; you direct the work.
Incorporate a Local Entity
Register a Private Limited Company with the Business Registration Service (BRS). Takes 6–12 weeks. Requires local directors, company secretary, and ongoing annual filings. Higher upfront cost and compliance burden.
Contractor Engagement
Fastest to start. No employment protections apply. However, KRA and the ELRC apply a substance-over-form test — if the relationship is sufficiently employment-like, the contractor may be reclassified as an employee with backdated tax and statutory benefit liability.
Which Path is Right For You?
| Factor | EOR (Two Max Group) | Local Entity | Contractor |
|---|---|---|---|
| Speed to hire | 48–72 hours | 6–12 weeks | Immediate |
| Employment law compliance | Full | Full | Risk of misclassification |
| Entity required in Kenya | No | Yes | No |
| Upfront cost | Low | High (KES 250,000+) | None |
| Monthly cost | EOR fee + statutory | Payroll + admin overhead | Agreed rate |
| Director required | No | Yes | No |
| IP ownership risk | Managed | Managed | High without contract |
| Best for | Entry, test, project | Scale, 5yr+ commitment | One-off, specialist |
Step-by-Step: Hiring via EOR in Kenya
Submit your hiring brief
Provide Two Max Group with the employee name, job title, agreed salary, and desired start date. No local entity, registered address, or Kenyan bank account is required at this stage. A one-page brief is sufficient to initiate the process.
Receive a scoped EOR proposal
Two Max Group delivers a fixed-fee EOR proposal within one business day. The proposal sets out the EOR service fee, the applicable statutory employer costs (NSSF, SHIF, Affordable Housing Levy), and any work permit or immigration costs for foreign nationals. There are no hidden charges.
Employment contract drafted and approved
Two Max Group prepares a Kenya Employment Act 2007 compliant employment contract covering all 18 statutory particulars required under section 10 of the Act. The contract is delivered for client review within 24 hours. The client approves contract terms and the employee counter-signs.
Statutory registrations completed
The employee is registered with the Kenya Revenue Authority (KRA) for PAYE, with the National Social Security Fund (NSSF), and with the Social Health Insurance Fund (SHIF). A payslip schedule is issued to the employee confirming their gross pay, expected deductions, and first pay date. All registrations run in parallel — no sequential delays.
First payroll processed and remitted
PAYE is calculated on the applicable tax band and filed via KRA iTax by the 9th of the following month. NSSF Tier I and Tier II contributions are remitted by the 15th. SHIF at 2.75% and the Affordable Housing Levy at 1.5% are filed with PAYE. The employee receives a detailed payslip with every payroll run.
Ongoing payroll and HR advisory
Two Max Group provides monthly payroll processing, payslips, statutory filing reports, and on-demand HR advisory covering leave management, disciplinary procedures, and Employment Act compliance.
Legal Requirements for Hiring in Kenya
Every employer in Kenya — whether a local entity or a foreign company operating via an EOR — is bound by the Employment Act 2007, the Labour Institutions Act 2007, the Income Tax Act, and the statutory fund regulations. The following obligations apply from the first day of employment.
Payroll Obligations in Kenya
Kenya requires multiple statutory payroll filings each month. Missing filing deadlines attracts immediate KRA penalties and interest. All filings are processed through the KRA iTax portal using the employer's registered PIN and the relevant return type. Two Max Group files all returns on behalf of EOR clients with a zero-late-filing record since 2011.
Work Permits for Foreign Employees in Kenya
Foreign nationals employed in Kenya require valid work authorisation from the Department of Immigration before they commence work. Employers who allow foreign employees to work without valid permits face significant penalties under the Kenya Citizenship and Immigration Act, with fines applied per employee per day of non-compliance.
The primary work permit for most foreign employees is the Class G Entry Permit. This permit is valid for two years and is renewable. The application requires: a formal job offer letter, evidence that the employing entity is registered in Kenya, proof that a local recruitment exercise was conducted and no suitable local candidate was found, a DCI (Directorate of Criminal Investigations) clearance certificate, and a medical certificate from a recognised institution. Processing time for a Class G is typically 30–60 days.
Where an employee needs to start work before the Class G is issued, a Special Pass provides 90-day temporary authorisation. The Special Pass can typically be obtained within 5–10 business days and allows the employee to work lawfully while the full Class G application is processed in parallel. This is the standard approach for fast-start international hires.
All foreign employees must also obtain a Kenya Revenue Authority KRA PIN before PAYE deductions can be processed against their salary. KRA PIN registration for foreign nationals requires the employee to be physically present in Kenya and to produce their passport and immigration documents. Two Max Group coordinates both the work permit process and the KRA PIN registration as part of the onboarding sequence. See work permit processing services.
Salary and Benefits Benchmarks
Statutory minimum wages in Kenya are set by the Minister of Labour via Regulation of Wages Orders under the Labour Institutions Act 2007. These differ by sector and town classification. See our Kenya minimum wage 2026 guide for sector-by-sector rates.
For most international employers, the statutory minimum is not the relevant compensation benchmark — it is a compliance floor. Market rates for professional staff in Nairobi are substantially higher. The standard statutory benefits package for any Kenya employee includes NSSF pension contributions, SHIF health coverage, 21 working days of paid annual leave, 90 days of paid maternity leave, and 14 days of paid paternity leave.
Beyond statutory minimums, employers competing for professional talent in Kenya typically supplement the package with private medical insurance (approximately KES 15,000–50,000 per person per year depending on cover level), an annual performance bonus, a pension top-up above NSSF, and provision of a company phone or laptop for relevant roles. Some employers in financial services and technology also offer medical cover that extends to dependants.
Two Max Group offers compensation and benefits benchmarking grounded in Kenya-specific market data to help employers position salaries competitively by role, sector, and seniority. See compensation benchmarking services.
Common Mistakes Foreign Employers Make in Kenya
Two Max Group has advised foreign employers entering Kenya since 2011. These are the most frequent compliance failures we see — and correct on behalf of new clients.
Using contractor agreements to avoid employment protections — KRA and ELRC apply substance-over-form tests and high misclassification risk applies to any ongoing, integrated role.
Missing PAYE registration before the first payroll — KRA imposes immediate penalties for late registration and for payroll runs processed without a valid PAYE PIN.
Issuing verbal-only employment contracts — section 10 of the Employment Act requires written particulars within two months of the employment start date.
Failing to register for NSSF within 30 days of the first hire — backdated contributions become due from the date employment commenced, not the date of registration.
Ignoring the NHIF-to-SHIF transition — SHIF applies a different deduction rate (2.75%) and has different filing mechanics from the old NHIF arrangement.
Assuming the probationary period removes the disciplinary process obligation — disciplinary and termination procedures under the Employment Act apply throughout the employment, including during probation.
Frequently Asked Questions
Hiring employees in Kenya — guidance for foreign companies.
Can a foreign company hire employees in Kenya without a local company?
Yes. A foreign company can hire employees in Kenya without incorporating a local entity by using an Employer of Record (EOR) such as Two Max Group. The EOR becomes the legal employer in Kenya, managing the employment contract, payroll, PAYE, NSSF, SHIF, and Housing Levy on your behalf. The foreign company directs the employee's work under a client services agreement without needing a registered Kenyan company, local bank account, or local directors.
How long does it take to hire someone in Kenya through an EOR?
Through Two Max Group's EOR service, a Kenya-based employee can be legally onboarded within 48–72 hours of receiving the required details (employee name, role, salary, and start date). The employment contract is drafted within 24 hours. KRA, NSSF, and SHIF registrations are completed in parallel with onboarding rather than sequentially, which is what enables the 48–72 hour timeline.
What taxes must a Kenya employer deduct from salaries?
Employers must deduct and remit PAYE (10%–35% progressive income tax, filed by 9th of each month via KRA iTax), NSSF (6% employee + 6% employer, maximum KES 2,160 each, due by 15th), SHIF (2.75% of gross from the employee, filed by 9th), and the Affordable Housing Levy (1.5% each from employer and employee, filed by 9th). An annual P9A return summarising each employee's tax position is due on 31 March.
Do I need a work permit to hire a foreign employee in Kenya?
Yes. Foreign nationals working in Kenya require a valid Class G Entry Permit or a Special Pass for assignments of up to 90 days while a Class G is processed. The Class G requires a formal job offer, evidence the employer is registered in Kenya, proof local candidates were considered, a DCI clearance, and a medical certificate. Class G processing takes 30–60 days; a Special Pass can be issued within 5–10 days. Two Max Group manages the full permit process. See /services/work-permit-processing-services-kenya/.
What is the risk of using contractors instead of employees in Kenya?
KRA and the ELRC apply a substance-over-form test. Where a contractor is integrated into the business, works exclusively for one client, uses client equipment, and is subject to the client's direction and control, KRA may reclassify the arrangement as employment — triggering backdated PAYE, NSSF, SHIF, and Housing Levy plus penalties and interest. The ELRC may also award employment rights (leave pay, severance, unfair dismissal compensation) retroactively. Contractor arrangements are appropriate only for genuinely independent, time-limited specialist work.
Ready to Hire in Kenya?
Two Max Group gets your first Kenya hire compliant and active within 48–72 hours. Fixed-fee EOR, zero statutory penalties, IHRM-certified advisory — all from a Nairobi team with 14 years of Kenya employment law experience.