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The Ultimate Guide To
Employment in Kenya

Kenya Facts

Population size: 47,251,449
Currency: Kenyan shilling, KES, KSh, /=, /-
Capital city: Nairobi
Languages spoken: English, Swahili
Ease of Doing Business: 92

GEO Solutions or DIY Employment in Kenya?

GEO Solutions or DIY Employment

Companies entering Kenya must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Kenya Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have a Kenyan entity established that can run payroll.

A DIY approach will typically take 6-9 months until there is a properly incorporated WFOE ready to run payroll and cost up to 6 figures if registered capital is required. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally Shield GEO is responsible for all compliance issues related to the employment.

Outsourcing Employment Through a GEO Employer of Record Service

Using Shield GEO Employer of Record Services in Kenya

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Kenya. For companies which intend to employ their staff directly through their incorporated Kenyan entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Kenya.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Kenya.

The Shield GEO solution is an attractive alternative where

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Kenya

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Kenya

– the company needs help with tax, employment, immigration and payroll compliance in Kenya

Payroll

Payroll Kenya
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote

Notes

Shield GEO pays the employee on a monthly basis, typically on the last working day of the month although we can adapt to your preferred schedule. Income tax and social security (where applicable) are deducted at source and paid to the local tax authorities.

Currency ? Kenyan shilling, KES, KSh, /=, /-
 
Grossed income Tax Rate (%)
0 - KES 121, 968 10
KES 121,969 - 236,880 15
KES 236,881 - 351,792 20
KES 351,793 - 466,704 25
Above 466,704 30
Tax Returns Supplied

Yes

Employees Social Security and statutory contributions

The employee is required to make contributions to the National Social Security Fund (NSFF) as well as the National Hospital Insurance Fund (NHIF).

The contribution rates are as follows:

NSFF: 6% of monthly wages

NHIF: Ranging from KES30 up to KES320

For more details, please refer to the section on Employment.

Immigration and Work Permits in Kenya

Foreign nationals wishing to work in Kenya are required to obtain a work permit. However, work permits are generally only granted in instances where the employer can prove that doing so would be beneficial to Kenya and the position cannot be filled by any suitable Kenyan applicants.

Use your own company?

A foreign company that wishes to get a work permit for one of its employees must first set up its Kenyan subsidiary/branch/representative office. This Kenyan entity may then apply for the work permit.

An applicant may make an application directly or choose an agent such as a law firm or consultancy. However, do note that direct applications take a longer time.

Step 1: Completion of the application

Foreign nationals wishing to be employed by a Kenyan entity are required to apply for a Kenyan work permit. The different classes will depend on the specific circumstances of the applicant. Generally, the success rate depends on whether skilled labour for the position is available locally i.e. employers are required to justify employment of the foreign national instead of a local.

All work permits are generally valid for 2 years, with renewals permitted for an extra 2 years at a time. The number of renewals is unlimited. Renewals need to be done at least 3 months prior to expiry.

While each work permit may have specific documentation requirements, the following are all required:

  • Dully filled and signed application Form 3
  • Covering letter from employer/self/organisation depending on the class (as applicable)
  • Copies of the foreign national’s passport
  • Two coloured Passport size photographs
  • Application form fee of KES 40

Step 2: Submission to the Ministry of Immigration

Once the application is submitted at the Ministry of Immigration, it shall be presented to a committee for approval. This process may take between two and six months.

The following factors are considered by the committee when deciding whether to approve or reject an application:

1. The amount of investment and its impact on Kenya’s economy, which is determined by the auditors’ report or bank statement

2. The number of jobs that will be created for Kenyans, which is determined by the application letter submitted by the applicant’s agent

3. The nationality of the applicant. An applicant has a higher chance of approval of his application if his or her country of origin has a stronger economy’s than that of Kenya and low criminal statistics and security threats.

If the application is successful, the Ministry will issue a Notification of Approval will be issued. If it is rejected, a Notification of Rejection will be issued. This Notification of Approval is valid for ninety days pending payment of the government fees.

The entry permit is then endorsed on the applicant’s passport.

More information can be found here.

Step 3: Registration as an alien

All foreigners who remain in Kenya for more than 3 months (90 days) are required to register as an alien and obtain an alien registration card from the Immigration Department.

The application must be accompanied by:

1.Two passport –size photographs (either coloured or black and white and taken not more than 12 months earlier) of the applicant;

2.A valid passport or some other official document establishing identity and nationality; and

3.The prescribed fee

Use the Shield GEO Employer of Record Solution?

Once you get in touch with us, one of our consultants will take all the work off your hand, co-ordinate with our local partners to get all the required permits organised, provide the processing time, costs, document-checklist and keep you informed through the process. Contact us to know more.

Types of visas in Kenya

Category Description of Visa
Class A

Issued to persons who intend to engage in prospecting for minerals or mining.

Requirements:

1. One should obtain or is assured to obtain the necessary licenses and registrations.
2. For renewals current license held for prospecting minerals and copy of PIN is required.
3. One has sufficient capital or resources for investment.

Cost: KES 10,000

Class B

Work permit issued to persons wishing to invest in Agriculture and Animal Husbandry.

Requirements:

1. Proof of land ownership or leasehold interest in land for the purpose.
2. Proof of capital available for the purpose.
3. Clearance from relevant bodies.
4. For renewals current license held for prospecting minerals and copy of PIN is required.

Cost: KES 10,000 application fee and yearly fee of KES 100,000 thereafter

Class D

Issued to a person who is offered specific employment by a specific employer who is qualified to undertake that employment.

Requirements:

1. Copies of academic/professional certificates along with the CV.
2. Evidence that the organisation failed to fill the vacancy from the local labor market.
3. Form 25 dully filled, signed and sealed by the company.

Cost: KES 10,000 and an annual fee of 200,000 per year or part thereof.

Class G

Work permit issued to investors in specific trade, business or consultancy.

Requirements:

1. Documentary proof of capital to be invested/already invested minimum of 100,000 US dollars or equivalent in any other currency.
2. Registration certificate of the company OR certificate of incorporation.
3. Copies of personal and company PIN (Personal Identification Number) if business is running.
4. For renewals; audited accounts for previous 2 years and a certificate of tax compliance from the Kenya Revenue Authority.

Cost: KES 10,000 and yearly fee of 100,000 per year or part thereof.

Class I

Work/Residence permit issued to a member of missionary society approved by the Government of Kenya and whose presence is beneficial to the country.

Requirement:

1. A copy of registration certificate of the organisation.
2. Academic and professional certificates of the applicant.

Cost: KES 1,000 and yearly fee of KES 5,000 or part thereof.

Class K

Residence permit issued to persons who have an assured income derived from sources outside and undertakes not to accept paid employment of any kind.

Requirement:

1. Documentary proof of assured income is required for Class K.

Cost: KES 10,000 and yearly fee of KES 100,000 per year or part thereof.

Class M

Work permit issued to Conventional Refugees.

Setting up a company in Kenya

When setting up a company you may want to consider these factors:

  1. Business Factors

    Generally, Kenya requires that foreigners wanting to own, or run a business in Kenya to obtain a work permit from the Ministry of Immigration. The type of permit applied for will depend on whether the foreigner will be an owner of the business or simply an employee (to be elaborated further below).

    In deciding on whether to invest in Kenya, you may also want to consider the following when making your decision :-

    • The industry and type of business that will be conducted
    • Nationality of the headquarters / individuals (s)
    • Presence of existing trade agreements or relationships
  2. Location

    Location will be another factor. Separate cities and regions may have different rules, costs and availability. It is always recommended to seek advice from relevant professionals, such as business or legal advisors, accountants and others depending on your needs.

There are three types of business forms available to foreign companies in Kenya. Each of these business forms has distinct advantages and disadvantages, as well as differing scope of business activities, registration requirements and minimum capital requirements. In most cases it will depend on the degree of commitment a company has to Kenya and the planned business activity.

When setting up a company in Kenya, you have the following options:-

  • Corporation
  • Branch Office
  • Representative Office

This article provides a general guideline for foreign businesses on entering Kenya for business purposes. In particular, it looks at common pathways to establishing a business presence in Kenya, generally through a corporation, branch office or liaison office. In addition, various economic, tax and regulatory factors are provided throughout as a source of useful information to assist those who will enter the Kenyan economy. The guide also looks at some immigration requirements such as obtaining appropriate visa status.

Data is based on the time of writing, November 2015 or closest available dates.

Corporation

PLC

Besides requiring foreign applicants to hold a valid work permit before being appointed as shareholders in Kenyan companies, Kenya also has certain foreign ownership rules in place. For example, telecommunications companies must have a minimum of 30% shareholding by Kenyans.

In Kenya, there are two main types of corporations (registered companies) that can be set up:

  • Private limited corporation
  • Public limited corporation

Types of corporations

To register a limited liability company (LLC) in Kenya you will need:

  1. two shareholders
  2. two directors
  3. A registered office within the republic of Kenya (both physical and postal address).

A foreigner is not required to have a work permit before registering the company, rather when applying for a class H work permits, it is a prerequisite that the company first be in existence.

1. Private limited corporation

Investment Capital Requirements

There are no minimum or maximum share capital requirements. However, there are certain industries which have minimum limits of nominal capital (regardless of whether it is owned by locals or foreigners) e.g. banking, insurance, foreign exchange and security firms.

A private limited liability company is only permitted to have a maximum of 50 members (excluding those under the company’s employment). One requirement under the Companies Act that when the membership of a private company exceeds fifty, it must convert to a public company.The right to transfer shares is restricted and shares or debentures cannot be subscribed to the public.

2. Public limited corporations

Alternatively, investors may set up a public limited corporation. Companies wishing to list on the Nairobi Stock Exchange are required to set up a public limited corporation.

Investment Capital Requirements

A public limited liability company has no maximum number of members. Shares may be transferred and shares and debentures may be offered to the public.

Incorporation process

Step 1: Reservation and approval of name by the Registrar of Companies

The company name reservation period lasts 30 days, and can also be renewed for a similar period.

Agency: Registrar of Companies

Time: 1 day

Cost: KES 100 per name reservation

Step 2: Preparation and stamping of the Memorandum, Articles of Association and Statement of Nominal Capital

The documents will be assessed by the Stamp Duty Office, before payment can be made at the Kenyan Revenue Authority (KRA)-designated banks. Payment of the relevant duty includes fees for bank handling charges.

Agency: Registrar of Companies, Kenyan Revenue Authority

Time: 5 – 10 days

Cost: KES 2,000 in stamping fees for three copies of the Memorandum and Articles of Association and two copies of the Statement of Nominal Capital, 1% of nominal capital (KES 20 for every KES 2,000 or part thereof of capital) and KES 100 in bank handling charges.

Step 3: Signing of the Declaration of Compliance 

In accordance with the Companies Act (Cap. 486), an advocate engaged in the formation of the company or a director or company secretary named in the articles of association must sign the declaration of compliance (Form 208). This form is submitted to the Registrar of Companies along with the registration documents.

Step 4: Completion and filing of the relevant forms

In addition to the Statement of Nominal Capital, companies are also required to complete the following forms: Particulars of Directors and Shareholders, Situation of Registered Office and Certificate of a Lawyer involved in the Formation of the Company. A public company is also required to complete Consent to Act as Directors, List of Persons who have Consented to Act as Directors and the Statement in Lieu of Prospectus forms. A complete list of the forms can be viewed here.

Once completed, the founder must submit the incorporation deed and the following documents to the Registrar of Companies:

  • Stamped memorandum and articles of association
  • Statement of capital
  • Notice of Situation of Registered Office (Form 201)
  • Particulars of Directors and Secretary (Form 203)
  • Declaration of compliance with the Companies Act (Form 208)
  • Copy of the company name approval

Once successful, the company will be issued with a Certificate of Incorporation. In addition to the Certificate of Incorporation, public companies will also be issued with a Trading Certificate.

Agency: Registrar of Companies at the Attorney General’s Chambers in Nairobi

Time: 12 days

Cost: Approximately KES 7,360.

Note: Fee schedule for registration under the Companies Act (Cap. 486):

  • For the first KES 100,000: KES 2,200
  • For every KES 20,000 after the first KES 100,000 or part thereof: KES 120, subject to a maximum of KES 60,000
  • Filing fee for three forms: KES 600 (KES 200 each)

Step 5:  Registration for taxes with the Kenya Revenue Authority (KRA)

Companies will require the personal tax identification number (PIN) of at least 2 signatories (2 directors or 2 shareholders or a director and the secretary) as well as the company tax identification number to register for VAT, local service tax, and the Pay-As-You-Earn (PAYE) tax. PIN and tax registrations can now be done online.

The founder will also be required to file the certificate of incorporation and a copy of the memorandum and articles of association during the online tax registration.

In the event the KRA has not received confirmation of the company’s incorporation from the Companies Registry, the founder must also submit the certificate of incorporation and receive log-in details to proceed with online tax registration.

Agency: KRA

Time: 1 day

Cost: No charge

Step 6: Application for a business permit

Companies are also required to apply for a business permit from the Nairobi City Council. The following fee scale is applicable for business permit fees:

1. Large trader, shop, or retail service with 21-50 employees and premises of 300-3,000 square meters (or at a prime location): KES 30,000
2. Medium trader, shop, or retail service with 5-20 employees and premises of 50-3,000 square meters (fair location): KES 15,000

Agency: Nairobi City Council

Time: 5 days

Cost: Depends on the type of permit

Step 7: Registration with the social security services

Companies are also required to register with the National Social Security Fund (NSFF) and the National Health Insurance Fund (NHIF).

Agency: NSFF and NHIF

Time: 1 day

Cost: No charge

Step 8: Making a company seal

Agency: Seal makers

Time: 2 days

Cost: Between KES 2,500 to 3,500

Branch office

Foreign corporations operating in Kenya can operate as a branch office without the need to incorporate. However, it is generally advisable to incorporate rather than set up a branch office in Kenya, given the numerous drawbacks associated with having a branch office. Having said that, foreign enterprises wanting to set up a branch in Kenya for lower levels of activity are allowed to do so.

When registering a branch, the following documents and details must be submitted to the Registrar of Companies within 30 days of the branch’s establishment:

  • A certified copy of the Charter, Statutes or Memorandum and Articles of the company, or other instruments defining the constitution of the company;
  • A list of the directors and the secretary of the company;
  • A statement of all existing charges entered into by the company affecting properties in Kenya;
  • Names and postal addresses of one or more persons resident in Kenya authorised to accept, on behalf of the company, service of notices required to be served on the company;
  • Full address of the registered or principal office of the company in its home country; and
  • Full address of place of business in Kenya.

Once the process is complete, the Registrar will issue a Certificate of Compliance.

Agency: Registrar of Companies

Time: Up to 4 weeks

Cost: KES 8,600

Representative Office

A representative office is not an independent legal entity and hence, may not conduct direct commercial or revenue-generating activities with the execution of contracts, receipt of funds, sale or purchase of goods, or provision of services. Its permitted activities are usually limited to activities designed to promote business interest of institutions licensed and incorporated outside Kenya.

 

The same registration procedure for branches is applicable for representative offices. The relevant forms and more information about the application procedure may be found here.

Outsourcing Employment Through a GEO Employer of Record Service

Whether to incorporate in Kenya, and what sort of entity to setup are just two of the many choices companies must make when expanding into a new market.

If the company intends to have staff in Kenya, they must also decide whether they will administer that employment internally or use a Global Employment Organisation to handle payroll and employment responsibilities. A GEO Employer of Record solution is an attractive alternative where

  • the company is looking to setup an office quickly
  • the company wants to work within a defined budget
  • the company wants to limit its initial commitment in Kenya
  • the company needs help with tax, employment, immigration and payroll compliance in Kenya

The complexity of employment regulations in Kenya makes the use of a GEO advisable coupled with local legal counsel to ensure full compliance with employment laws, for example the drafting of local contracts for workers.

Shield GEO provides a comprehensive service in Kenya allowing companies to deploy their staff quickly with reasonable, clearly stated costs and timeframes. The company contracts directly with Shield to employ and payroll their staff on their behalf in Kenya.

Shield GEO then becomes the Employer of Record. Shield GEO assumes the legal responsibility for these employees, sponsoring them on work permits, complying with local employment law and running their monthly payroll. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Kenya. Read more about outsourced employment through Shield GEO.

  • Kenya Employer of Record Overview

Kenya Employer of Record Overview

  • Kenya Employer of Record Overview

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