Employer of Record (EOR) Services in Kenya

Employer of Record (EOR)/HR Outsourcing refers to services performed by a third party to support companies in managing employees, particularly when they are hiring across different regions or countries.

Companies look to Employer of Record (EOR)/HR Outsourcing services when they want to expand into a new country or market but have no legal entity/location there.

Rather than spend their time navigating the administrative and regulatory hurdles to open one, they hire an EOR to help the business establish itself in the new market quickly and effectively.

Companies also choose an Employer of Records (EOR) when;

• Testing the market before establishing a legal entity
• Hiring a small number of employees
• There’s a need to hire competent staff abroad quickly
• Looking to establish representation in the country

Does this sound like what you might need? Keep reading!

Cedar Africa Group’s EOR services handle many aspects of the business. From finding and hiring talent to managing payroll and ensuring compliance with labour and tax laws, we get you ready to open for business.

If you’re looking to expand operations in Kenya without establishing a local presence, look to us. 

Our in-depth knowledge of the local government, including the administrative and regulatory requirements, ensures you avoid challenges that could delay your expansion. This saves you valuable time and resources and allows you to focus on growth.

What is an Employer of Record (EOR)?

An Employer of Record (EOR) is a third-party organization that acts as the legal employer for your workforce in Kenya. While you maintain full control over day-to-day tasks and team management, we take care of everything else, including payroll, compliance, and taxes. This simplifies hiring and managing employees abroad, reducing your operational overhead.

How Employer of Record (EOR) services in Kenya work

An Employer of Record (EOR) service in Kenya works by acting as the legal employer for your workforce while you retain operational control over their day-to-day activities. This model is particularly useful for your company if you’re looking to expand into Kenya quickly without needing to set up a local entity and to ensure that all your employment practices are compliant with local regulations. Here’s how it generally works:

1. Employment contracts: The EOR service handles the creation and management of employment contracts following Kenyan labour laws.
2. Payroll and benefits: The EOR manages payroll, benefits, and taxes, ensuring that all employee compensation and statutory obligations are handled accurately and on time.
3. Compliance: The EOR ensures that all local labour laws, including employment regulations and health and safety standards, are adhered to, reducing the risk of legal issues.
4. HR functions: The EOR handles HR administrative tasks, such as onboarding, employee records, and terminations, while you focus on managing the employees’ work and performance.
5. Liability: The EOR assumes legal responsibility for employment-related matters, providing you with peace of mind and allowing you to focus on your core business activities.

What our Employer of Record (EOR) services entail

Talent acquisition and staff outsourcing

As an EOR service provider, we assist in identifying and hiring the right talent for your organization. We leverage our extensive network and recruitment expertise to source candidates that match your specific requirements. Our services include job postings, screening, interviewing, and presenting qualified candidates. Additionally, we manage staff outsourcing by handling the administrative aspects of employment, allowing you to focus on integrating new hires into your team without the complexities of direct employment management.

Offer negotiation and contract management

We facilitate offer negotiations to ensure competitive and attractive employment terms that align with industry standards and your company’s compensation strategy. Our team drafts, reviews, and manages employment contracts to comply with Kenyan labour laws and regulations. We handle contract renewals, amendments, and terminations, ensuring all agreements are legally sound and reflect the agreed terms.

Employee onboarding

Our onboarding process ensures that new employees are seamlessly integrated into your organization. We manage all necessary administrative tasks, including the completion of required documentation, orientation, and initial training. Our goal is to provide a smooth transition for new hires and equip them with the tools and information they need to succeed in their roles.

Payroll processing

We handle all aspects of payroll processing to ensure employees are paid accurately and on time. This includes calculating salaries, overtime, bonuses, and deductions. We manage the entire payroll cycle, from data collection and processing to disbursement, while ensuring that the Kenyan payroll regulations and standards are being followed.

Tax administration – statutory remittance

We take responsibility for the administration and remittance of statutory taxes and contributions, including income tax, social security, and other mandatory deductions. Our team ensures that all tax obligations are met by following Kenyan tax laws, minimizing the risk of penalties and ensuring you comply with local tax regulations.

Workstation and admin support

We provide comprehensive support for setting up and maintaining workstations for your employees. This includes managing office supplies, equipment, and administrative services required for day-to-day operations. Our goal is to create an efficient and productive work environment for your team.

Immigration support – visa, special pass, and work permit processing (for expatriates)

For expatriate employees, we offer immigration support to facilitate the acquisition of necessary work visas, special passes, and work permits. Our services include guiding you through the application process, making sure you follow the Kenyan immigration regulations, and handling all documentation and procedural requirements.

Travel support – (on a need basis)

We provide travel support for employees as needed, including arranging transportation, accommodations, and itinerary planning. This service is designed to assist with travel logistics to ensure a smooth experience for employees traveling for business purposes.

Relocation support (for expatriates)

Our relocation support services assist expatriate employees with moving to Kenya. We help with various aspects of relocation like finding housing, coordinating moving services, and providing information about living in Kenya. Our goal is to ensure a smooth transition and help expatriates settle into their new environment comfortably.

Benefits and insurance management

We manage employee benefits and insurance programs, including health insurance, retirement plans, and other employee perks. Our services include selecting and administering appropriate benefits packages, handling enrollments, and ensuring that all benefits comply with Kenyan regulations and meet the needs of your employees.

Company and employee registration

We handle the registration of both your company and employees with relevant Kenyan authorities. This includes obtaining necessary business licenses and registering employees for statutory benefits according to the requirements of our local regulations. Our services see to it that your company and its employees are properly documented and compliant with Kenyan laws.

Why should you use an Employer of Record (EOR) service in Kenya?

1. Compliance with local laws
   Navigating Kenya’s complex labour laws, including the Employment Act, National Social Security Fund (NSSF), and National Hospital Insurance Fund (NHIF), can be daunting. Our EOR ensures that your business stays compliant with all statutory requirements.
2. Faster market entry
   With an EOR service, you can avoid the time-consuming process of setting up a legal entity. Our services enable you to hire employees in Kenya quickly, without the need to establish a local subsidiary.
3. Cost-effective solution
   Setting up and maintaining a legal entity can be expensive. With our EOR services, you can significantly reduce administrative costs and focus your resources on expanding your business.
4. Simplified payroll & taxation
   We handle payroll processing, statutory deductions, and taxes on your behalf, ensuring accurate, timely payments to your employees and complying with Kenyan tax regulations​.
5. Full employee benefits
   Your employees will have access to statutory benefits like the NSSF and NHIF, as well as optional add-ons like private health insurance or life insurance, offering them comprehensive coverage​.

Why choose our EOR services in Kenya?

Expert knowledge of Kenyan labour laws

Kenya’s labour laws are subject to frequent changes, and non-compliance can lead to fines or legal complications. Our team stays updated with the latest employment regulations to ensure your business remains compliant.

Customized solutions for your business

Whether you are hiring your first employee or managing a large team in Kenya, our EOR services are tailored to meet your specific needs. We understand that every business is unique, and we offer customized solutions to ensure smooth operations.

Scalable services

If you need to onboard one employee or manage a growing team, our EOR services are scalable to match your business needs. As your business grows, we ensure that your HR and payroll operations run efficiently, without the hassle of expanding your legal footprint.

Dedicated support

You will have a dedicated point of contact for all HR and administrative matters. This ensures that your queries are resolved quickly, and you can focus on driving your business growth without worrying about your employee management.

 Saves your business time and resources

Employing our services as your EOR service provider ensures you are free from issues that might hold back or delay your expansion into the Kenyan market, saving you time and resources and making sure you work within your business timelines.

What you need for an Employer of Record (EOR) service in Kenya

To utilize an Employer of Record (EOR) service in Kenya, you’ll generally need the following:

1. Business information: You will need to provide details about your company, including its legal name, business registration, and nature of operations.
2. Employee details: There’s also a need to share information about the employees you want to hire through the EOR. Details should include their roles, job descriptions, and compensation packages.
3. Compliance requirements: You have to outline any specific compliance needs or local regulations relevant to your industry or business operations.
4. Payroll information: An EOR service provider needs details about your salary structures, benefits, and any other compensation-related data to help find the right candidates.
5. Contractual agreements: You will need to work with the EOR to draft and finalize employment contracts that meet Kenyan legal standards.
6. Company policies: You also need to share any internal policies or practices you wish to be integrated into the EOR service.

What you need to know about Kenyan labour laws & compliance

Employment act compliance

Kenya’s Employment Act governs all labour relations, and non-compliance can result in fines or legal action. As your EOR/HR Advisor, we ensure that employment contracts, working hours, and employee benefits comply with the Employment Act.

Statutory contributions

We handle all required statutory contributions, including:

• National Social Security Fund (NSSF): A mandatory retirement savings plan for employees.
• National Hospital Insurance Fund (NHIF): Provides employees with access to healthcare benefits.
• PAYE (Pay As You Earn): Ensuring accurate income tax deductions for each employee​ as imposed by the Kenya Revenue Authority (KRA).

Employee Rights & Protection

Our EOR services guarantee that your employees’ rights are protected in line with Kenyan labour laws. We handle matters related to paid leave, public holidays, and maternity/paternity leave according to the Employment Act.

Employment contracts in Kenya

1. Parties involved: The contract should clearly state the names and details of the employer and the employee.
2. Job title and description: It includes the employee’s job title, responsibilities, and the scope of their role within the organization.
3. Terms of employment: This specifies whether the employment is permanent, temporary, or on a fixed-term basis. It also includes the contract start date and, if applicable, the end date for fixed-term contracts.
4. Probationary period: If applicable, the contract outlines the duration of the probationary period and the conditions under which it may be extended or terminated.
5. Salary and compensation: The contract details the employee’s salary, payment frequency (e.g., monthly, quarterly, etc), and any other forms of compensation such as bonuses, allowances, or incentives.
6. Working hours: It specifies the regular working hours, including start and end times, and any provisions for overtime or shift work.
7. Leave entitlements: The contract outlines the employee’s entitlement to various types of leave, such as annual leave, sick leave, and maternity/paternity leave under Kenyan labour laws.
8. Benefits and insurance: It includes information on any benefits provided by the employer, such as health insurance, retirement contributions, or other employee perks.
9. Termination conditions: The contract specifies the conditions under which either party can terminate the employment, including notice periods, reasons for termination, and any severance pay or compensation due.
10. Confidentiality and non-compete clauses: If applicable, the contract may include clauses related to confidentiality, non-disclosure, or non-compete agreements to protect the employer’s business interests.
11. Dispute resolution: The contract may outline procedures for resolving any disputes that arise between the employer and employee.
12. Governing law: It specifies that Kenyan labour laws will govern the terms of the contract and any legal matters arising from it.

Mandatory benefits that employers must provide for employees

In Kenya, employers are required by law to provide certain mandatory benefits to their employees. These benefits are designed to ensure the welfare, health, and financial security of employees during and after employment. Here are the key mandatory benefits that employers must provide:

1. National Social Security Fund (NSSF) Contributions

• Legal Basis: National Social Security Fund (NSSF) Act, 2013.
• Purpose: Provides retirement, disability, and survivor benefits.
• Contribution Rate:

Lower Limit (Tier 1)	Kshs. 7,000
Total Contribution by Employee	Kshs. 420
Total Contribution by Employer	Kshs. 420
Total Tier 1 NSSF Contributions	Kshs. 840
Upper Limit (Tier 2)	Kshs. 36,000
Contribution on Upper Limit (6% of Upper Limit less Lower Limit)	Kshs. 29,000
Total Contribution by Employee	Kshs. 1,740
Total Contribution by Employer	Kshs. 1,740
Total Tier 2 NSSF Contributions	Kshs. 3,480
Total NSSF Contributions	Kshs. 4,320

 

2. National Hospital Insurance Fund (NHIF) Contributions

• Legal Basis: National Hospital Insurance Fund (NHIF) Act, 1998.
• Purpose: Provides healthcare coverage and insurance for hospitalization.
• Contribution Rate:
• Employees contribute a fixed amount based on their income band, with a maximum contribution of KES 1,700 for high-income earners.
• Employers are required to deduct and remit these contributions on behalf of employees by 9th of every month.

3. Pay-As-You-Earn (PAYE) Tax Deductions

• Legal Basis: Income Tax Act, Chapter 470.
• Purpose: Employees must pay income tax, which employers are obligated to withhold from their wages.
• Contribution Rate:
• PAYE is deducted based on income brackets defined by the Kenya Revenue Authority (KRA), with the highest bracket being taxed at 35%.
• Employers must calculate, deduct, and remit these taxes to KRA.

4. Annual Leave

• Legal Basis: Employment Act, 2007.
• Purpose: Ensures employees have time off for rest and personal activities.
• Benefit:
• Employees are entitled to a minimum of 21 working days of paid leave annually
• Leave is accrued based on months worked if an employee has not completed a full year 

5. Sick Leave

• Legal Basis: Employment Act, 2007.
• Purpose: Provides paid leave during illness.
• Benefit:
• After completing two months of continuous service, employees are entitled to up to 30 days of sick leave per year, with the first 7 days being fully paid and the next 7 days at half pay, provided a medical certificate is issued.

6. Maternity and Paternity Leave

• Maternity Leave:
• Legal Basis: Employment Act, 2007.
• Benefit:
• Female employees are entitled to three months (90 calendar days) of fully paid maternity leave. However, some companies offer 4 or 6 months maternity leave depending on the company policy.
• Maternity leave can be extended due to medical reasons related to childbirth.
• Paternity Leave:
• Legal Basis: Employment Act, 2007.
• Benefit:
• Male employees are entitled to two weeks (14 calendar days) of fully paid paternity leave.

7. Work Injury Benefits

• Legal Basis: Work Injury Benefits Act (WIBA), 2007.
• Purpose: Provides compensation for work-related injuries and accidents.
• Benefit:
• Employers are required to compensate employees for work-related injuries, disabilities, or deaths.
• The compensation includes medical expenses, permanent disability benefits, and death benefits for dependents.

8. Overtime Pay

• Legal Basis: Employment Act, 2007.
• Purpose: Ensures employees are compensated for extra hours worked.
• Benefit:
• Any hours worked beyond the regular workweek (usually 52 hours) must be compensated as overtime.
• Overtime pay is typically 1.5 times the normal wage rate, and double the rate for work on public holidays or rest days.

9. Severance Pay

• Legal Basis: Employment Act, 2007.
• Purpose: Compensation for employees who are terminated due to redundancy.
• Benefit:
• Employees are entitled to severance pay of not less than 15 days’ pay for each completed year of service.

10. Gratuity (for some employment contracts)

• Legal Basis: Employment Act, 2007 (depending on contract terms).
• Purpose: Provides a lump sum benefit at the end of employment.
• Benefit:
• If stipulated in the employment contract, employees may receive gratuity upon termination, typically calculated as a percentage of their salary over the duration of employment.

11. Public Holidays

• Legal Basis: Public Holidays Act.
• Purpose: Employees are entitled to take the day off on public holidays.
• Benefit:
• Employees are entitled to paid leave during public holidays.
• If employees work on a public holiday, they are entitled to overtime pay at twice their normal rate.

12. Compassionate Leave

• Legal Basis: Employment Act, 2007.
• Purpose: Provides employees with time off for personal emergencies or family-related events.
• Benefit:
• Employees are entitled to compassionate leave for personal reasons, though this is often granted at the discretion of the employer.

These mandatory benefits ensure that Kenyan employees are protected in terms of social security, health, income, and work-life balance. Employers must comply with these statutory requirements to avoid legal penalties and ensure that employees’ rights are protected