Every employer in Kenya is legally required to register with the Social Health Insurance Fund (SHIF) and the National Social Security Fund (NSSF) and to make prescribed deductions from employee salaries and matching employer contributions. Failure to register, deduct, and remit statutory contributions exposes employers to significant penalties, interest, and criminal liability under the Social Health Insurance Act 2023, the NSSF Act 2013, and the PAYE provisions of the Income Tax Act. New employers must complete all registrations before paying their first employee.

Social Health Insurance Fund (SHIF) Registration

The Social Health Insurance Fund (SHIF) was established under the Social Health Insurance Act 2023, which replaced the National Hospital Insurance Fund (NHIF). SHIF came into effect in October 2024 and represents a fundamental restructuring of Kenya’s national health insurance scheme. All Kenyan residents are required to register with SHIF, and employers are required to deduct SHIF contributions from employee salaries and remit them to the Social Health Authority (SHA).

SHIF Contribution Rates

Under the Social Health Insurance Act 2023, SHIF contributions are calculated as 2.75% of gross salary for employed persons, with no minimum or maximum cap. This is a significant change from the previous NHIF structure which had fixed contribution bands. Self-employed persons and those in informal employment contribute a flat rate prescribed by the SHA. Employers must deduct the employee’s contribution and add the employer’s matching contribution before remitting to SHA by the ninth day of the following month.

SHIF Employer Registration Process

Employers register with SHIF through the SHA’s employer registration portal at sha.go.ke. The registration requires the employer’s KRA PIN, Certificate of Incorporation or business name registration, and details of all employees. Upon registration, the employer receives an employer registration number used for all subsequent remittances and correspondence with the SHA.

National Social Security Fund (NSSF) Registration

The NSSF Act 2013 requires all employers to register with the NSSF and to deduct and remit NSSF contributions for each employee. The NSSF Act 2013 increased contribution rates significantly from the previous NSSF Act contributions, though the implementation of the new rates has been subject to litigation and phased introduction.

NSSF Contribution Structure

Under the NSSF Act 2013, contributions are divided into two tiers. Tier I contributions are calculated on the lower earnings limit (LEL), which is the national minimum wage, with the employer and employee each contributing 6% of the LEL. Tier II contributions are calculated on earnings above the LEL up to the upper earnings limit (UEL), with employer and employee each contributing 6% of the Tier II earnings. The combined effect is a significantly higher NSSF deduction than under the previous Act.

NSSF Employer Registration Process

Employers register with the NSSF through the NSSF self-service portal at nssf.or.ke. Registration requires the employer’s KRA PIN, business registration documents, and employee details. Monthly contributions must be remitted by the ninth day of the following month. Late remittances attract a penalty of 5% per month of the outstanding amount plus interest.

PAYE Registration and Employer Tax Obligations

Employers in Kenya must register as PAYE agents with the Kenya Revenue Authority and deduct income tax from employee salaries based on the prescribed PAYE bands. PAYE must be remitted to the KRA by the ninth day of the following month. Employers must also issue employees with P9 forms annually showing total remuneration and PAYE deducted, which employees use to file their annual income tax returns.

Penalties for Non-Compliance

Employers who fail to register with SHIF, NSSF, or the KRA, or who deduct and fail to remit statutory contributions, face substantial penalties. Under the NSSF Act, criminal penalties including fines and imprisonment apply to employers who wilfully fail to register or remit contributions. Under the Social Health Insurance Act, the SHA has powers to impose administrative penalties, charge interest, and initiate legal action to recover outstanding contributions.

Our corporate and commercial practice assists new businesses with employer registration, employment contract drafting, and statutory compliance set-up. For ongoing regulatory compliance on employment law obligations, our team provides advisory support covering SHIF, NSSF, PAYE, and Employment Act requirements. Guidance is also available from the Social Health Authority and the NSSF website.