SHIF and NSSF Employer Registration in Kenya: Statutory Deductions Compliance Guide

SHIF and NSSF employer registration is a legal obligation for every Kenyan employer, and it should be completed before the first salary is paid. An employer must register with the National Social Security Fund (NSSF) and deduct and remit contributions for each employee, and must deduct contributions to the Social Health Insurance Fund (SHIF), which the Social Health Authority (SHA) administers. Employers also carry a statutory duty to deduct and remit the Affordable Housing Levy. This guide sets out the verified rules, the deadlines and the exposure for getting them wrong.

SHIF and NSSF employer registration: the legal basis

Three statutes carry most of the load. The Social Health Insurance Act, 2023 (Act No. 16 of 2023) created SHIF. The National Social Security Fund Act, 2013 governs NSSF membership and contributions. The Affordable Housing Act, 2024 imposes the housing levy. PAYE is a separate duty under the Income Tax Act. Each regime has its own registration, deduction and remittance rules, so a payroll that is right for one can still be wrong for another.

SHIF: registration and contributions

Under section 26 of the Social Health Insurance Act, every Kenyan must register as a member of the Fund. Section 27 requires a household whose income comes from salaried employment to contribute through a monthly statutory deduction made by the employer, at a rate prescribed under the Act. The Social Health Insurance Regulations, 2024 (Legal Notice 49 of 2024) set that rate at 2.75% of the gross salary or wage, payable by the ninth day of each month, and provide that the monthly amount shall not be less than KES 300. The deduction is made from the employee. Do not treat it as an employer matching contribution, because the regulations we checked do not impose one.

Section 27(6) of the Act adds a penalty of two percent of the amount due for the period the contribution remains unpaid, and section 27(4) limits access to services under the Act to persons whose contributions are up to date. A missed remittance can therefore affect your employees’ access to cover, not only your own exposure. Register on the SHA platform and confirm the current onboarding requirements there, because the portal process is administrative and changes more often than the statute.

NSSF: registration and contributions

Section 19 of the NSSF Act requires every employer who employs one or more employees under a contract of service to register with the Fund as a contributing employer and to register the employees as members. Section 20 requires the employer to pay a contribution of six percent of each employee’s monthly pensionable earnings, and to deduct and pay the employee’s own contribution of six percent. The employer must pay by the ninth day of each month, or a later date the Board sets in consultation with the relevant minister.

The Act splits contributions into two tiers. Tier I contributions are calculated on pensionable earnings up to the Lower Earnings Limit, and Tier II contributions on pensionable earnings above it. The Lower Earnings Limit and the upper limit are fixed under the Act’s schedules and gazetted from time to time, so check the current gazetted figures before running payroll rather than relying on a figure quoted in an article. Part VII of the Act covers enforcement, including civil proceedings (section 58), priority for payment of contributions (section 59) and remission of interest (section 60). Section 69 sets a fine not exceeding KES 100,000 for contraventions where no penalty is expressly provided.

Affordable Housing Levy

Section 4 of the Affordable Housing Act imposes the levy at one point five percent of an employee’s gross salary. Section 5 requires the employer to deduct and remit that amount and to remit an equivalent amount of its own. The levy is payable not later than the ninth working day after the end of the month in which the salary was due. The Act also provides a penalty of three percent of the unpaid amount for each month or part of a month it remains unpaid, recoverable as a civil debt.

PAYE

An employer who pays employment income must deduct tax under the Income Tax Act and account for it to the Kenya Revenue Authority each month. Confirm the due date and the current bands on the KRA portal before each filing cycle, because both are changed by Finance Acts. Issue each employee an annual tax deduction certificate so that the employee can file a return.

Practical steps for a new employer

Register with the KRA, NSSF and SHA before onboarding staff. Collect each employee’s KRA PIN, national identity number and bank details at hiring. Set up payroll so that PAYE, SHIF, NSSF and the housing levy are calculated separately and each payment is reconciled to a receipt. Calendar the ninth of the month, and the ninth working day for the levy, as separate deadlines. Review the setup at least once a year and whenever a Finance Act or new regulations are published.