Payroll is one of the most sensitive business functions in Kenya — and also one of the easiest places to get compliance wrong.

From PAYE errors to missed NSSF remittances, payroll mistakes quickly become expensive, disruptive, and legally risky.

That’s why more SMEs, scaling companies, and foreign employers are choosing payroll outsourcing in Kenya as a smarter way to stay compliant and efficient.

In this guide, we break down what payroll outsourcing means, why it matters, and how Kazicloud Employ Limited supports employers across Kenya and East Africa.

What is Payroll Outsourcing?

Payroll outsourcing is when a business hires a professional payroll provider to manage payroll processing and statutory compliance on their behalf.

This includes:

• Salary calculations
• PAYE deductions and KRA remittance
• NSSF and SHIF contributions
• Housing Levy compliance
• Payslip generation
• Monthly payroll reporting

Instead of running payroll manually in-house, employers partner with experts who ensure payroll is done correctly, on time, every time.

Why Payroll Outsourcing in Kenya is Growing Fast

Kenya’s payroll environment is becoming more complex each year.

Employers must comply with:

• Progressive PAYE tax bands
• Statutory pension requirements (NSSF tiers)
• SHIF healthcare deductions
• Affordable Housing Levy remittances
• Frequent regulatory updates from KRA and labour bodies

For many companies, keeping up internally becomes unsustainable.

Payroll outsourcing helps businesses reduce risk while improving operational focus.

Key Statutory Deductions Employers Must Manage in Kenya

A compliant payroll system must account for all statutory deductions, including:

1. PAYE (Pay As You Earn)

Employers must deduct income tax and remit it monthly to the Kenya Revenue Authority.

Late PAYE submissions attract penalties immediately.

2. NSSF Contributions

Mandatory retirement contributions require both employee and employer payments.

Correct tier application is critical.

3. SHIF Contributions

Kenya’s updated healthcare contribution framework requires accurate monthly deductions and remittance.

4. Housing Levy

The Affordable Housing Levy is now a standard payroll compliance requirement.

Many employers overlook this until enforcement begins.

Benefits of Payroll Outsourcing in Kenya

Outsourcing payroll is not just about convenience — it’s about business protection and scale.

Here are the key advantages:

Full Compliance and Reduced Legal Risk

Payroll providers ensure statutory deductions are calculated correctly and remitted on time.

This minimizes exposure to:

• KRA penalties
• Interest charges
• Compliance audits

Time Savings for HR and Finance Teams

Payroll processing consumes significant internal time, especially when done manually.

Outsourcing allows your team to focus on:

• Hiring
• Performance management
• Business growth
• Employee engagement

Accurate Payroll Reporting

Professional payroll outsourcing includes clean monthly reporting, payslips, and executive summaries.

Cost Efficiency for SMEs

Hiring a full internal payroll specialist is expensive.

Outsourcing provides expert-level payroll execution at a fraction of the cost.

Better Employee Experience

Employees expect timely, accurate payslips and correct statutory deductions.

Payroll errors reduce trust and morale quickly.

Who Should Outsource Payroll in Kenya?

Payroll outsourcing is ideal for:

• SMEs without a dedicated payroll department
• Foreign companies hiring in Kenya
• Employers scaling beyond 10+ staff
• Businesses using Employer of Record services
• Companies seeking compliance-first HR operations

If payroll feels stressful or uncertain, outsourcing is usually the right move.

Payroll Outsourcing vs Employer of Record (EOR) in Kenya

Many employers confuse payroll outsourcing with Employer of Record services.

Here’s the difference:

• Payroll Outsourcing: You remain the legal employer, provider manages payroll processing.
• Employer of Record (EOR): The provider becomes the legal employer on paper, handling payroll, compliance, contracts, and HR administration.

Kazicloud provides both depending on your hiring model.

Why Choose Kazicloud for Payroll Outsourcing in Kenya?

At Kazicloud Employ Limited, we deliver payroll services designed for modern employers:

What We Handle

✅ PAYE, NSSF, SHIF, Housing Levy compliance
✅ Monthly payroll processing and payslips
✅ Statutory remittance schedules and reporting
✅ Payroll support for SMEs and foreign investors
✅ Employer of Record solutions for compliant hiring

We don’t just run payroll — we run compliance-backed payroll systems that protect your business.

Frequently Asked Questions (Payroll Outsourcing in Kenya)

What is payroll outsourcing in Kenya?

Payroll outsourcing in Kenya is when a business hires a professional service provider to manage salary processing, statutory deductions (PAYE, NSSF, SHIF, Housing Levy), payslips, and monthly remittances on their behalf. It helps employers stay compliant and reduce payroll errors.

What statutory deductions must employers remit in Kenya?

Employers in Kenya must remit several statutory payroll deductions, including:

• PAYE (Income Tax) to KRA
• NSSF (Pension contributions)
• SHIF (Healthcare contributions)
• Housing Levy (Affordable Housing)

Accurate remittance is mandatory to avoid penalties.

How much does payroll outsourcing cost in Kenya?

Payroll outsourcing costs vary depending on:

• Number of employees
• Payroll complexity
• Whether you need payroll only or full Employer of Record services

Kazicloud offers scalable payroll solutions for SMEs and growing employers. You can request a free consultation for a tailored quote.

What are the benefits of outsourcing payroll in Kenya?

Payroll outsourcing helps employers:

• Stay compliant with KRA and statutory bodies
• Avoid penalties and payroll errors
• Save HR and finance time
• Improve employee trust through accurate payslips
• Access professional payroll expertise without hiring internally

Can foreign companies outsource payroll in Kenya?

Yes. Foreign companies hiring employees in Kenya often outsource payroll to ensure compliance with local tax and labour laws. Kazicloud supports international employers with payroll outsourcing and EOR solutions across Kenya and East Africa.

How does Kazicloud support payroll compliance in Kenya?

Kazicloud Employ Limited ensures:

• Accurate PAYE, NSSF, SHIF and Housing Levy calculations
• Timely monthly remittances
• Payslip generation and payroll reporting
• Compliance-backed payroll systems for SMEs and foreign employers

We make payroll simple, professional, and audit-ready.

Which is the best payroll outsourcing company in Kenya?

The best payroll outsourcing company in Kenya is one that ensures full statutory compliance, accurate deductions, timely remittances, and reliable reporting. Kazicloud Employ Limited provides payroll services built for SMEs, scaling employers, and foreign companies hiring in Kenya.

Do payroll outsourcing providers handle PAYE filing in Kenya?

Yes. Professional payroll outsourcing providers like Kazicloud handle PAYE calculations, monthly deductions, and remittance support to KRA, ensuring employers remain compliant and avoid late filing penalties.

Can small businesses outsource payroll in Kenya?

Absolutely. Payroll outsourcing is especially beneficial for small businesses in Kenya that lack an internal payroll officer. It reduces errors, saves time, and ensures compliance with PAYE, NSSF, SHIF, and Housing Levy requirements.

What payroll compliance documents should employers keep in Kenya?

Employers should maintain:

• Payroll registers
• Payslips
• PAYE returns and payment confirmations
• NSSF and SHIF remittance records
• Employment contracts and deduction authorizations

Kazicloud ensures all payroll records are audit-ready.

How often are statutory payroll deductions submitted in Kenya?

Statutory deductions in Kenya are remitted monthly. Employers must submit PAYE, NSSF, SHIF, and Housing Levy payments within the required deadlines to avoid interest and penalties.

Do payroll companies in Kenya provide payslips?

Yes. A professional payroll provider will generate compliant employee payslips every month showing gross pay, deductions, net salary, and statutory contributions. Kazicloud provides clean, executive-standard payslips for all employees.

Is payroll outsourcing suitable for companies hiring remote employees in Kenya?

Yes. Companies hiring remote or distributed teams in Kenya often outsource payroll to ensure proper tax compliance, statutory deductions, and consistent salary processing regardless of employee location.

What industries commonly outsource payroll in Kenya?

Payroll outsourcing is common across industries such as:

• Technology and startups
• Logistics and distribution
• Manufacturing
• NGOs and donor-funded projects
• Retail and hospitality
• Foreign-owned companies entering Kenya

Kazicloud supports payroll across all major sectors.

Get Payroll Outsourcing Support in Kenya Today

If your payroll is becoming too complex, too risky, or too time-consuming, we can help.

📩 Email: info@kazicloud.co.ke
📞 Call: 0715 670 000
🌍 Website: www.kazicloud.co.ke

Book a free consultation with Kazicloud Employ Limited today — and let payroll stop being a headache.