What Deductions Are Allowed from an Employee’s Salary in Kenya

In Kenya, salary deductions are only allowed if they are authorized by law, court order, the employment contract, or if the employee has given written consent. The Employment Act strictly regulates permissible deductions to ensure employees receive their rightful wages and to prevent exploitation.

The most common statutory deductions include contributions to the National Social Security Fund (NSSF) and the National Hospital Insurance Fund (NHIF), both of which are mandatory for formal employment. Employers must also deduct Pay As You Earn (PAYE) income tax based on the Kenya Revenue Authority’s progressive tax bands. These deductions must be calculated and remitted each month, with the employer acting as the withholding agent.

Other allowable deductions may include voluntary savings or loan repayments to cooperative societies (SACCOs), staff loan repayments, or employer-approved benefit schemes, but only if the employee has consented in writing. Additionally, court-ordered deductions such as child support payments or debt recoveries must be complied with as instructed by the relevant legal authority.

Importantly, the total amount deducted from an employee’s wages must not reduce their take-home pay below one-third of their gross earnings, unless the deduction is due to tax or statutory obligations. Employers must provide clear payslips that outline all deductions and ensure transparency in every payroll cycle.

For Horizon-supported employees, all deductions—statutory and otherwise—must be documented and processed through the approved payroll channels. If an employee raises concerns about a deduction, support teams should verify whether it falls within the legal and contractual parameters before escalating or responding.

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Kenya

What Deductions Are Allowed from an Employee’s Salary in Kenya