Payroll compliance in Kenya requires getting several moving parts right simultaneously: PAYE according to KRA brackets, NSSF contributions, NHIF deductions, and housing levy — all of which change periodically. Manual payroll on spreadsheets is error-prone and audit-risky.
ERPNext's Payroll module handles all of this through configurable salary structures and automated statutory deduction formulas. Once set up correctly, running monthly payroll takes under 30 minutes — including payslip generation and bank transfer file export.
Key configuration steps:
- Define salary components (basic, allowances, overtime)
- Set up tax slabs aligned with current KRA PAYE rates
- Configure NSSF tiers (Tier I and Tier II as per the new NSSF Act)
- Set NHIF contribution tables
- Link to bank accounts for direct payslip delivery
One critical feature: ERPNext generates a bank-ready payroll file in the format required by most Kenyan banks, eliminating the need to manually input transfer details. For companies with 20+ employees, this alone saves significant time.
We also configure leave encashment, gratuity calculations, and full payroll audit trails — so when KRA or NSSF auditors come calling, your records are clean and complete.
We recommend pairing payroll with ERPNext HR to get full employee lifecycle management: contracts, appraisals, leave management, and offboarding — all in one place.
Want this working in your business?
Our team implements ERPNext, KRA eTIMS and M-Pesa integrations for organisations across Kenya and East Africa.
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