Payroll Compliance
The Affordable Housing Levy on Payroll: What Employers Still Get Wrong
The Housing Levy looks like the simplest line on a Kenyan payslip. The mistakes come from its base, its employer match and the way it now interacts with PAYE.
The last payslip is the one an employee scrutinises most closely and the one HR is most likely to calculate by hand. A checklist for getting it right in Kenya.
By StepUp HR Experts
Most employees glance at their payslip each month. Nobody glances at their final one. An employee who is leaving — especially one who did not choose to — will check every line, and if a figure is wrong, it becomes the subject of a complaint, a labour officer's letter or a claim.
Final dues are also the calculation most often done outside the payroll system, by hand, under time pressure. That combination produces errors.
The exact list depends on the contract and the reason for leaving, but in Kenya it usually includes:
Salary for days worked. Pay up to the last working day, pro-rated for a partial month.
Accrued, untaken leave. Annual leave earned but not taken is paid out. This depends on an accurate leave balance, which is why poor leave records turn into exit disputes.
Notice pay, where applicable. If notice was due and not worked, pay in lieu of notice may be owed, according to the contract and the Employment Act.
Service pay, where applicable. Under the Employment Act, service pay applies in some cases, but employees who are members of NSSF or an appropriate pension scheme are generally excluded. Do not apply it automatically, and do not leave it out automatically; check the employee's position.
Commissions and bonuses earned. Amounts earned before exit and payable under the scheme rules should be included. This is a frequent source of dispute for sales staff and loan officers.
Reimbursements outstanding. Approved expenses not yet paid.
Statutory deductions. Payments in final dues that form part of pay attract PAYE and the other statutory deductions. They do not become tax-free because they are the last payment.
Staff loans and advances. Outstanding balances can be recovered, within the limits the law and the loan agreement allow. Document the agreement.
HELB. The final month's deduction still applies, and HELB should be told the employee has left.
Company property. Deducting for unreturned property needs a clear legal and contractual basis. When in doubt, recover the property, not the money.
Every departing employee is entitled to a certificate of service, whatever the reason for leaving. It records their employment details. It is not a reference and should not contain judgements about performance or conduct. Issuing it promptly is a legal obligation and costs nothing.
Final dues should be paid promptly after exit. Delays are one of the most common reasons former employees complain to labour officers, and a delay looks worse than a small error that is corrected quickly.
A useful discipline is to start the calculation when notice is given, not on the last day. That leaves time to confirm the leave balance, collect property and resolve questions while the employee is still around to answer them.
Give the departing employee a clear breakdown: each item, how it was calculated and the deductions applied. Most disputes start because the employee cannot see how the figure was reached. A breakdown answers the question before it is asked.
The safest final dues are calculated by the same system that ran every other month's payroll, using the same leave balances, the same statutory rules and the same records.
StepUp HRM's offboarding workflow calculates final dues from the employee's actual records, applies the correct deductions, tracks the handover and property return, and keeps the full record for later. HR reviews and approves rather than calculating from scratch.
The Housing Levy looks like the simplest line on a Kenyan payslip. The mistakes come from its base, its employer match and the way it now interacts with PAYE.
HELB repayment is the employee's debt, but once the employer is notified, deducting and remitting it becomes the employer's obligation, with penalties to match.
The three deductions on a Ugandan payslip, what each is charged on, and the one that catches almost everyone out.
