Letter from the table: The cost of making one job formal

To the Team Council

I support the First Ten Hires proposal. I am writing from Nakuru, where I have been keeping the Council’s First Ten Hires cost diary. My experience is not that the rules are pointless. A worker should have social protection, and a business should contribute to it. The difficulty is that a very small employer meets several obligations at once, through different systems, before there is any certainty that the new work will pay for itself.

In February 2026, I decided I could no longer keep up with a growing workload alone. I considered taking on my first employee at a gross monthly salary of KSh 30,000. That was the amount I could reasonably budget for wages. I had to ask a different question: what would it take to employ someone formally, and could I manage the administration every month?

I began checking the steps in early March. The employer has to handle payroll tax through the Kenya Revenue Authority, including PAYE reporting and remittance. There are also separate obligations involving the National Social Security Fund (NSSF) and the Social Health Authority (SHA). The Affordable Housing Levy adds another calculation. These are not all the same kind of cost: some amounts are withheld from a worker’s pay, some are paid by the employer, and some are administrative work. But to a first-time employer, they arrive together as one practical problem: get the figures right, register in the right places, and remit on time.

For a salary of KSh 30,000, the figures I used included an employee NSSF contribution of KSh 1,800 and an employer NSSF contribution of KSh 1,800, at the 6 per cent rate. The employee’s SHIF contribution at 2.75 per cent would be KSh 825. The Affordable Housing Levy would be KSh 450 from the

employee and a further KSh 450 from the employer, at 1.5 per cent each. The employee deductions are not extra wages paid by me, but they affect take-home pay and need to be calculated and remitted. The employer-side NSSF and housing levy alone bring the monthly outlay to KSh 32,250 before other employment costs. PAYE also has to be calculated according to the applicable rules; I did not treat it as an employer contribution.

Those amounts may look manageable on a page. The harder part was that I was learning several processes at the same time. I tried to make a simple monthly checklist: what to deduct, what to add as the employer, which return or payment belonged to which institution, and when each was due. I could find information, but I had to assemble the picture myself. A mistake would not just be a line in my notebook; it could mean an underpayment, a correction, or a late remittance. I also had to think about whether the work would reliably cover the wage and the employer’s share in slower months.

I delayed the decision while I worked through those questions. That delay has a human consequence. When I do not hire, I keep work that could be shared, and someone who might have had a formal job does not get one. I do not want the answer to be informal hiring or to ask a worker to accept fewer protections. I want the formal option to be easier to understand and safer to take.

What the proposed fix would change

A one-stop payroll registration process would make a real difference. A new employer should be able to register the business and its first worker once, see which institutions must be notified, and receive one clear schedule of the obligations that follow. That would not erase the separate purposes of PAYE, NSSF, SHA, or the housing levy. It would spare a small employer from having to discover the connections between them by trial and error.

I also support phased social contributions for the first ten hires, with predictable rules. The first employee is a large step for a very small operation. A clear, temporary phase-in could make that step possible without changing the worker’s agreed wage. The rules should say in

advance how long the phase lasts, what happens as the business hires more people, and how the transition is calculated. If a contribution is reduced during the phase, the worker’s protection should not quietly be reduced with it; the standard should make clear how that gap is covered.

Predictability matters as much as the amount. A small employer needs to know the likely monthly cost before making an offer, and to know that the same basic process will still apply next month. A short, official first-hire guide and a single calendar of filing and payment dates would help. So would an accessible way to correct an honest first-time error before it becomes a penalty problem.