Payroll
Kazisafi handles every step of the monthly payroll cycle for Kenyan businesses, from selecting employees through calculating statutory deductions to generating government reports and distributing payslips.
How payroll works
Section titled “How payroll works”A payroll run represents a single pay cycle. Each run moves through defined stages, and every step is logged for audit purposes.
| Status | What it means |
|---|---|
| Draft | Select employees, set the pay period, review readiness. |
| Calculating | Payslips are being generated in the background. |
| Pending Approval | Calculation complete. Review totals and individual payslips. |
| Processed | Approved and finalized. Exports generated, payslips can be emailed. |
| Rejected | An approver declined the run. You can recalculate or cancel. |
| Cancelled | The run was cancelled. No further actions possible. |
Only one draft or calculating run can exist per company at a time, and pay periods cannot overlap with existing runs.
Running payroll step by step
Section titled “Running payroll step by step”1. Create a new payroll run
Section titled “1. Create a new payroll run”Navigate to Payroll and click New Payroll Run. Set the Period Start, Period End (must be within one month of the current date), and Payment Date (within 30 days of period end).
2. Select employees
Section titled “2. Select employees”| Selection mode | How it works |
|---|---|
| All employees | Every active, payroll-ready employee is included |
| By department | Select one or more departments |
| Specific employees | Hand-pick from a searchable list |
You can change the selection while in Draft status. Once calculation begins, it is locked.
3. Review payroll readiness
Section titled “3. Review payroll readiness”Before calculation, Kazisafi checks every selected employee for issues: missing basic salary, incomplete personal details (full name, KRA PIN), missing payment details, or deductions that would violate the one-third rule. Employees who are not payroll-ready are skipped during calculation.
4. Calculate payslips
Section titled “4. Calculate payslips”Click Calculate to generate payslips in the background. For each employee, Kazisafi:
- Gathers all payroll data (salary, allowances, deductions, tax reliefs)
- Adjusts salary proportionally if the employee started or exited mid-month (when enabled)
- Calculates gross pay (basic salary + all allowances)
- Calculates statutory deductions in order: NSSF, SHIF, AHL, PAYE, NITA
- Applies tax reliefs (insurance, pension, mortgage) to reduce PAYE
- Subtracts non-statutory deductions (loans, SACCO, custom deductions)
- Checks the one-third rule and produces the final net pay
5. Review the results
Section titled “5. Review the results”Review:
- Totals summary showing aggregate gross pay, net pay, total deductions, and employer contributions.
- Individual payslips with full breakdowns. Click any employee to see earnings, statutory deductions with exact calculations, non-statutory deductions, and net pay.
- Statutory summaries for PAYE, NSSF, SHIF, AHL, and NITA across all employees.
If you spot issues, you can recalculate without starting over.
6. Approve and process
Section titled “6. Approve and process”Click Approve & Process to finalize. With two-stage approval enabled, a different user must approve (see below). Once processed, core exports are automatically generated.
7. Download exports and distribute payslips
Section titled “7. Download exports and distribute payslips”Download exports (see exports section) and email payslips to employees with a single click. If auto-send is enabled, emails go out automatically upon approval.
Two-stage approval workflow
Section titled “Two-stage approval workflow”By default, two-stage approval is enabled, which ensures two different people review every payroll run.
- User A prepares the payroll and clicks Submit for Approval.
- User B (a different authorized user) reviews and clicks Approve & Process.
- If User A tries to approve their own submission, Kazisafi blocks the action.
To disable, go to Settings > Payroll and toggle Payroll Review off.
Rejecting a payroll run
Section titled “Rejecting a payroll run”Approvers who find issues can reject a run instead of approving it. A rejection reason is required and recorded in the audit trail.
From Rejected status, you can either Recalculate (fix issues and regenerate all payslips) or Cancel the run entirely.
Amending a processed payroll run
Section titled “Amending a processed payroll run”If corrections are needed after processing, you can create an amendment rather than voiding the entire run.
- Open the processed run and click Amend.
- Select the specific employees needing corrections. Amendments are always for selected employees, not the entire payroll.
- Confirm. Kazisafi creates a new payroll run linked to the original, with the same pay period and payment date.
- Make the necessary changes to the selected employees’ payroll components (update salary, add/remove allowances or deductions).
- Calculate and approve the amendment run through the normal workflow.
The amendment follows the same steps (Draft, Calculating, Pending Approval, Processed) and is linked to the original run for traceability. Only one active amendment can exist per processed run.
Recalculating payslips
Section titled “Recalculating payslips”Recalculation is available when a run is in Pending Approval or Rejected status. Use it when salaries, allowances, deductions, or tax reliefs have changed since the initial calculation. Kazisafi recalculates every payslip from scratch using the latest employee data.
Statutory deductions
Section titled “Statutory deductions”Kazisafi automatically calculates all statutory deductions required by Kenyan law. For detailed rates, band tables, and calculation examples, see Statutory Deductions.
NSSF, SHIF, and AHL employee contributions are subtracted from gross salary before PAYE is calculated, reducing taxable income.
| Deduction | Who pays | Summary |
|---|---|---|
| NSSF | Employee + Employer | Two-tier system (Tier 1 up to KES 9,000, Tier 2 up to KES 108,000), maximum KES 6,480/month each |
| SHIF | Employee + Employer | 2.75% of gross, minimum KES 300/month each |
| AHL | Employee + Employer | 1.5% of gross, no cap |
| PAYE | Employee | Progressive tax (10%-35%), reduced by personal, insurance, pension, and mortgage reliefs |
| NITA | Employer only | KES 50 flat per employee/month |
| HELB | Employee | Per individual repayment schedule, if applicable |
One-third rule
Section titled “One-third rule”Kenya’s Employment Act Section 19(3) requires that net pay must be at least one-third of gross pay. Kazisafi enforces this automatically during calculation.
- If total deductions would push net pay below one-third of gross, the readiness report flags a violation.
- Statutory deductions are never reduced. The report indicates how much non-statutory deductions need to be reduced.
- Violations must be resolved before the payroll can be approved.
Example: An employee earning KES 60,000 gross can have maximum total deductions of KES 40,000 (two-thirds). If statutory deductions are KES 15,000 and non-statutory deductions are KES 30,000, the total of KES 45,000 exceeds the limit by KES 5,000. Kazisafi flags this and recommends reducing non-statutory deductions.
Employee payroll components
Section titled “Employee payroll components”Each employee can have allowances, deductions, and tax reliefs that customize their pay beyond the basic salary. These are managed from the employee’s profile page — see Employee Management for details.
Salary proportional adjustment
Section titled “Salary proportional adjustment”To enable this, go to Settings > Payroll and toggle Salary Proportional Adjustment on. When enabled, Kazisafi automatically adjusts salary and allowances for employees who start or exit mid-month.
The adjustment is based on the number of days worked compared to the total days in the pay period. For example, an employee who starts on the 16th of a 30-day month works 15 out of 30 days, so they receive half of their normal salary and allowances for that month.
- Basic salary and allowances: Adjusted proportionally.
- Deductions and tax reliefs: Not adjusted (full amounts apply).
- If this setting is disabled, all employees receive their full salary regardless of start date.
Exports
Section titled “Exports”Automatically generated on approval
Section titled “Automatically generated on approval”| Export | Format | Purpose |
|---|---|---|
| Payslips ZIP | .zip | Individual PDF payslips for all employees |
| NSSF Report | .csv | Monthly NSSF contributions for filing |
| SHIF Report | .csv | Monthly SHIF contributions for filing |
| P10 Detailed | .csv | Comprehensive KRA tax report for iTax |
| Bank Payment | .csv | Bulk transfer file for your bank |
On-demand exports
Section titled “On-demand exports”Additional exports generated on request:
| Export | Format | Purpose |
|---|---|---|
| CSV | .csv | Full payroll breakdown for internal records |
| P10 Simplified | .csv | Condensed KRA tax summary |
| HELB Report | .csv | HELB deductions for employees with active loans |
| Muster Roll | .csv | Complete summary with earnings, deductions, and employer contributions |
Failed exports can be regenerated individually without affecting other exports.
Payslip distribution
Section titled “Payslip distribution”- Automatic: Go to Settings > Payroll and toggle Auto-send Payslips on. Payslips will be emailed automatically when the run is approved.
- Manual: Open the processed run and click Email Payslips. Employees without an email address are skipped.
- Self-service: Employees can view and download payslips from the Employee Portal at any time.
Payroll analytics
Section titled “Payroll analytics”The payroll overview provides monthly gross/net pay totals, statutory deduction summaries, employer contribution totals, and period-over-period comparisons.
Payroll settings
Section titled “Payroll settings”Configure from Settings > Payroll:
| Setting | Description |
|---|---|
| Payroll Day | Day of the month employees are paid (1-31) |
| Default Payment Method | Bank transfer or M-Pesa |
| Payroll Review | Enable two-stage approval |
| Salary Proportional Adjustment | Adjust salary for mid-month starters and exits |
| Auto-send Payslips | Email payslips automatically when payroll is approved |
Audit trail
Section titled “Audit trail”Every payroll run maintains a complete audit trail. Kazisafi records each step: creation, calculation start and completion, approval, rejection (with reason), recalculation, cancellation, amendment creation, export generation, and payslip distribution. Each entry shows who performed the action and when.
Summary: how a payroll run flows
Section titled “Summary: how a payroll run flows”- Create a new payroll run and select employees
- Calculate: Kazisafi generates payslips for all selected employees
- Review: check the results and either approve or reject
- If rejected: make changes and recalculate
- Approve: payslips are finalized and exports are generated
- Distribute: send payslips to employees and download reports
You can cancel a payroll run at any point before it is approved. After approval, use an amendment to correct specific employees.