Payroll

Employee Records Management for Kenyan SMEs

What employee records a Kenyan employer must keep, how long to keep them, and how to organise them so the labour office finds what it needs.

Sentibooks · · 6 min read

Every Kenyan employer has to keep employee records. The obligation is statutory, the penalties for not keeping them are real, and most businesses have a drawer full of files that would not survive a labour office inspection.

This is a practical guide to what records to keep, how long to keep them, and how to organize them so that any inspection goes smoothly.

What records every employer must keep

The Employment Act, 2007 and its subsequent regulations specify what an employer must maintain for each employee.

Employment contract. The written contract or letter of appointment, signed by both parties. For casual employees, the contract terms can be oral but the employer still has an obligation to document the key terms.

Personal details. Full name, date of birth, national ID number, contact details, home address, next of kin.

Statutory identifiers. KRA PIN, NSSF number, SHIF number, and NITA registration.

Job details. Position, job description, department or branch, reporting line, start date.

Salary and allowance details. Base salary, allowances, deductions, and any subsequent changes. A record of the effective date of each change is essential.

Attendance records. Timesheets for casual staff, clock-in records or attendance registers for permanent staff.

Leave records. Annual leave accrued, taken, and remaining. Sick leave used. Maternity or paternity leave taken. Any other leave types.

Payroll records. Payslips, P10 returns, statutory remittance confirmations. Every month of every employee’s employment, going back to their start date.

Disciplinary records. Warnings, written warnings, disciplinary hearings, and outcomes. These matter if the business ever needs to defend a termination.

Training records. Certifications, courses attended, professional development.

Termination records. Resignation letters, termination notices, final payslips, clearance forms. These stay on file even after the employee leaves.

That is what a complete employee file looks like. Most Kenyan businesses have 30 to 50 percent of it, which is a real exposure during any inspection.

How long to keep records

The Kenya Revenue Authority requires tax records to be kept for 5 years. The Employment Act requires employment records to be kept for the duration of employment plus a period after termination.

The safest rule:

  • Payroll records and P10s. 7 years minimum. This matches KRA’s preferred period.
  • Employment contracts. 7 years after termination.
  • Leave records. 7 years after termination.
  • Disciplinary records. 7 years after termination.
  • Training records. Duration of employment plus 3 years.
  • Employee personal details. Duration of employment plus 3 years.

Seven years after termination is the conservative rule. It covers KRA, labour office, and any civil claim period.

Where the records should live

Three options, ranked by how well they work.

Paper files in a cabinet. Works for very small businesses. Fails when files multiply, when the cabinet is accessible to everyone, and when documents need to be found quickly.

Digital folders on a shared drive. Better. Works if the folders are organized consistently and access is controlled. Fails if the folders are just names with no consistent structure.

Employee records software. Best. Every record attached to the employee, searchable, access-controlled, with audit logging. This is what an HR system is for.

For a business with more than 10 employees, paper files and shared folders are both inadequate. The exposure during an inspection is real, and the time spent finding records during day-to-day operations is significant.

Organizing the records

If you are moving from paper to digital (or cleaning up an existing digital system), organize the records by employee. For each employee, one folder with sub-folders:

  • Personal details. ID copy, KRA PIN certificate, NSSF number, SHIF number, NITA certificate.
  • Employment. Contract, job description, any amendments.
  • Salary. Current salary and allowance details, history of changes.
  • Attendance. Timesheets, attendance registers.
  • Leave. Leave applications, approvals, balances.
  • Payroll. Payslips, P10 records, statutory remittances.
  • Discipline. Warnings, hearings, outcomes.
  • Training. Certificates, courses.
  • Termination. (If applicable) Resignation, termination, final payslip.

Every document has a date. Every document has a version if it was amended. Every document is searchable.

The common failures

Four specific failures, ranked by how often they appear in inspections.

Missing contracts. A business hired 30 employees over 5 years, and only 12 have signed contracts on file. This is the most common failure, and the most expensive, because the Employment Act presumes the employee’s version of events when no written contract exists.

Leave records that do not reconcile. The leave register says one thing, the payslip implies another, and the employee claims a third. Without consistent records, the labour office resolves in favor of the employee.

Missing payroll records. Particularly for casual staff. Every casual pay needs a record: days worked, rate, gross, deductions, net. If the business cannot produce these, casual employment is presumed to be permanent employment in any dispute.

Records scattered across multiple systems. The employee’s contract is in the paper file, their payslips are on the accountant’s laptop, their leave is on a spreadsheet, and their training certificate is in the employee’s own email. No single system has the complete picture, and no inspection can be completed cleanly.

What good records management actually looks like

The business should be able to answer these questions within five minutes, for any employee, at any time.

  • When did this employee start?
  • What is their current salary?
  • What was their salary 12 months ago?
  • How much leave do they have accrued?
  • How much leave have they taken this year?
  • Have they received any disciplinary warnings?
  • Have they completed any mandatory training?
  • Are their statutory identifiers up to date?

If answering those questions takes an hour, the records are not in good shape. If it takes five minutes, they are.

How Sentibooks handles employee records

Sentibooks keeps employee records against the payroll module. Every employee has a record with their personal details, statutory identifiers, contract dates, salary history, leave balances, payslips, and statutory remittance history.

Every record is searchable. Every record is access-controlled. Every change is logged. If the labour office conducts an inspection, the record is one export away.

For casual staff, the record includes their timesheet history and their pay history. For permanent staff, the record includes the full history from start date.

Because records live in the same system as payroll and accounting, there is no manual handover between systems. The employee record, the payroll record, and the accounting record are consistent, because they are the same record.

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