Hiring your first employee: the mistake to avoid (and the contract that protects you)

Here's the fatal mistake and the 3 must-have protections to hire with peace of mind:

❌ The mistake NOT to make: hiring verbally

• The Employment Act 2007, Section 9, makes it clear: any contract lasting more than 3 months must be in writing. And Section 10 puts the burden of proof on the employer in a dispute .
• No contract? You're breaking the law. And in a dispute, courts interpret ambiguity against you . This isn't a formality – it's your shield.

Here are 3 concrete remedies for a risk-free hiring process:

🛡️ 1. The written contract: your first line of defence

• It must include: names and addresses of both parties, start date, job description, workplace, working hours, remuneration, probation period, leave (21 days per year), and notice period .
• Don't forget essential clauses: confidentiality, intellectual property, and disciplinary procedure .
• Once signed, one copy for the employee, one for your records. Double-check that all mandatory details are included .

⚖️ 2. The probation period: a double-edged sword

• The law allows 6 months, extendable to 12 months with the employee's written agreement .
• Warning: the courts have ruled that Section 42(1) of the Employment Act, which excluded probationary employees from procedural protections, is unconstitutional . You must now follow a fair process (notification of reasons, right to be heard) even during probation .
• To terminate, the minimum notice is 7 days, unless your contract says otherwise .

💰 3. Mandatory contributions: don't forget them

• As an employer, you must register and remit :
• NSSF: 6% of gross salary (cap: KES 108,000/month, so max employer contribution KES 6,480) .
• SHIF (replaces NHIF): 2.75% of gross salary (no cap) .
• Affordable Housing Levy: 1.5% of gross salary, employer share + 1.5% employee share .
• PAYE: to be deducted and remitted to KRA if salary exceeds the threshold .
• Late or missed payments attract fines and prosecution .
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Tip: A detailed payslip is mandatory every pay period. A simple M-Pesa transfer isn't enough.

Do it now: Download the Employment Act contract template. Fill it in with your first employee's details. Have them sign before day one. One hour today saves you years of legal battles.

Sources: Employment Act 2007 (Sections 9, 10, 35, 41, 42); NSSF Act 2013; Social Health Insurance Act 2024; Affordable Housing Act 2024; KRA – PAYE Guidelines.

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