The 2026 minimum wage order is backdated to 1 May. Has your payroll caught up?

On Labour Day 2026 the government announced a 12% increase in general minimum wages. The Regulation of Wages (General) (Amendment) Order, 2026 followed, and it is deemed to have come into operation on 1 May 2026. That date is the whole problem. A payroll that only changed when the order was published may still owe staff the difference from May onwards, and by now that is about six months.

I have worked on payroll through more than one statutory change, and a backdated change is the one that catches businesses out. A normal rate change starts on a clean date, and you update the system and move on. A backdated one asks you to look backwards: who was affected, by how much, for how long, and what that does to every deduction that follows pay. The employers who handle it well are not the ones with the cleverest software. They are the ones who treat it as a small project with a list, an owner and records.

This guide walks through what changed, who is affected, what the arrears and the deductions look like on a real payslip, and how to document it so you can show your work.

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1. What the Order changed

The Order replaces the whole schedule of minimum wages, so do not work from memory of last year's figures. In summary:

• The schedule is by occupation and by area. A receptionist, a storekeeper and a general labourer each have their own line, and the figure depends on where the employee works.
• General labourer, monthly basic pay: KES 18,047.40 in Nairobi, Mombasa, Kisumu, Nakuru and Eldoret; KES 16,650.95 in the former municipalities of Mavoko, Ruiru and Limuru; and KES 9,268.07 in all other areas.
• Agricultural minimum wages rose by 15% under a separate order.
• The monthly figures are basic pay, exclusive of housing allowance. Check how your contracts treat housing before you compare anything.
• The Order sets a floor. It does not by itself change the pay of people who already earn above the minimum for their occupation and area.

That last point is where many employers relax too early. Not being below the floor does not mean nothing needs doing. I come back to it in section 5.

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2. Who is actually affected

Start with a simple question: is anyone on your payroll paid close to the minimum for their occupation? These are the roles that usually sit near it:

• General labourers, cleaners, security staff and messengers
• Storekeepers, drivers and machine operators
• Receptionists, clerks and shop attendants
• Agricultural workers, who are covered by a separate order

The traps are in the detail. A person is compared with the schedule for their occupation and the area where they work, not the area of your head office. A branch outside the main towns has a different figure from the same job in Nairobi. An employee who was promoted, or whose job title no longer matches what they do, may sit on a different line from the one you assume. And a salary that looks comfortable can still fall short once you separate basic pay from allowances.

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3. A worked example: one employee, one payslip

Take a general labourer in Nairobi. A 12% rise takes the minimum to KES 18,047.40, which means the earlier minimum was KES 16,113.75. Assume the employee was paid exactly that, with no benefits and no reliefs other than personal relief. This is an illustration, not a rule: use your own employee's actual figures.

Two things stand out.

The employee does not keep the whole increase. Pay goes up by KES 1,933.65, but take-home goes up by KES 1,735.47. The difference is the extra NSSF, SHIF and Housing Levy, which all rise with gross pay. At this level there is no PAYE, because taxable pay is below KES 24,000 and personal relief wipes out the tax.

The employer pays more than the headline increase. Employer cost rises by KES 2,078.66, which is KES 145.01 more than the KES 1,933.65 pay rise. That extra is the employer's share of NSSF and the Housing Levy. If you budget a minimum wage change at the pay difference alone, you will be short.

What the arrears look like

If this employee was paid at the old rate from May to October, the underpayment is KES 1,933.65 a month. Over six pay months, May to October, that is KES 11,601.90 in gross arrears for one person. Multiply by the number of affected staff and the sum becomes a real budget item, not a rounding error. It is worth finding out now, while you can plan the payment, rather than during an inspection or a dispute.

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4. How I would run the catch-up

Treat it as a short project. This is the order I would follow:

1. List every role and where it is based. Use a simple sheet: employee, occupation, work location, current basic pay.
2. Compare each person with the schedule for their occupation and area. Flag anyone below the minimum, and anyone within a few percent of it.
3. Check housing. If a contract folds housing into one figure, separate it before you compare with basic pay.
4. Calculate arrears from 1 May 2026 for everyone paid below the new minimum, month by month, so you can show the working.
5. Approve the numbers before they reach payroll. Someone other than the preparer should review the list and sign it off.
6. Run the arrears through the full sequence. Arrears are pay. Show them as a separate line on the payslip with the period they cover, and work the statutory deductions through the same order as normal pay. Keep the workings.
7. Tell staff in writing what changed and when. A short note avoids a stream of questions at the payroll desk.
8. Update the rate in your system, once, in one place, so next month starts correctly.

A note to staff does not need to be long. Something like this works:

Following the Regulation of Wages (General) (Amendment) Order, 2026, minimum wages increased with effect from 1 May 2026. We have reviewed everyone's pay against the schedule. If an adjustment is due to you, it will appear on your payslip as a separate line showing the period it covers. If you have questions about your payslip, please speak to HR.

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5. Why it reaches beyond basic pay

Higher gross pay changes more than one line on the payslip. PAYE, NSSF, SHIF and the Housing Levy are all worked out from pay, so each of them moves too, as the table above shows. Backdated pay also has to be calculated, approved and presented clearly. Overtime that is paid as a multiple of the basic rate rises as well, so check any rate that is derived from basic pay.

There is also a quieter effect. When the floor rises, the people just above it can end up paid almost the same as new starters. That is pay compression, and it is one of the reasons good staff leave. If you have people on very low pay, read Pay compression after the minimum wage rise as well.

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6. Why records matter

An authorised officer can require you to produce employment records for the preceding 36 months (section 74(2) of the Employment Act). Employees must also receive an itemised pay statement each time they are paid (section 20).

Put those two together. If an inspector or a former employee asks what you paid in May and why, you should be able to produce the schedule you used, your comparison, your arrears working and the approval. A gap found during an inspection is much harder to explain than one you found and fixed yourself.

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7. Questions employers ask

We already pay above the minimum. Do we need to do anything?

Check, rather than assume. Compare basic pay, not total pay, against the schedule for the occupation and area. If everyone is above the floor with some room, the main task is to record that you checked.

Do we have to pay arrears even though the Order was published later?

The Order is deemed to have come into operation on 1 May 2026. That is why arrears for any employee paid below the new minimum from that date are the issue. If you are unsure how it applies to a specific case, take advice before you decide not to pay.

Which figure applies to a branch outside the main towns?

The area where the employee works decides it. Read the schedule for that location and occupation in the Order itself.

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Figures are as gazetted. Always confirm the schedule for your occupation and area in the Order itself.

Sources: Regulation of Wages (General) (Amendment) Order, 2026 in the Kenya Gazette; Employment Act, ss. 20 and 74.

Maurice Mwaura is an HR & Systems Strategist with more than six years in HR, covering recruitment, employee relations, payroll inputs, learning and development, and HR systems, and an earlier career in sales and business development.

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