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22 kwi 2024 · Calculation of Service Pay/Gratuity. The calculation of gratuity in Kenya follows a specific formula that takes into account the employee’s basic salary and years of service. The formula for gratuity calculation is as follows: Service Pay/Gratuity = (Basic Salary × Years of Service) ÷ 26.
Calculations for PAYE (tax) on service gratuity or severance pay in Kenya are based on two main factors, the gratuity amount and the number of years of service: Take total gratuity amount (lump sum) and number of years of service. Divide the total lump sum equally to all years of gratuity.
Section 35 sub-section (5) and (6) of the Employment Act provides as follows in relation to gratuity or service pay in Kenya: “ (5) an employee whose contract of service has been terminated under subsection (1) (c) shall be entitled to service pay for every year worked, the terms of which shall be fixed. (6) This section shall not apply where ...
This dissertation analyses the current legal framework in Kenya with regard to service pay. In addition, it analyses the legal framework in other jurisdictions such as India, Sri-Lanka and
20 maj 2024 · Example Calculation. Suppose an employee in Kenya retires after 20 years of service with a final monthly salary of Ksh 100,000. If the company policy states that the gratuity factor is 15 days’ wages for each year of service, the calculation would be: Determine daily wage: Daily Wage= Monthly Salary/30= 100,000/30=Ksh 3,333.33
Take the total taxable pay for the year and add the lump sum amount for that year, calculate the tax payable on the revised total taxable income using the annual individual tax rates. Deduct the personal relief and the total PAYE that is already paid. The balance is the tax payable on the lump sum.
Calculate your statutory severance pay under the Kenyan Employment Act for redundancy, layoffs, or restructuring.
