Gross vs. Net Salary: Streamlining Payroll with IntaSend
Mar 14, 2025
Have you ever looked at your employment contract, seen a promising salary figure, and then wondered why your bank account tells a different story on payday?
Or perhaps you're a business owner struggling to explain to employees why the amount on their offer letter doesn't match what lands in their M-Pesa account?
This disconnect between what's promised and what's received isn't an accounting error—it's the fundamental difference between gross salary and net salary. Understanding this distinction is crucial for both employers and employees in Kenya's evolving workplace.
In this comprehensive guide, we'll break down exactly what separates gross from net pay, explore the deductions that create this gap, and reveal how forward-thinking businesses are using IntaSend's disbursement solutions to transform their payroll processes.
What Is Gross Salary?
Gross salary is the total amount of money an employer agrees to pay an employee before any deductions are made. This is the figure typically advertised in job listings and written in employment contracts.
Think of gross salary as the "headline number"—the amount that catches your attention when considering a job offer or discussing a raise.
For example, if your employment contract states a monthly salary of KSh 100,000, that's your gross salary. It represents your total compensation before the government, retirement plans, and other programs take their share.
Key characteristics of gross salary include:
It's the larger number that appears on your offer letter or contract
It's what employers use when budgeting for personnel costs
It's the figure used to calculate most deductions
It's often discussed during salary negotiations and performance reviews
What Is Net Salary?
Net salary (also called "take-home pay") is what actually hits your bank account after all deductions have been subtracted from your gross salary. This is the money you can actually spend, save, or invest.
If gross salary is the headline, net salary is the real story—the actual purchasing power you have each month.
Continuing our example, if your gross salary is KSh 100,000 but after all deductions you receive KSh 76,500, then KSh 76,500 is your net salary.
Key characteristics of net salary include:
It's the smaller number that appears on your payslip
It's what employees actually receive in their bank accounts or mobile money wallets
It's what employees use for personal budgeting
It can vary month to month if overtime, bonuses, or deduction amounts change
What Creates the Difference? Understanding Salary Deductions in Kenya
The gap between gross and net salary is created by various mandatory and voluntary deductions. Here are the primary ones in Kenya:
1. Pay As You Earn (PAYE) Tax
PAYE is income tax collected by employers on behalf of the Kenya Revenue Authority (KRA). The rate varies based on income brackets:
Monthly Taxable Income (KSh) | Rate |
Up to 24,000 | 10% |
24,001 - 32,333 | 25% |
Above 32,333 | 30% |
After calculating the tax, a personal relief of KSh 2,400 per month is subtracted from the payable amount.
2. Social Health Insurance Fund (SHIF)
SHIF has replaced the previous NHIF system. Instead of the graduated scale that NHIF used, SHIF contributions are calculated as a percentage of gross salary:
Contribution rate: 2.75% of gross monthly salary
This applies to all salaried public and state officers, as well as private sector employees
The contribution is deducted directly from the employee's gross salary
This new percentage-based system simplifies calculations for employers while creating a more progressive healthcare funding model.
3. National Social Security Fund (NSSF)
NSSF deductions help build retirement benefits for employees. The current rates are:
Employee contribution: 6% of pensionable pay, up to a maximum of KSh 1,080 per month
Employer contribution: Matches the employee contribution
4. Housing Levy
A relatively new addition to Kenyan payroll deductions:
1.5% of gross salary contributed by the employee
1.5% matching contribution from the employer
Capped at KSh 5,000 per month
5. Other Potential Deductions
Depending on individual circumstances, employees might also see:
Loan repayments (including HELB student loans)
Private pension contributions
Additional medical insurance premiums
Union dues
Voluntary savings schemes
A Real-World Example: From Gross to Net
Let's see how these deductions work in practice for an employee with a gross monthly salary of KSh 100,000:
PAYE Calculation:
Taxable income: KSh 100,000
First KSh 24,000 at 10% = KSh 2,400
Next KSh 8,333 (32,333 - 24,000) at 25% = KSh 2,083.25
Remaining KSh 67,667 at 30% = KSh 20,300.10
Total tax: KSh 24,783.35
Less personal relief: KSh 2,400
PAYE payable: KSh 22,383.35
SHIF Contribution: 2.75% of KSh 100,000 = KSh 2,750
NSSF Contribution: KSh 1,080 (maximum contribution)
Housing Levy: 1.5% of KSh 100,000 = KSh 1,500
Total Deductions: KSh 27,713.35 (PAYE + SHIF + NSSF + Housing Levy)
Net Salary: KSh 100,000 - KSh 27,713.35 = KSh 72,286.65
This example shows that someone earning a gross salary of KSh 100,000 actually takes home about KSh 72,287—roughly 72% of their gross pay.
The Business Challenge: Managing Payroll Efficiently
For businesses, especially those with multiple employees, calculating these deductions accurately and disbursing net salaries efficiently presents several challenges:
Calculation Complexity: Computing the correct deductions for each employee based on their specific circumstances can be time-consuming and error-prone.
Compliance Risk: Failing to apply the correct tax rates or missing mandatory deductions can lead to legal issues and penalties.
Keeping Up With Changes: As seen with the recent transition from NHIF to SHIF, Kenya's statutory deductions framework continues to evolve, requiring businesses to stay current.
Administrative Burden: Traditional payroll processes require significant manual work, from calculations to bank transfers.
Cash Flow Management: Coordinating salary disbursements, especially for businesses with employees across multiple banks or payment platforms, can be logistically challenging.
Security Concerns: Handling sensitive payroll data and payment information creates security vulnerabilities.
How IntaSend Is Revolutionizing Salary Disbursements in Kenya
This is where IntaSend's disbursement solutions come in, transforming how businesses handle their payroll processes:
Streamlined Bulk Payments
IntaSend allows businesses to make multiple salary payments simultaneously, regardless of where employees bank or which mobile money platform they use.
The IntaSend Advantage:
Send salaries to M-Pesa, bank accounts, or other mobile money platforms from a single dashboard
Process hundreds of transactions in one batch instead of individual transfers
Reduce the time spent on payroll disbursement from days to minutes
Cross-Border Capabilities
For businesses with team members in multiple East African countries, IntaSend has recently expanded its disbursement reach to:
Uganda
Tanzania
Burkina Faso
Nigeria
Ghana
Ivory Coast
Cameroon
This means you can pay your entire team—whether they're in Nairobi, Kampala, Dar es Salaam, or Lagos—through a single platform.
Automated Payment Processing
IntaSend's API integration allows businesses to automate the entire payroll process:
Your payroll system calculates gross pay and deductions
The net salary figures are automatically sent to IntaSend
Payments are disbursed to employees' preferred accounts
Everyone receives instant confirmation of payment
Enhanced Security and Compliance
IntaSend implements bank-grade security measures to protect sensitive payroll data:
End-to-end encryption for all transactions
Multi-factor authentication for account access
Detailed audit trails of all payment activities
Compliance with local financial regulations
Detailed Reporting and Reconciliation
For accounting and record-keeping purposes, IntaSend provides:
Comprehensive transaction reports
Easy reconciliation tools
Payment status tracking
Historical payment data for audit purposes
Real Business Impact: IntaSend Payroll Success Stories
Case Study: Tech Startup Cuts Payroll Processing Time by 80%
A Nairobi-based technology company with 45 employees across Kenya, Uganda, and Tanzania previously spent nearly two full days each month processing payroll payments. After implementing IntaSend's bulk disbursement solution:
Payroll processing time dropped from 16 hours to just 2 hours
Payment errors were eliminated completely
HR staff were freed up to focus on more strategic initiatives
Employees reported higher satisfaction with the punctual, reliable payment system
Case Study: Construction Company Simplifies Field Worker Payments
A construction firm with 200+ project-based workers across multiple sites struggled with cash handling and payment logistics. After switching to IntaSend:
Weekly wage disbursements now happen with a single bulk upload
Workers receive payments directly to their mobile money accounts
The company eliminated cash handling risks
Payment verification happens in real-time
How to Implement IntaSend for Your Business Payroll
Getting started with IntaSend's payroll disbursement solution is straightforward:
Create a Business Account: Sign up at IntaSend.com and complete the business verification process
Configure Your Dashboard: Set up payment categories, recurring schedules, and approval workflows
Integration Options:
Use the web dashboard for manual uploads
Integrate via API with your existing payroll or accounting software
Use the bulk upload feature for Excel/CSV files with employee payment details
Run Your First Payroll: Upload your salary disbursement file, review the details, and authorize the payments
Monitor and Reconcile: Track payments in real-time and download reports for your accounting records
Beyond Salary: Other Business Disbursement Needs
IntaSend's payment capabilities extend beyond just salaries to help businesses with:
Supplier Payments: Pay vendors and suppliers in bulk
Commission Disbursements: Send payments to sales agents or affiliates
Expense Reimbursements: Quickly refund employee expenses
Dividend Payments: Distribute investor payments efficiently
Contractor Fees: Pay freelancers and project-based workers
Conclusion: Bridging the Gross-to-Net Gap Efficiently
Understanding the difference between gross and net salary is essential for both employers and employees. While this gap created by taxes and deductions is inevitable, the process of calculating and disbursing net salaries doesn't have to be cumbersome.
With solutions like IntaSend, Kenyan businesses can transform payroll from a dreaded monthly headache into a smooth, efficient process. By automating calculations, simplifying disbursements, and providing clear reporting, modern payment platforms are freeing businesses to focus on what matters most: growing their operations and taking care of their people.
The recent transition from NHIF to SHIF highlights the importance of having flexible payroll systems that can quickly adapt to regulatory changes. IntaSend's platform is designed to accommodate such changes with minimal disruption to your payroll process.
Whether you're processing payroll for 5 employees or 500, across one country or seven, the right payment partner can make all the difference in ensuring everyone gets paid the right amount, at the right time, every time.
Ready to revolutionize your payroll process? Visit intasend.com to learn more about bulk payment disbursements for businesses of all sizes.