Casual workers keep construction sites, farms, shops and events running. Because they are paid by the day, many employers assume the usual employment rules do not apply. They do. This guide explains who a casual employee is, when the status changes, and how to treat tax and statutory deductions correctly.

What is a casual employee?

Under the Employment Act, a casual employee is a person whose terms of engagement provide for payment at the end of each day and who is not engaged for longer than a period that would require monthly payment. In practice, casual work is for tasks that last a day or a few days. The employee is paid daily and either side can end the engagement at the close of any day without notice.

When casual work becomes a monthly contract

The status does not last forever. If a casual employee works continuously for a period or a number of continuous working days that amount in total to the equivalent of not less than one month, the contract is treated as one where wages are paid monthly, and the monthly rules on notice and leave apply. If the employee has worked for more than a month and then continues, the employer must treat them under the term of the Act that applies to monthly employees. Employers who rotate the same people through "new" daily engagements to avoid this risk labour disputes. Read probation, contracts and notice periods for the rules that apply after conversion.

Minimum pay and conditions

Casual workers must be paid at least the minimum wage for their job and area, on a daily rate, and the daily rate in the Regulation of Wages orders is higher in cities than in rural areas. Check yours with the minimum wage calculator and the guide to checking the minimum wage. The employer must also provide a safe workplace, pay on time, and not demand work beyond normal hours without overtime. See overtime pay rules and tax.

PAYE on daily wages

Casual pay is taxable like other employment income. The employer calculates PAYE using the monthly bands, treating the pay as the total for the month. For a worker paid below the point where the monthly tax is cancelled by personal relief, no PAYE is due. As the figures change with Finance Acts, run the actual numbers through the PAYE calculator. Two practical points:

  • Where a casual employee works on and off in one month, add all the days in that month before applying the bands.
  • The employer needs the worker's KRA PIN to file the PAYE return. Without one, KRA will not credit any tax paid, so ask for the PIN on day one.

NSSF, SHIF and the housing levy

Casual employees are employees for the statutory schemes. NSSF, SHIF and the Affordable Housing Levy are calculated on gross pay for the month and deducted from wages. The employer pays its own share of NSSF and the housing levy as well. If the monthly total is small, the contribution is small, but the employer must still register the worker, deduct and remit. The housing levy calculator and NSSF calculator give the amounts for any wage level. For the levy rules, see affordable housing levy explained.

Paying casual workers weekly

An employer can pay casual wages weekly if the employee agrees, though the contract then follows the weekly-paid rules. The weekly casual wages sheet records days worked, the daily rate, deductions and net pay for each worker, and gives a signature column that works as a receipt.

Records an employer should keep

  1. A register of each casual worker's name, ID and PIN.
  2. The days worked and the rate for each.
  3. Statutory deductions and the net amount paid.
  4. Proof of payment by M-Pesa or a signed payment sheet.
  5. Remittance receipts for PAYE, NSSF, SHIF and the housing levy.

These records support your tax deductions for wages. KRA can disallow labour costs that you cannot evidence, as explained in how to keep business records for KRA.

For casual workers: protect yourself

Ask to be paid on the day work ends and keep a note of the days and the rate. If you have worked every day for a month or more, ask for a written contract. Make sure the employer gives your PIN credit by checking that PAYE shows in your iTax. If you were underpaid, the Ministry of Labour's county offices can help.

Frequently asked questions

Do casual workers get annual leave? Casual workers engaged day to day do not accrue leave, but once they are treated as monthly employees they earn leave like any other staff.

Who is responsible for a casual worker's PIN? The worker applies for it, but the employer should insist on it because PAYE cannot be filed correctly without it.

Is NSSF compulsory for a casual worker? Yes. Employees must be registered and contributions deducted, with the employer adding its share, whatever the pay period.

Can a casual worker be paid in kind? The Act limits payment in kind and requires wages to be paid in cash or by an agreed electronic method. Keep a written record of how wages are paid.