How to Calculate Hourly Rates and Overtime in Kenya: The 225-Hour Rule Explained for Employers

Ask several employers how an hourly rate should be derived from a monthly salary and you are likely to receive several different answers.

Some divide monthly salary by 30 days and then by eight hours.

Others use 26 working days.

Some divide annual salary by 365.

Others divide salary by the actual number of hours worked during the month.

And in many Kenyan payroll departments, another number regularly appears:

225 hours.

So which calculation is correct?

The answer depends onwhat you are trying to calculate.

That distinction is where many payroll problems begin.

A daily rate used for a particular employment benefit is not necessarily calculated on the same basis as an hourly rate used for overtime. Similarly, the statutory hourly minimum appearing in a Wage Order should not automatically be treated as though it were derived mathematically from the published monthly minimum.

For employers operating shifts, factories, warehouses, logistics operations, hotels, retail outlets, security operations and other labour-intensive businesses, getting this wrong can create a significant historical payroll exposure.

The issue therefore deserves more attention than simply knowing that overtime is paid at“time and a half.”

What Is the 225-Hour Rule in Kenya?

Under the Regulation of Wages(General) Order, where an employee is not employed by the hour, the basic hourly rate used for overtime purposes is deemed to benot less than one two-hundred-and-twenty-fifth of the employee's basic minimum monthly wage.

This is the origin of what is commonly described in payroll discussions as the225-hour rule.

It is an important statutory reference.

But one misconception needs to be addressed immediately.

225 Hours Is Not Simply a Maximum Monthly Working-Hours Limit

The figure225 performs a specific function in the overtime calculation.

It should not automatically be interpreted to mean:

“Every employee is legally allowed to work exactly 225 hours per month, and everything above 225 is overtime.”

Working-hours compliance under the General Order is principally expressed throughweekly normal hours and limits over consecutive weeks, while the 225 divisor establishes a basis for calculating an hourly rate for an employee who is not employed by the hour.

Those are connected concepts, but they should not be collapsed into one test.

This distinction becomes particularly important for night-shift employees.

What Are Normal Working Hours in Kenya?

Under the Regulation of Wages(General) Order, the normal working week generally consists of not more than52 hours spread over six days.

For a person employed on night work, the normal working week may consist of not more than60 hours per week.

The General Order then provides for overtime where an employee works beyond the applicable normal hours.

Ordinary overtime is payable atone-and-a-half times the normal hourly rate.

Work performed on the employee's normal rest day or a public holiday attractstwice the normal hourly rate.

There is another control employers should not overlook.

Normal hours plus overtime should not exceed, over any period of two consecutive weeks:

• 144 hours for employees engaged in night work; and
• 116 hours for other adult employees.

This means overtime is not simply an unlimited pool of hours that an employer can purchase at 1.5 times the hourly rate.

Paying overtime does not by itself make an excessive-hours arrangement compliant.

Why This Matters for 12-Hour Shifts

Consider a common manufacturing arrangement:

12 hours per shift× 6 days per week.

Assuming those are actual working hours rather than a 12-hour presence period containing excluded breaks, that produces:

72 working hours per week.

For an ordinary day worker under the General Order, that is considerably above the 52-hour normal working week.

For an employee genuinely engaged in night work, it is above the 60-hour normal working week.

But there is another issue.

Two consecutive 72-hour weeks amount to:

144 hours.

For night work, that reaches the two-week ceiling provided under the General Order.

For other adult employees, 144 hours exceeds the corresponding 116-hour two-week ceiling.

So when an organisation operates a permanent 12-hour× six-day roster, management should not only ask:

“How much overtime should Payroll pay?”

Management should also ask:

“Is the underlying shift structure itself compliant and sustainable?”

That is a workforce-design question, not simply a payroll calculation.

How Should Employers Think About the 225 Divisor?

For a monthly-paid employee, the General Order provides the statutory hourly-rate reference for overtime by using the1/225 basis.

In simplified terms, the employer first establishes the appropriate basic wage basis and then determines the applicable hourly overtime rate before applying the relevant overtime multiplier.

However, there is an important qualification.

The wording of the General Order establishes aminimum statutory basis. An employee's actual contractual salary, a collective bargaining agreement, another applicable Wage Order or more favourable employment terms may produce a higher entitlement.

Section 26 of the Employment Act protects more favourable terms and conditions where they arise from applicable regulations, collective agreements, contracts or other written law. Courts have similarly treated overtime as a statutory entitlement rather than something an employer may simply disregard because the employment contract is silent.

So the employer should not use the 225 divisor as a mechanism for artificially reducing the rate payable to an employee who is contractually entitled to something better.

Do Not Confuse the Statutory Hourly Minimum With the Overtime Hourly Base

This is another technical point that can create payroll errors.

Under Kenya's 2026 General Wage Order, the published:

monthly minimum wage is exclusive of housing allowance, while the publisheddaily and hourly statutory rates are inclusive of housing allowance.

That is significant.

The statutory hourly figure in the minimum-wage schedule and the basic hourly rate used in the overtime calculation are therefore not necessarily interchangeable figures.

An employer who takes an HA-inclusive statutory hourly minimum, treats it as though it were simply monthly basic divided by 225, and then applies overtime may unintentionally combine calculations that have different statutory purposes.

This is why payroll compliance should start by establishing:

What exactly is included in the number being used?

Basic wage?

Housing allowance?

Consolidated salary?

Overtime?

Other allowances?

Without answering that question, a mathematically correct formula can still produce a legally or commercially misleading result.

Where Does Housing Allowance Fit?

Housing deserves particular attention because it is frequently blended into salary discussions.

Section 31 of the Employment Act requires an employer either to provide reasonable housing or to pay an employee a sufficient amount for accommodation, subject to circumstances where housing has properly been consolidated into remuneration or addressed through a collective agreement.

Under the General Order, a monthly employee who is not provided with free housing is entitled to housing allowance equal to15% of the basic minimum wage.

The 2026 wage schedule then expressly presents daily and hourly minimum rates asinclusive of housing allowance.

These distinctions reinforce an important payroll principle:

Always compare like with like.

Do not compare a basic salary excluding housing against a statutory figure that already includes housing and conclude that there is a shortfall without first normalising the basis of comparison.

Similarly, do not assume that because housing has been considered in a statutory hourly minimum, every other hourly calculation must be constructed in exactly the same way.

Why“Monthly Salary÷ Actual Hours Worked” Can Be Misleading

Suppose an employee works unusually long shifts during a particular month.

A payroll analyst may reason:

“The employee worked 280 hours, therefore monthly salary divided by 280 gives the hourly rate.”

That can be problematic.

The more hours the employee works, the lower the resulting hourly rate becomes.

In effect, excessive working hours would reduce the employee's hourly value.

That is one reason statutory frameworks prescribe a reference basis rather than simply allowing employers to divide salary by whatever number of hours happened to be worked that month.

The issue is particularly important where overtime itself is being calculated.

An employer should not allow the overtime hours that need to be compensated to simultaneously increase the divisor and reduce the rate at which those same hours are paid.

What About Annual Salary÷ 365?

Annual remuneration divided by 365 can be useful in some HR and payroll contexts where the purpose is to establish acalendar-day value.

But that does not make annual salary÷ 365 the universal formula for every pay calculation.

A calendar-day calculation and an overtime-hour calculation answer different questions.

This is one of the wider lessons for payroll teams:

There Is No Single Conversion Formula for Every Employment-Pay Question

Before selecting the divisor, determine the purpose.

Are you calculating:

• a calendar-day value?
• a statutory daily minimum?
• an hourly overtime rate?
• leave pay?
• salary in lieu?
• a rest-day entitlement?
• public-holiday work?
• payroll costing?

Different questions can require different treatment.

The greatest payroll risk arises when organisations create one convenient internal formula and use it indiscriminately for all of them.

The 12-Hour Shift Can Become a Payroll Strategy Without Management Realising It

There is another reason employers should periodically examine overtime.

Overtime is intended to compensate additional working time.

But in some organisations it gradually becomes part of the permanent remuneration structure.

Employees begin to expect it.

Supervisors build rosters around it.

Operations depend on it.

Payroll budgets for it every month.

Eventually the business may have created a situation where employees' real income depends heavily on sustained overtime.

At that point, changing the shift structure becomes considerably more difficult because what management sees as“eliminating overtime” may be experienced by employees as a substantial reduction in monthly earnings.

This is why long-term overtime should be treated as both acost issue and an employee-relations issue.

Could a Third Shift Be Cheaper Than Overtime?

Sometimes, yes.

And this is where overtime analysis becomes strategic.

Consider a business maintaining 24-hour operations through:

two 12-hour shifts.

An alternative may be:

three 8-hour shifts.

The second structure requires more employees.

On the surface, increasing headcount appears more expensive.

But management should compare the additional ordinary payroll cost against the overtime currently being paid across the existing workforce.

A business may discover that recurring overtime is expensive enough to fund a significant proportion of the additional headcount required for a third shift.

That does not automatically make a three-shift structure preferable.

Management must also consider:

recruitment, statutory employer contributions, PPE, training, supervision, transport, meals, facilities, shift handovers, productivity and operational requirements.

But the comparison should be done.

A useful executive question is:

Are we paying overtime to manage occasional demand—or are we using overtime as a permanent substitute for adequate staffing?

If it is the latter, workforce redesign may deserve serious consideration.

Why Employers Should Analyse More Than One Month of Overtime

A single payroll period can distort the picture.

One month may contain:

public holidays, production peaks, shutdowns, absence deductions, arrears, exceptional overtime or unusual staffing shortages.

For workforce planning, employers should therefore consider analysing several payroll periods.

A three-month or six-month review can show:

• which employees regularly earn overtime;
• which departments consistently generate overtime;
• which job categories drive the largest overtime cost;
• whether overtime is seasonal or structural;
• whether a particular shift pattern is causing the expenditure;
• whether overtime approvals correspond with attendance records; and
• whether additional headcount may be commercially justified.

The objective is not merely to calculate what was paid.

The objective is to understandwhy it was paid.

Payroll Should Be Reconciled to Attendance and Shift Data

Overtime should not exist as an isolated spreadsheet maintained by Payroll.

A stronger control environment connects:

attendance→ roster→ supervisor approval→ overtime approval→ payroll.

Where biometric systems are available, employers should reconcile clock-in and clock-out information against scheduled shifts and approved overtime.

Exceptions should be visible.

For example:

An employee repeatedly working beyond the authorised shift.

An employee recording overtime without an approved roster change.

Departments consistently exceeding overtime budgets.

Staff working on rest days without appropriate approval.

Large discrepancies between attendance hours and payroll overtime.

This is one of the areas where HR technology can substantially improve governance.

The purpose is not merely automation.

It is creating an audit trail.

Five Questions Management Should Ask About Overtime

A strong overtime review should ultimately answer five management questions:

1. Are employees classified under the correct Wage Order, occupation and geographical category?
2. Are normal working hours and shift arrangements compliant with the applicable legal framework, CBA and contracts?
3. Is the hourly basis used for overtime legally and mathematically defensible?
4. Do attendance, overtime approvals and payroll actually reconcile?
5. Would alternative staffing or shift arrangements cost less than permanent overtime?

If management cannot answer those five questions confidently, the issue deserves deeper review.

Frequently Asked Questions About Overtime in Kenya

What is the 225-hour rule in Kenya?

Under the Regulation of Wages(General) Order, where employees are not employed by the hour, the basic hourly rate used for overtime purposes is deemed to be not less than one two-hundred-and-twenty-fifth of the employee's basic minimum monthly wage.

Does 225 mean an employee can only work 225 hours per month?

Not exactly. The 225 figure is a statutory hourly-rate reference for overtime calculations. Working-hour limits under the General Order are expressed through normal weekly hours and maximum combined normal-plus-overtime hours over consecutive weeks.

What is the overtime rate in Kenya?

Under the General Order, overtime beyond normal working hours is generally paid at1.5 times the normal hourly rate. Time worked on the employee's normal rest day or public holiday is generally paid attwice the normal hourly rate.

What are normal working hours under the General Order?

The General Order generally provides for up to52 hours over six days, and up to60 hours per week for employees engaged in night work. Employers should confirm whether another sector-specific Wage Order, CBA or more favourable contractual arrangement applies.

Is a 12-hour shift illegal in Kenya?

The answer depends on the complete working arrangement. Employers need to examine weekly hours, night work, rest days, overtime, breaks, applicable Wage Orders and the limits on normal plus overtime hours. A 12-hour shift should therefore not be assessed purely by the shift length in isolation.

Can overtime be included in a monthly salary?

Employers should be cautious about simply describing remuneration as“inclusive of overtime”. Statutory minimum employment conditions cannot necessarily be contracted away, and the employer should be able to demonstrate how working hours and overtime entitlements have been addressed. Kenyan courts have repeatedly treated overtime as an enforceable employment entitlement where applicable.

Overtime Is Ultimately a Workforce-Planning Question

For HR, the overtime question may begin with compliance.

For Finance, it begins with cost.

For Operations, it begins with production coverage.

For employees, it affects income and working time.

All four perspectives matter.

That is why persistent overtime should not be left solely to Payroll.

An organisation that consistently operates long shifts should periodically assess whether its staffing model, shift design, salary structure and attendance controls are still appropriate.

The right answer may be better overtime controls.

It may be additional employees.

It may be another shift.

It may be a revised roster.

Or it may reveal that the current system is commercially sensible but needs stronger documentation and governance.

The important thing is that the organisationknows which of those conclusions applies rather than simply carrying last year's roster into next year's payroll.

Is Your Overtime Structure Actually Working for Your Business?

ACCUREX Human Capital Hub supports employers withpayroll compliance reviews, minimum-wage alignment, overtime analysis, shift and workforce-cost modelling, salary grading, HR outsourcing and HR technology implementation.

For organisations operating extended shifts or large frontline workforces, we can analyse the relationship betweenjob roles, working hours, attendance, overtime and payroll cost and help management determine whether the existing workforce model remains compliant and commercially sustainable.

Talk to ACCUREX about an Overtime& Workforce Cost Review before recurring overtime becomes a permanent payroll liability.

Contact ACCUREX through www.accurex.co.ke or email info@accurex.co.ke.

This article provides general HR and employment-practice guidance. The applicable Wage Order, employment contract, collective bargaining agreement and individual circumstances should be reviewed before implementing payroll or working-hours changes.