Salary components — earnings, deductions and the taxable flag
Reusable building blocks for every employee's pay structure. Set them up once and every run picks them up correctly.
Salary components are the reusable line items that build an employee's pay structure: Basic Pay, House Allowance, Transport Allowance, Lunch Allowance, Voluntary Pension and so on. Each component is either an EARNING or a DEDUCTION, has a fixed amount or a percentage of basic, and carries a `taxable` flag that controls whether it contributes to the PAYE base.
Types
| Type | Examples | Direction |
|---|---|---|
| EARNING — taxable | House Allowance, Transport Allowance, Acting Allowance | Adds to gross AND to PAYE base |
| EARNING — non-taxable | Per-diem, mileage reimbursement, disturbance allowance | Adds to gross but excluded from PAYE base |
| DEDUCTION | Voluntary pension, sacco loan, salary advance recovery | Reduces net pay only |
The non-taxable flag is for genuine reimbursements that recompense an out-of-pocket expense (KRA's 'on behalf of the employer' test). Cash 'allowances' paid regardless of expenditure are taxable in Kenya, regardless of what you call them. Marking a true cash allowance non-taxable understates PAYE.
Calculation modes
- FIXED — an absolute KES amount per period. Use for one-off allowances and most deductions.
- PERCENTAGE — a percentage of basic salary. Use for components that scale with basic (e.g. House Allowance commonly defined as 15% of basic).
How components flow into payroll
- Define the component once on the Salary Components page.
- Link it to each employee that should get it (with optional custom amount / percentage that overrides the default).
- When you process a payroll run, Vendly walks the employee's linked components, computes each amount and builds two totals: taxableComponentEarnings (the taxable ones) and nonTaxableComponentEarnings (the rest).
- Gross pay = basic + both totals + overtime. NSSF / SHIF / AHL are charged on that gross.
- Taxable pay = basic + taxable components + overtime + any benefits in kind. PAYE bands are applied to this number.
Editing or retiring a component
- Editing a component's amount or percentage affects the NEXT payroll run only — historical PayrollRecords carry their own snapshot.
- Deactivating a component removes it from new runs but leaves it on past payslips.
- Renaming changes the label everywhere — including on issued payslips, since payslips read the live component name. If you need the rename to stop at the boundary, archive the old component and create a new one.
Kenya law that applies
- Income Tax Act, Cap 470
Primary statute for PAYE, allowable deductions, reliefs and benefit-in-kind valuation.
- KRA Employer's Guide to PAYE
KRA's operational PAYE manual; Appendix 7C carries the car-benefit rate table.