Employers in Kenya are required by law to deduct certain dues from an employee’s remuneration. Some of the deductions provided for under the various laws include;

Income Tax – Pay as You Earn (PAYE)

Employment income is levied as income tax under Section 5 of the Income Tax Act (Cap 470 Laws of Kenya) through a Pay As You Earn (PAYE) scheme. PAYE places a statutory obligation on the employer to deduct income tax from an employee’s salary at the required rates and remit the same to the Kenya Revenue Authority. Income tax on employment income is payable before the 9^th day of each succeeding month.

Contributions to Retirement Benefits Schemes

An employer is allowed to deduct employees’ contributions to a provident fund or pension scheme which the employee is a member of subject to the consent of the employee.

Retirement benefits contributions to the National Social Security Fund (‘NSSF’) are mandatory to all employed persons under Section 20 of the National Social Security Fund Act, number 45 of 2013. Employers are required to remit their employees’ NSSF contributions on or before the 9^th day of each succeeding month.

Contributions to the National Hospital Insurance Fund (NHIF)  

The National Hospital Insurance Fund (‘NHIF’) is a state corporation that provides a public medical insurance cover for its members and their dependents.

Membership to NHIF is mandatory for all employed persons and open to all Kenyans who have attained the age of 18. Employers are required to remit NHIF contributions deducted from salaries paid to their employees on or before the 9^th day of each succeeding month.

Remittance to the Higher Education Loans Board (HELB)

The Higher Education Loans Board (HELB) is a government agency responsible for financing students pursuing higher education in various institutions through student loans. HELB student loans are payable by the beneficiary. It is the responsibility of the employer to deduct and remit payments of HELB loans for employed beneficiaries on or before the 15^th day of each succeeding month.

Remittance to Trade Unions.

a) Union Dues

Trade union dues refer to payments made by an employee to a trade union by virtue of their membership. A trade union that has recruited more than five employees in an organization may apply to the Cabinet Secretary in charge of labour to direct an employer to deduct union dues from an employee’s salary and remit the dues to the trade union.

b) Agency Fees

Agency fees are distinct from union dues and are payable by unionisable employees who are not members of the union recognized by their employer but are benefitting from the terms of a collective bargaining agreement negotiated by the recognized union.  A recognized trade union that has successfully negotiated a registered collective bargaining agreement may apply to the Cabinet Secretary in charge of labour to direct an employer to deduct agency fees from an employee’s salary and remit the dues to the recognized trade union.

Employees liable to pay agency fees who are members of a trade union other than the recognized union are liable to pay both the agency fees and the union dues.

Other Deductions

Other deductions are also provided under Section 19 of the Employment Act, which permits the following deductions;

1. An amount equivalent to damages or loss caused by an employee’s willful default.
2. Where an employee absconds duty, the employer may deduct an amount not exceeding one day’s wages for each day of the employee’s absence. 
3. Where an employee’s contract of service involves being a custodian of money, the employer may deduct any amount lost as a result of the employee’s negligence or dishonesty
4. Any amount wrongfully paid to an employee, as remuneration, in excess of what they are legitimately entitled to, from the employer;
5. Any deductions arising from a collective agreement, wage determination, court order or arbitration award;
6. Any amount in which the employer has no direct or indirect beneficial interest, and which the employee has requested the employer in writing to deduct from their wages; and
7. An amount not exceeding 50% of the employee’s wages, for purposes of repayment or part repayment of a loan.  

It is key for an employer to only deduct from an employee’s wages as provided under various laws to ensure legal compliance.  Please contact us at Info@cfllegal.com  should you require further information.