20pc of roads unit workers breach two-thirds pay rule
The Employment Act 2007 prohibits employers from deducting more than two-thirds of the basic pay of an employee to safeguard their rightful gains from employment. FILE PHOTO | POOL
The take-home pay of 20 percent of the employees of the State Department of Roads shrank past the legally recommended level by last April, an audit has revealed, an indication of economic challenges many public and private sector workers face.
The Employment Act 2007 prohibits employers from deducting more than two-thirds of the basic pay of an employee to safeguard their rightful gains from employment.
Checks by Auditor-General Nancy Gathungu revealed that the take-home of 131 of the 658 employees of the department, or 19.9 percent, were in breach of the two-thirds basic.
“Review of the integrated payroll and personnel database records for the department revealed that during the month of April, 2023, 131 employees had their net pay below a third of their basic pay,” she said.
“This is contrary to Section C.1 (3) of the Human Resource Policies and Procedures Manual for the Public 198 Service, of May 2016, which states that public officers shall not over-commit their salaries beyond two-thirds of their basic salaries. In the circumstances, management was in breach of the law,” said Ms Gathungu.
More salaried workers with pre-existing loan repayment obligations have in the past three years seen their take-home pay shrink past the legally recommended level on the effects of the financial mess triggered by the Covid-19 pandemic.
The situation has worsened in the recent few months after statutory and tax deductions— presenting a compliance headache for employers and financial institutions.
Salaried workers have seen a jump in National Social Security Fund contributions from Sh200 to up to Sh1,080 and a 1.5 percent housing levy deduction on gross pay, cutting their take-home pay.
The Federation of Kenya Employers raised the red flag last September, saying the new statutory deductions and the mounting interest rates have significantly raised the monthly deductions on private sector employee payslips, cutting the workers’ take-home income in a tough economy.
The new deductions have seen many employers breach the Employment Act 2007 which stipulates that deductions from an employee’s pay— whether statutory or voluntary— should not exceed two-thirds of their total salary.
“The total amount of all deductions which may be made by an employer from the wages of his employee at any one time shall not exceed two-thirds of such wages or such additional or other amount as may be prescribed by the Minister,” states the Act.
