Government Orders Mandatory “Contribution” of 1.5% from Employees’ Payroll

The ministry of Transport, infrastructure, Housing, Urban Development, and Public works in conjunction with the Kenya Revenue Authority (KRA) will begin a further deduction of 1.5 percent on every employed Kenyan’s pay slip on the 9^th of May 2019.

The Ministry through a public notice has informed Kenyan employers, employees and the general public that it will start deducting 1.5 percent of their monthly basic salary to finance the Government’s Affordable Housing Scheme under the Big 4 Agenda.

The deductions will be enabled by a provision of the Finance Act 2018 relating to the Housing Fund Levy.

The employer and the employee will be expected to each remit 1.5 percent per employee as long as the sum of the total monthly contribution shall not exceed 5000 shillings.

The Ministry expects the employer to deduct and remit the levy together with other statutory levies from the employer and the employee.

The first deductions shall be effected on the 9^th of May 2019 and will be expected to get deducted every month and remitted by the 9^th of every month together with other payroll deductions.

According to the public notice, the housing fund will be used to finance the Affordable Housing Scheme under the Big 4 Agenda.

The benefits of the contributions, according to the public notice, include; purchase of a home under the affordable housing scheme or in case of ineligibility for a home.

The contribution, according to the public notice, could also be transferred to a pension scheme, or another person under the scheme or as cash to the contributor, spouse or dependent child.

The move comes at a time when Kenyans have lost trust in the Government’s role to watch over the Country’s resources as it continues to struggle with unrecovered billions of shillings lost in corrupt means.

The Federation of Kenya Employers has however remained adamant terming the move as unlawful through its CEO Jacqueline Mugo who explained that the court injunction was still on.

The deductions will add to numerous others that continue to eat up Kenyans’ earnings despite the high cost of living where basic needs remain unaffordable to a majority of Kenyans.