Labour Court Stops 1.5 p.c House Levy Deductions

Kenyan workers have a reason to smile following the recent move by the Labour Court to stop the 1.5 percent pay cut for a homes development levy that the government had scheduled to start in May.

On Wednesday 17^th, 2019, Justice Maureen Onyango directed the freeze to remain in place pending the conclusion of the court case and urged for the suit to be merged with the one by Central Organisation of Trade Unions (Cotu)—which in December got an order stopping the deduction.

On Tuesday, workers woke up to news from the government that their salaries will be 1.5 percent less from May, news that rubbed them the wrong way sparking lots of protests and discussions around the matter.

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

In the latest case, Consumers Federation of Kenya (Cofek) through lawyer Henry Kurauka said the Housing Fund Levy is unfair, oppressive and discriminatory to many citizens who already own houses, retrenched workers, and disabled people, low-income earners and those about to retire.

“The housing fund levy does not guarantee that all contributors under the scheme would get houses after investing their money,” he said.

He added that the scheme does not factor the fact some employees in the private and public sector enjoy reasonable housing allowances and are members of home ownership schemes as part of the employment terms.

ALSO READ: Before we pay the 1.5% Housing Fund Levy, we should ask ourselves the following questions

He accused the government of breaching several laws by not subjecting the law to public participation and openness.

According to the directive from the government on the 1.5 percent house levy deductions, both the employer and the employee were 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 1.5 percent levy on salaries is expected to generate about 57 billion shillings a year, from about 2.5 million salaried Kenyans, with additional revenue expected to come from voluntary contributors, who will be putting in a minimum of 200 shillings into the fund per month.

Justice Onyango yesterday said the case should be handled by Justice Hellen Wasilwa, who is handling the earlier case by Cotu and the case will be mentioned together on May 20.