MPs push to scrap one-third salary rule amid rising tax burden
The Employment Act, 2007 bars employers from deducting more than two-thirds of an employee’s basic salary.
MPs are pushing for the removal of the law that ensures workers take home at least one-third of their salaries, arguing that new tax measures have left employees struggling financially.
Members of the National Assembly’s Public Accounts Committee (PAC) raised concerns over the increasing number of state departments violating the rule, which was initially meant to prevent workers from being left with little or no income after deductions.
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The Employment Act, 2007 bars employers from deducting more than two-thirds of an employee’s basic salary.
However, the PAC, chaired by Butere MP Tindi Mwale, now argues that the law is no longer practical due to multiple tax deductions that have eroded workers' earnings.
Government employees have seen increased deductions in recent years, including 1.5 percent of their gross salary for the affordable housing levy and 2.75 percent for the mandatory Social Health Insurance Fund (SHIF).
Additionally, higher rates for the National Social Security Fund (NSSF) have further reduced take-home pay.
The committee has now directed the National Treasury to consult Attorney General Dorcas Oduor on the feasibility of scrapping the one-third salary rule.
The MPs raised the matter during a session with Irrigation Principal Secretary Ephantus Kamoto, who was responding to audit queries.
They pointed to the rising tax burden as the reason why many employees are unable to comply with the rule.
“This committee has requested the National Treasury, in the advent of the NSSF Act, SHIF, and the housing levy, to get in touch with the Attorney General on what to do. If we do not address this matter, it will continue to appear as an audit question,” said Lugari MP Nabii Nabwera.
“We need you to make a ruling on this matter so that we can get a way forward. We find that the one-third rule, given the current deductions, is untenable,” he added.
Funyula MP Wilberforce Oundo echoed these sentiments, stating that employees should not be penalised for breaking the rule as they are forced into financial strain by unavoidable deductions.
“No disciplinary action should be taken against any member of staff for breaching this rule. It is because of taxes such as the housing levy, SHIF, and NSSF, as well as the tough economic times, that Kenyans are borrowing more. We need a way out of this,” Oundo said.
Audit reports indicate that 47,300 employees in the national government take home less than a third of their salary due to deductions.
In county governments, the situation has worsened, with the number of affected employees rising to 21,647 in the financial year ending June 2024, up from 8,514 the previous year.
MPs now want urgent action taken to review the rule, arguing that its continued enforcement is unrealistic in the face of rising taxes and economic hardship.
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