LSK warns employers against applying disputed NSSF rates

The Law Society of Kenya (LSK) has cautioned employers against applying National Social Security Fund (NSSF) contribution rates under the NSSF Act, 2013, that have been declared unconstitutional unless a court order is set aside or employees give consent.

They warned that failure to comply with judicial rulings could expose employers to liability for unlawful salary deductions.

LSK Council member and Senior Counsel Charles Kanjama said court orders remain binding and must be obeyed until they are formally overturned, arguing that any deviation risks creating legal uncertainty in the labour sector.

“It is absolutely not open for the Federation of Kenya Employers (FKE) to advise employers to use NSSF rates prescribed under a law that has been declared unconstitutional. It is not a matter of unilateral employer choice or discretion,” said Kanjama.

He added that disregarding court rulings could lead to what he described as “legal confusion and anarchy”, stressing that compliance with judicial decisions is a core requirement of the rule of law.

“It bears repeating: unless and until set aside, court orders must be obeyed, else we end up in a situation of anarchy and legal confusion,” he said.

Kanjama further cautioned that employers who make unlawful deductions from employees’ salaries are liable to refund the affected workers both under law and contract.

He noted that only statutory deductions or those authorised by court orders are mandatory, while other deductions must be voluntary and based on written employee consent or collective bargaining agreements.

“For clarity, any employer who makes unlawful deductions on an employee's payslip is liable to the employee under both law & contract for the deducted sum,” he noted.

The LSK president was responding to guidance issued by the Federation of  FKE, which advised employers to continue applying contribution rates under the NSSF Act, 2013.

It noted that employers are currently caught between the old rate of sh200 per contributor per month and the new Tier I and Tier II contributions of 6 per cent of pensionable earnings demanded under the 2013 Act.

The employers’ body advised its members that, since the Court of Appeal has not yet delivered a final judgment in the case, it would be prudent to continue deducting and remitting the new NSSF rates while the matter is pending determination.

It further advised employers to keep proper records showing that they are acting under caution as they await the outcome of the appeal.