HOUSING FUND LEVY – COURT SUSPENDS THE LEVY
By a joint advertisement in the Daily Nation on 16th April 2019, the Kenya Revenue Authority (“KRA”) and the Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works (“the Ministry”) informed the public that the requirement for employers to deduct and remit the Housing Fund Levy (“the Levy”) had come into effect. It was also stated that the first contribution in respect of the Levy was due by 9th May 2019 and that information relating to the payment process, that is, remittance of the Levy, would be communicated in due course.
By way of background, the amount to be deducted is 1.5% of an employee’s monthly basic salary, payable by both an employer and the employee provided that both contributions should not exceed KES5,000 per month per worker.
Since the publication of the advertisement there has been a great deal of confusion and anxiety with respect to whether the Levy ought to be deducted from employees, in light of various articles in the newspapers, as well as a press release by the Federation of Kenya Employers.
By orders of the Employment and Labour Relations Court, issued on 16th and 17th April 2019 in separate cases filed by the Central Organisation of Trades Unions and the Consumer Federation of Kenya, the Court has issued temporary injunctions barring the implementation of the Levy until 20th May 2019 when the cases are next to be heard. What this means is that for the time being employers are not required to make any deductions in respect of the Levy.
We will update you as and when there are significant developments in relation to the implementation of the Levy.
For any further clarity or assistance, please contact Richard Harney, Terry Mwango, or your relationship partner at Bowmans Kenya.