MPs raise alarm over workers pay breach amid new tax burden

A public watchdog committee is now seeking an audience with Treasury CS John Mbadi over increasing cases of public servants earning less than one-third of their basic salaries due to new taxes.

The Public Accounts Committee, led by Butere MP Tindi Mwale, yesterday raised concerns that several state departments had breached the constitutional requirement ensuring employees retain at least two-thirds of their net salary.

The revelation emerged during an inquiry into the accounts of the State Department for Roads for the 2023-2024 financial year.

The committee noted that the situation stemmed from the introduction of new taxes in the past two years.

Employees are now required to contribute 1.5 per cent of their gross salary to the Housing Levy and a further 2.75 per cent to the Social Health Insurance Fund (SHIF).

According to MPs, these deductions have reduced employees’ take-home pay to below the one-third threshold of their basic salary. This violates the Employment Act, 2007, which prohibits employers from deducting more than one-third of an employee’s salary.

“We need to engage the National Treasury to address the reality where public servants are not complying with the law,” said Lugari MP Nabii Nabwera. Rarieda MP Otiende Amolo emphasised the need to review the regulations to “recommend changes to the existing policy.”

A report by the Office of the Auditor-General flagged the State Department for Roads for having 131 employees taking home less than one-third of their basic pay.

“Review of the Integrated Payroll and Personnel Database (IPPD) records for the department revealed that, during April 2023, 131 employees were earning less than a third of their salaries,” stated Auditor-General Nancy Gathungu’s report.

“In these circumstances, the management was in breach of the law,” it added.

Roads Principal Secretary Joseph Mbugua, who appeared before the committee to address the non-compliance, attributed the situation to tax relief granted during the Covid-19 pandemic.

“This arose from tax relief extended by the government to all public and private sector employees to cushion them during the Covid-19 pandemic,” he explained.

“In the circumstances, employees had more disposable income reflected in their payslips and took on long-term financial obligations, such as loans. Once the tax relief was withdrawn, some employees became non-compliant with the one-third rule,” submitted the PS.