Explainer: When an Employer Deducts but Won’t Remit: What Kenyan Employees Can Do?

A silhoutte representation of group of employees in discussion with an employment and labour relations advocate

By Kollea News Writer

If a Kenyan limited company deducts PAYE, NSSF, SHIF/Housing Levy, or withholds earned salaries and severance, employees can pursue recovery through regulators and the courts. While the company remains the primary debtor, directors can face personal liability in clear cases of fraud or deliberate non-remittance.

What happens when deductions aren’t remitted

Regulators are empowered to act. The Kenya Revenue Authority (KRA), the National Social Security Fund (NSSF), and the Labour Office can pursue personal liability for unremitted funds and may press criminal charges. Beyond criminal risk, there are financial and legal consequences for the company, including penalties, interest, and potential penalties that can affect licenses and permits in severe cases.

Remedies for employees

Employees should start by gathering evidence—payslips, employment contracts, termination letters, and any notices about severance. They should then notify regulators by filing formal complaints with KRA (PAYE and levies), NSSF, and the Labour Office. Regulators can investigate and push for enforcement, sometimes triggering actions that accelerate recovery.

For wages and severance, employees typically file a claim with the Employment and Labour Relations Court (ELRC) against the company for unpaid salaries and the severance due—15 days’ pay per year completed, as provided by the Employment Act 2007. A last-resort option is lifting the corporate veil: if there is evidence of fraudulent trading or deliberate withdrawal of funds from the company to avoid obligations, lawyers can seek to hold directors personally liable.