As part of the Finance Act 2018, assented by Kenya’s President on 21 September 2018, the Employment Act 2007, was amended to introduce contributions to the National Housing Development Fund (NHDF).
The NHDF contributions were meant to come into effect 1 January 2019, however, it was temporarily suspended by the Labour Court, pending discussions between workers and the government.
On 16 April 2019, a public notice was published on the Kenya Revenue Authority website informing employees and employers that the Housing Fund Levy has come into effect.
Both the employer and the employee must each contribute 1.5% of the employee’s monthly basic salary. The combined contribution is capped at KES 5,000 per month. Voluntary contributions may also be made to the scheme at a minimum of KES 200 per month. The first contribution will be due by 9th May 2019. Information relating to the payment process still to be communicated.
Every employer must register with the Housing Fund as a contributing employer and must also register his/her employees as members of the Housing Fund.
Despite the notice, the Federation of Kenya Employers’ (FKE) asked employers not to implement the policy as directed by the Housing ministry and the Kenya Revenue Authority. The FKE attended court on April 8, 2019, and obtained an order suspending the implementation of the levy until May 20, when the case will be mentioned. The FKE said the Gazette is therefore unlawful.
It is our recommendation that employers register the company and their employees with the Housing Fund and make the necessary adjustments to their payroll systems as heavy penalties could be inflicted. Should the Housing Fund Levy be suspended for a further period, an update will be distributed.
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