The Labour Court in Nairobi on Wednesday suspended the directive issued by the Kenya Revenue Authority requiring mandatory contributions by employees and employers towards the Housing Fund.
The court ruled that the directive was illegal and would only apply after an ongoing court case, filed by the Consumer Federation of Kenya (Cofek), is concluded.
KRA, together with the Ministry of Housing, had directed employers to start deducting 1.5 per cent of their employers’ basic salary for April.
The employers were also required to match the employer’s contribution and remit the money to the National Housing Development Fund - one of President Uhuru Kenyattta's flagship projects meant to achieve affordable housing as part of the Big Four Agenda.
The Federation of Kenyan Employers(FKE), through Executive Director Jacqueline Mugo had on Tuesday advised employers to ignore the government directive as there was an existing court order barring the deductions until after May 20 when the matter will be heard.
“The notice by the Ministry of Transport, Infrastructure, Housing, Urban Development and Public Works in conjunction with Kenya Revenue Authority has issued a go-head on the implementation of the Housing Fund Levy with effect from May 9, 2019. This is contrary to the court orders which are still in force,” Mugo said in a press statement.