[2019] KEELRC 2290 (KLR)
The court held that compensation awarded under Section 49(1)(c) of the Employment Act is subject to statutory deductions, including PAYE, as provided by Section 49(2). The consent between parties did not exclude tax, and the judgment explicitly referenced Section 49(1)(c), which brings the sums within the tax...
Source-derived case information.
- Citation
- [2019] KEELRC 2290 (KLR)
- Parties
- Applicant: Doris Kairuthi Kaaria & 59 Others; Respondent: B.O.M Kahithe Secondary School; Respondent: Teachers Service Commission
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Nyeri
- Jurisdiction
- Kenya
- Case Number
- Cause 211 of 2019
- Procedural Posture
- Employment Claim / Ruling on Tax Deductibility and Related Deductions Post Judgment
- Outcome
- Statutory taxes to be deducted from the decretal sum; deductions for advances, fees, and imprests disallowed; payment by instalments left to parties' agreement post-tax deduction.
- Judges
- AN Makau
- Legal Topics
- Statutory Deductions, Income Tax on Decree, Employment Compensation, Counterclaims, Payment by Instalments
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
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Parties
Doris Kairuthi Kaaria & 59 Others
Applicant
B.O.M Kahithe Secondary School
Respondent
Teachers Service Commission
Respondent
Procedural Posture
Employment Claim / Ruling on Tax Deductibility and Related Deductions Post Judgment
Legal Issues
- 1 Whether PAYE and statutory taxes are deductible from compensation decreed to claimants under Section 49(1)(c) of the Employment Act.
- 2 Whether the respondent is entitled to deduct advances, fees, and imprests allegedly owed by claimants without a counterclaim.
- 3 Whether payment by instalments is permissible and under what conditions.
Ratio Decidendi
The court held that compensation awarded under Section 49(1)(c) of the Employment Act is subject to statutory deductions, including PAYE, as provided by Section 49(2). The consent between parties did not exclude tax, and the judgment explicitly referenced Section 49(1)(c), which brings the sums within the tax deduction regime. The court rejected the claimants' argument that tax is not payable on a decree, distinguishing the cited authority and emphasizing the statutory mandate. Deductions for advances, fees, and imprests were disallowed due to the absence of a counterclaim. The court left the issue of payment by instalments to the parties to agree upon after tax deduction, requiring proof...
Court Disposition
Statutory taxes to be deducted from the decretal sum; deductions for advances, fees, and imprests disallowed; payment by instalments left to parties' agreement post-tax deduction.
Orders
- Statutory taxes (PAYE) to be deducted from the global sum due to claimants.
- A certificate from KRA on remittance of taxes must be presented to Court within 30 days.
Full Case Text
Judgment text and source record
21 paragraphs
REPUBLIC OF KENYA
IN THE EMPLOYMENT & LABOUR RELATIONS
COURT OF KENYA AT NYERI
CASE NO. 211 OF 2017
(As consolidated with ELRC causes No. 221 and 222 of 2017)
DORIS KAIRUTHI KAARIA & 59 OTHERS………….…….…....CLAIMANT
VERSUS
B.O.M KAHITHE SECONDARY SCHOOL…..................1ST RESPONDENT
TEACHERS SERVICE COMMISSION……………….....2ND RESPONDENT
RULING
1. The only issue the Court can properly make a Ruling on is the issue of tax payable in decrees. It is the Respondent’s position that there is tax due and PAYE payable on account of the decreenow held by the Claimants. The Claimants on their part assert that the tax is not payable on a decree and cite the provisions of the Income Tax Act as well as Section 19(1) of the Employment Act which is specifically a finding in the case of Joseph Murabu vK-Rep Bank Ltd (2017) eKLRa decision by Nduma Nderi J. The 2 parties therefore have a diverged position on the payment of taxes due.
2. In regard to the other deductions, the Respondent asserts there are dues that it is entitled to being fees, advances and imprests by the individuals who owed the Respondent some money. The Claimants oppose these deductions arguing that no counter claim was mounted. As regards the last issue a liquidation by instalment the Claimants did not give any response to the request to liquidate the sum by payment of the sum of 5 million each month till payment in full.
3. The Employment Act makes provision under Section 49 (2) of the said Act for payment of statutory deductions for any payment made pursuant to this Section. The consent entered into by parties did not make provision on the taxes due. However the Judgment of the Court given in July 2017 made provision of payment of compensation in terms of Section 49(1)(c) which clearly places the sums due as a decree of Court within the provisions of the tax element in Section 49(2). The Income Tax Actpreceded the Employment Act 2007 and is amended accordingly by this Act in line with the principles of statutory interpretation relating to a subsequent legislation affecting a statutory provision that is new.
The final point on payment by instalments is a matter the Court will leave to parties to agree on after the taxes are deducted from the global sum due. A certificate from KRA on the remittance of the taxes must be presented to Court within 30 days of today. No applications may be made without leave of Court first being obtained. Should any party wish to appeal this decision they have 14 days to do so.
It is so ordered.
Dated and delivered at Nyeri this 17th day of January 2019
Nzioki wa Makau
JUDGE
I certify that this is a true
copy of the original
DEPUTY REGISTRAR