[2017] KEELRC 1813 (KLR)
The court held that Section 49(2) of the Employment Act, 2007, is explicit in requiring that any payments made by the employer under this section are subject to statutory deductions, which include PAYE. Therefore, the employer was entitled to deduct and remit PAYE from the compensation awarded to the claimant. The...
Source-derived case information.
- Citation
- [2017] KEELRC 1813 (KLR)
- Parties
- Claimant: Peris Njeri Kinyanjui; Respondent: Kobo Safaris Limited
- Court
- Employment and Labour Relations Court
- Court Station
- Employment and Labour Relations Court at Nairobi
- Jurisdiction
- Kenya
- Case Number
- Cause 176N of 2009
- Procedural Posture
- Employment Cause / Ruling
- Outcome
- Application allowed. Employer entitled to deduct PAYE from compensation award.
- Legal Topics
- Statutory Deductions, Pay as You Earn, Compensation Awards, Employment Act Interpretation
- Source Language
- en
Source-derived case record
Summary, issues, holding and outcome
More case intelligence is available
Unlock the full research layer for this judgment.
Parties
Peris Njeri Kinyanjui
Claimant
Kobo Safaris Limited
Respondent
Procedural Posture
Employment Cause / Ruling
Legal Issues
- 1 Whether an employer is entitled to withhold PAYE tax on an award of compensation under Section 49(1)(c) of the Employment Act, 2007.
- 2 Whether the claimant/respondent was justified in seeking to proclaim and attach the property of the applicant for the withheld amount.
Ratio Decidendi
The court held that Section 49(2) of the Employment Act, 2007, is explicit in requiring that any payments made by the employer under this section are subject to statutory deductions, which include PAYE. Therefore, the employer was entitled to deduct and remit PAYE from the compensation awarded to the claimant. The claimant/respondent was not justified in threatening to proclaim and attach the property of the applicant in respect of the withheld amount, as the deduction was lawful and in accordance with statutory requirements. The withheld amount should either be refunded to the applicant or remitted directly to the Kenya Revenue Authority.
Court Disposition
Application allowed. Employer entitled to deduct PAYE from compensation award.
Orders
- The claimant/respondent was wrong to threaten to proclaim and attach the property of the applicant in respect of the withheld amount.
- The withheld amount should be refunded to the applicant and/or remitted directly to the Kenya Revenue Authority forthwith.
Full Case Text
Judgment text and source record
20 paragraphs
REPUBLIC OF KENYA
IN THE EMPLOYMENT AND LABOUR RELATIONS COURT
AT NAIROBI
CAUSE NO. 176N OF 2009
PERIS NJERI KINYANJUI...............................CLAIMANTS
VERUS
KOBO SAFARIS LIMITED..........................RESPONDENT
Mr. Ohenga for respondent/applicant
M/S Kang’ethe for claimant/respondent
RULING
1. Issue in dispute is whether or not an employer is entitled to withhold tax Pay As You Earn (PAYE) on an award of compensation in terms of Section 49 (1) (c) of the Employment Act, No. 11 of 2007.
Section 49 (2) provides:
“Any payments made by the employer under this Section shall be subject to statutory deductions.”
2. Tax deductions, including PAYE are statutory deductions within the meaning of subsection (2) above.
The compensation awarded under Section 49 (1) (c) is “the equivalent of a number of months wages or salary not exceeding twelve months based on the gross monthly wage or salary of the employee at the time of dismissal.”
3. The Act is explicit that any such payment is subject to statutory deductions and the applicant was entitled to deduct, and remit the amount deducted to the Kenya Revenue Authority.
4. Accordingly, the claimant/respondent was wrong to threaten, as it did to proclaim and attach the property of the applicant in respect of the withheld amount. The same should be refunded to the applicant and/or remitted directly to the Kenya Revenue Authority forthwith.
Dated and delivered at Nairobi this 10th day of February 2017
MATHEWS NDERI NDUMA
PRINCIPAL JUDGE