As part of a broader strategy to uphold the socio-economic rights enshrined in Article 43 of the Constitution of Kenya, the government has initiated several ambitious reforms aimed at enhancing health, housing, and social security systems. These reforms reflect an ongoing commitment to providing a dignified quality of life for every citizen. Among the key initiatives are the Housing Levy, the Social Health Insurance Fund, and the revamped National Social Security Fund (NSSF). Each of these initiatives brings specific obligations for employers, who are now crucial participants in the implementation of these transformative programs.
The Housing Levy
The Housing Levy is an initiative aimed at improving access to affordable housing for all Kenyans by creating a sustainable fund for housing development. As of January 2024, employers are required to deduct 1.5% from employees’ gross salaries and remit it to the Kenya Revenue Authority or another designated entity. However, the introduction of the levy has not been without controversy. Several employer associations have raised objections, citing concerns over the additional financial burden on businesses. This has led to ongoing court battles, which have created uncertainty about its future.
For employers, compliance is essential despite the challenges. Failure to remit the levy on time will attract a punitive penalty of 2% of the outstanding amount for every month the payment is delayed, thus making adherence to deadlines critical.
The Social Health Insurance Fund (SHIF)
The SHIF marks a significant milestone in Kenya’s healthcare landscape, promising Universal health coverage and ensuring that citizens can access essential health services without falling into financial distress. Under the new framework, salaried employees are expected to contribute 2.75% of their gross monthly income, which must be deducted and remitted by their employers. This payment must be made by the 9th of the subsequent month.
To facilitate this, the government has introduced a streamlined system of payment through the Government Pay Bill Number 222222, with separate account numbers for employer contributions and penalties. This structured approach ensures transparency and ease of compliance for employers.
The National Social Security Fund (NSSF)
Revisions to the NSSF regulations have been aimed at strengthening retirement benefits and ensuring better social security for Kenyan workers. The updated NSSF rates for 2024, issued in accordance with the 3rd Schedule of the NSSF Act, outline new contribution requirements that employers must adhere to. Like the SHIF, NSSF contributions must be remitted by the 9th day of the subsequent month.
The NSSF revisions, alongside the SHIF and Housing Levy, have collectively garnered significant pushback from various stakeholders, including business communities and civil society organizations, highlighting concerns over the cumulative financial impact on both employers and employees.
If you need any assistance or advice relating to Housing Levy, SHIF and or NSSF, or any other employee related matters, please feel free to reach out to Peter at peter@pmlaw.co.ke or Ammy at info@pmlaw.co.ke
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