Court Suspends Deduction Of 1.5pc Housing Levy

The government suffered a blow after Employment and Labor Relations Court suspended its plan to deduct 1.5 percent from employees for the National Housing Scheme. This is after a petition was filed by Central Organization of Trade Union (COTU) through lawyer Okwech Achiendo, urging the court to suspend the same pending the hearing of the case on grounds that there was no public participation.

Employment and labor relations court judge Hellen Wasilwa yesterday granted the orders in an urgent application filed by the workers umbrella body COTU. Justice Wasilwa, while granting the orders, further directed that the parties in the matter exchange documents before the hearing on January 21.

“That the matter is extremely urgent as the application seeks to stop the irregular imposition of 1.5 per cent VAT on salaries of the employees as there was no public participation in the Amendment Act 2007 through section 86 of the Finance Act, 2018,” ruled the judge.

COTU argues that the implementation of the 1.5 per cent on basic salaries of employees will drive them to servitude, resulting in widespread public discontent. They claim that the decision by the government to impose the deduction is in defiance of the express decision of the union and Kenyans.

In the court documents, COTU Secretary General Francis Atwoli argues that the sections of the Act require public debate to enable stakeholders to understand the implications of the provisions to the amendments of Section 31A and its financial implications.

“The court is enjoined to move with speed to protect the rule of law and to uphold the Constitution by declaring the imposition of 1.5 per cent housing developments levy on basic salary to be unconstitutional and therefore invalid null and void,” reads the court documents in part.

Atwoli states that the amendment of Section 31A offends Article 118 with respect to facilitation of public participation and involvement in its legislative and other business as there was no consultation with stakeholders in the labor movement.

“The petitioner is opposed to the proposed amendments because they don’t promote good governance, accountability and transparency,” claims lawyer Okwech Achiando. COTU claims that regulations have not been developed to guide the implementation of the levy, which was to come to effect on January 2019.