Domestic Workers – Employers’ Obligations in relation to N.S.S.F & N.H.I.F
3 years ago
Objective of this article
There has been much celebration over the past week or so over the return of domestic workers after the Christmas break. We, clearly, appreciate the work done by our helps but are we taking care of them in terms of their retirement benefits and in the event that they fall sick?
This article addresses the obligation of employers to domestic workers in relation to deduction and remittance of N.S.S.F (social security) and N.H.I.F (medical insurance). At the end of the article, we shall touch on P.A.Y.E (income tax) as well.
A “domestic worker” is: –
A person employed wholly or partly in any private household as a cook, house help, waiter, butler, nanny, valet, chauffeur, bar attendant, gardener or labourer.
- Applicable Laws
Article 43(1)(e) of our Constitution gives every person the right to social security.
The National Social Security Fund Act, 2013 came into force in 2014. It repealed the previous N.S.S.F Act, Cap. 258. Substantial portions of the new Act, including the parts which provide the new higher rates of contribution, are, however, not in force at the moment due to a court case filed by the Central Organization of Trade Unions against N.S.S.F. Consequently, the rates prescribed under the former Act still apply.
Both the employer and the employee are required to register under the scheme. It is the employer’s responsibility to ensure that his workers are registered.
An employee is any person who is employed under a contract of service – whether oral or written – for any period of time.
Are supposed to be deducted at the time of payment of wages. A domestic worker is required to contribute Kshs. 200/= and their employer is required to contribute a similar amount.
The obligation is on the employer to deduct and remit the monthly contribution.
- The benefits
Include a retirement benefit, survivor’s benefit, invalidity benefit, funeral grant and an emigration benefit.
- Voluntary registration
Whereas registration is mandatory for an employer and an employee, a self-employed person may register voluntarily.
- Consequences of non-compliance
It is an offence to fail to register and to evade making any payment due under the Act.
In a number of court decisions it has been held that an employer who fails to comply with the N.S.S.F provisions is liable to pay service pay at the time of termination of the employment. Service pay is calculated on the basis of 15 days’ pay for each completed year of service.
It is mandatory for every person whose income exceeds Kshs. 1,000/= per month (whether derived from salaried or self-employment) to be registered under the scheme. Employees make a prescribed standard contribution whereas those who are self-employed make the prescribed special contribution.
It is the employer’s responsibility to deduct and remit the contribution.
Depends on the monthly earnings. The rates published in the N.H.I.F website (http://www.nhif.or.ke/healthinsurance/) are as follows: –
|Up to 5,999||150|
|6,000 – 7,999||300|
|8,000 – 11,999||400|
|12,000 – 14,999||500|
|15,000 – 19,999||600|
|20,000 – 24,999||750|
|25,000 – 29,999||850|
|30,000 – 34,999||900|
|35,000 – 39,999||950|
|40,000 – 44,999||1,000|
|45,000 – 49,999||1,100|
|50,000 – 59,999||1,200|
|60,000 – 69,999||1,300|
|70,000 – 79,999||1,400|
|80,000 – 89,999||1,500|
|90,000 – 99,999||1,600|
|100,000 and above||1,700|
|Self Employed (special)||500|
- Consequences of non-compliance
It’s an offence to: – fail to register, to pay the contribution and to make a late payment.
- How do you go about complying?
For both N.S.S.F and N.H.I.F, it is common for employers of domestic helps to request them to register as self-employed and for the employer to either remit the deductions directly to the relevant bodies or to request the employee to make the remittance and submit receipts to confirm this has been done. In light of the provisions stated above, strict compliance would require the employer and employee to register and for the employer to deduct and remit the deductions.
Income tax is payable by any employee who earns Kshs. 11,180/= and above. The minimum wage for a domestic worker employed in Nairobi, Kisumu or Mombasa is Kshs. 10,954/= per month (exclusive of house allowance) or Kshs. 528/= per day or Kshs. 98/= per hour (daily and hourly rates are inclusive of house allowance). For domestic workers employed in all former municipalities, Mavoko, Ruiru and Limuru, the minimum wage is Kshs. 10,108/= per month or Kshs. 485/= per day or Kshs. 90/= per hour. For those employed in all other areas of Kenya, the minimum wage is Kshs. 5,845/= per month or Kshs. 297/= per day or Kshs. 55/= per hour.
If your domestic help earns the minimum tax threshold and above, it is your responsibility to deduct and remit the requisite income tax to the Kenya Revenue Authority.
Please share your experiences or thoughts on this issue in the comment section.
As regards an employer’s general obligations to domestic workers, please see this previous post on domestic workers.
NOTE: THE MINIMUM WAGE WAS INCREASED BY 18% WITH EFFECT FROM 01/05/2017.
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