Joseph Ogonda Omondi v Sbi International Holding AG (Kenya) [2015] KEELRC 779 (KLR)
The bottom line
#Kenyan employers can deduct PAYE from unfair termination awards, but they must prove the tax was actually remitted to KRA or risk paying the amount twice.
What this practically means
#Executive summary
#Key legal issues
#Whether court-awarded compensation under Section 49 of the Employment Act is subject to statutory deductions including PAYE
The court held that awards of payments made under Section 49 are subject to statutory deductions, and PAYE is one of those deductions, so the respondent complied with Section 49(2) in deducting income tax from the decretal sum
Section 49(2) provides that payments made by an employer under that section are subject to statutory deductions. The court construed statutory deductions as deductions authorized by statute, including PAYE, NSSF and NHIF. Relying on the KRA Guide to Employers, compensation for termination of employment is taxable whether or not the contract provides for such payment. Whether the Income Tax Act itself defines a decree as a taxable item was not the determining factor.
Whether the respondent discharged its obligation by merely deducting PAYE
Deduction alone is insufficient; the employer must prove remittance to KRA by submitting a tax remittance certificate, failing which the claimant may execute for the sum of Kshs 89,713
While the deduction complied with Section 49(2), the court required proof that the deducted sum was actually transmitted to the Kenya Revenue Authority. The respondent was given 14 days to submit a tax remittance certificate; failure would mean the obligation to pay the claimant the sum of Kshs 89,713 was not discharged, entitling the claimant to execute.
Whether the respondent's application for stay was filed after inordinate delay
The delay was not inordinate as the application was filed six days after proclamation and before the 7-day proclamation period expired
The claimant argued the application was an abuse of process given delay between proclamation on 14th August 2014 and filing on 20th August 2014. The court found only six days elapsed, within the proclamation period, so the delay was neither inordinate nor unexplained.
Whether the respondent failed to issue a certificate of service
The allegation was not denied and the respondent was ordered to issue the certificate of service under Section 51 of the Employment Act within 14 days
The claimant submitted that the respondent breached the court award by failing to issue a certificate of service. The court noted the respondent did not deny the allegation and accordingly ordered issuance of the certificate within 14 days.
Legal principles established
#- Payments awarded under Section 49 of the Employment Act are subject to statutory deductions including PAYE
- An employer deducting statutory deductions from a decretal sum must prove remittance to the relevant authority
Court orders
#- 1.The respondent submits the tax remittance certificate to the claimant as confirmation of remittance of PAYE to KRA within 14 days from date of the ruling, failing which it will be deemed that the respondent has not discharged its obligation to pay the claimant Kshs 89,713 and the claimant will be free to execute for the said sum
- 2.The respondent issues a certificate of service to the claimant in terms of Section 51 of the Employment Act within 14 days
- 3.The respondent pays the claimant's costs of the application
- Jurisdiction invoked
- Article 159(2)(d) of the Constitution, Section 3 of the Income Tax Act, Sections 3 and 12 of the Industrial Court Act, Rules 16 and 27 of the Industrial Court (Procedure) Rules, 2010
Key timeline
#Practical implications
#Frequently asked questions
#Later judgments citing this (2)
#Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.
- Sakam Enterprises Limited v Wando (Employment and Labour Relations Appeal E026 of 2025) [2025] KEELRC 2917 (KLR)[2025] KEELRC 2917 (KLR)23 Oct 2025followed
- Egerton University v Musyoka (Employment and Labour Relations Appeal E001 of 2023) [2025] KEELRC 1851 (KLR)[2025] KEELRC 1851 (KLR)24 Jun 2025
Cite this brief
#Cite this brief
Caselaw, "Joseph Ogonda Omondi v Sbi International Holding AG (Kenya) [2015] KEELRC 779 (KLR)", Case Analysis (2015). . Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2015/779/eng@2015-06-16
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.