Julius Nyarotho v Nzoia Sugar Company Limited & another [2018] KEELRC 1454 (KLR)
The bottom line
#A Kenyan court confirmed that employers can deduct PAYE from court-awarded employment payments, and signing a discharge voucher means the debt is settled.
What this practically means
#Executive summary
#Key legal issues
#Whether statutory deductions (PAYE) could be made from the decretal award
Yes. The respondent was obliged to deduct and remit tax on the award; the net payment fully satisfied the decree.
Section 49(2) of the Employment Act subjects payments under that section to statutory deductions. Section 37 of the Income Tax Act obliges employers to recover appropriate tax from lump sum payments before release to the employee. Rika J in Kioko Joseph v Bamburi Cement, following Andrew Mukite Saisi v Tracker Group of Companies, held awards are taxable and the employer need not state this in the judgment. Both the claimant and counsel accepted the tax tabulation and signed the discharge voucher.
Whether the decree remained partly unsatisfied such that the matter should not have been marked settled
No. The gross award, interest and taxed costs amounted to Kshs. 2,442,375.35; the net payment of Kshs. 1,691,827.20 after lawful tax deductions fully satisfied it.
The court tabulated the gross award of Kshs. 2,332,800 (principal plus 12% interest) and the PAYE deductions, producing the net sum actually paid. The claimant admitted receipt and signed a discharge voucher. Partial payments and the tax tabulation were accepted by the claimant and his counsel, so no balance of Kshs. 750,548.15 remained due and the order marking the matter settled was regular.
Legal principles established
#- Payments made by an employer under section 49 of the Employment Act are subject to statutory deductions, and an employer is obliged to deduct and remit PAYE on lump sum court awards before releasing the balance to the employee.
- A claimant who accepts a tabulated decretal sum and signs a discharge voucher is taken to have accepted the full satisfaction of the decree.
Court orders
#- 1.The application seeking review or setting aside of the order of 29th June 2017 marking the matter as settled is dismissed
- 2.No orders for costs - each party to bear own costs (application dismissed with no orders for costs)
- Jurisdiction invoked
- Original and supervisory jurisdiction of the Employment and Labour Relations Court over its own decree; review of the order marking the matter as settled
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Julius Nyarotho v Nzoia Sugar Company Limited & another [2018] KEELRC 1454 (KLR)", Case Analysis (2018). Not stated in the judgment (underlying judgment delivered 17th September 2014). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2018/1454/eng@2018-07-12
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.