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ELRCAllowedNot stated in the judgment extract· [2023] KEELRC 1194 (KLR)

Karama v Grain Industries Limited (Cause 24 of 2020) [2023] KEELRC 1194 (KLR)

Employment and Labour Relations Court
11 May 2023
MMM. Mbaru
628 words in judgment
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The bottom line

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What this practically means

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Executive summary

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This is a first-instance ruling of the Employment and Labour Relations Court at Mombasa (M. Mbaru, J) on the claimant's application dated March 23, 2022, seeking a determination of how much was deductible from the judgment sum of Ksh. 199,019 delivered on December 3, 2021 (payment less PAYE by February 1, 2022, plus costs). The parties could not agree on deductions; the respondent issued a cheque of Ksh. 280,130 against an agreed award-plus-costs figure, having deducted Ksh. 88,997 as PAYE, withholding tax and an alleged outstanding loan balance. The claimant contended only PAYE of Ksh. 40,391.57 was due and that he had repaid his Ajab Sacco loan in full. The respondent was served but neither attended nor filed a response. Applying section 49(2) of the Employment Act, 2007, the court held that only PAYE was due on the award, and under section 19(1)(h) that while an employer may deduct outstanding loans, it must keep work records; the respondent's failure to controvert the claimant's evidence on loan repayment left it unchallenged. The court computed the balance due at Ksh. 48,426 and, because the application was necessitated by the respondent's default, awarded the claimant costs of the application assessed at Ksh. 20,000 all-inclusive. The application was found with merit and allowed in its entirety.

Key legal issues

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01

Whether PAYE and withholding tax were properly deductible from the judgment award

Holding

Only PAYE of Ksh. 40,391.57 was due on the award of Ksh. 199,019; withholding tax was not due

Reasoning

The judgment of December 3, 2021 directed payment of Ksh. 199,019 less PAYE. The court computed the due PAYE at Ksh. 40,391.57 under section 49(2) of the Employment Act, which subjects payments under that section to statutory deductions. The respondent's larger deduction of Ksh. 88,997 included withholding tax not due.

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02

Whether the respondent was entitled to deduct an outstanding loan balance

Holding

No deduction allowed; the claimant's uncontroverted evidence that the loan was repaid in full stands

Reasoning

Under section 19(1)(h) of the Employment Act an employer may deduct outstanding loans at the end of employment but must keep records. The respondent did not attend or file a replying affidavit to challenge the claimant's averment that the Ajab Sacco loan had been repaid in full, leaving the court with no contrary evidence.

p. 2

Legal principles established

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  • Payments under section 49 of the Employment Act are subject to statutory deductions (PAYE)
  • An employer may deduct outstanding loans or facilities advanced to an employee at the end of employment, and bears the duty to keep records of such deductions

Court orders

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  1. 1.Application dated March 23, 2022 is found with merit
  2. 2.Dues owing to the claimant assessed at Ksh. 48,426
  3. 3.Costs of the application assessed at Ksh. 20,000 all-inclusive payable by the respondent
Jurisdiction invoked
Court determining deduction from its own judgment award under section 49(2) of the Employment Act, 2007

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "Karama v Grain Industries Limited (Cause 24 of 2020) [2023] KEELRC 1194 (KLR)", Case Analysis (2023). Not stated in the judgment extract. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2023/1194/eng@2023-05-11

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.