James Kithinji v Jamii Co-operative Savings and Credit Society Ltd
The bottom line
#A Kenyan court ruled that once an employer remits deducted PAYE to KRA, it cannot be forced to refund it — disputes over tax computation belong at the Tax Tribunal.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether the Respondent applied the correct method of taxation to the lump-sum payment awarded as compensation for loss of employment
- 2.Whether the decretal sum awarded under Section 49 of the Employment Act is subject to statutory deductions
- 3.Whether the Respondent lawfully deducted and remitted PAYE
- 4.Whether the Court can order the Respondent to release to the Claimant sums already deducted and remitted to the Kenya Revenue Authority
Key legal issues
#Whether an employer can be ordered to refund PAYE already deducted and remitted to KRA
No. Once remitted, the funds are no longer in the employer's custody and any dispute over the computation lies with the Tax Tribunal, not the ELRC.
The court accepted that the Respondent deducted PAYE pursuant to Section 49(2) of the Employment Act and remitted it through its April 2024 payroll. Since the deducted amount was no longer in the Respondent's possession, ordering a refund would compel double payment. The court also noted KRA's absence as a party and held the Tax Tribunal competent to examine the computation and make appropriate orders.
Whether sums awarded under Section 49 of the Employment Act are subject to statutory deductions
Yes - the Respondent's position that Section 49(2) mandates statutory deductions was not disturbed; the court did not decide the correctness of the PAYE computation.
The Respondent relied on Section 49(2) of the Employment Act and Peris Njeri Kinyanjui v Kobo Safaris Limited for the proposition that PAYE constitutes a mandatory statutory deduction. The court did not rule on whether the correct taxation method was applied, instead deflecting that question to the Tax Tribunal.
Legal principles established
#- Where PAYE deducted from a decretal sum has been remitted to the Kenya Revenue Authority, the ELRC is not the proper forum for a claim for refund of the tax; the Tax Tribunal is the correct forum.
Court orders
#- 1.The Notice of Motion dated 27th November 2025 is dismissed
- 2.No order of costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
- Jurisdiction invoked
- Original employment and labour relations jurisdiction of the ELRC under the Employment and Labour Relations Court Act; the matter arises from a decree in ELRC Cause No. 707 of 2017
Relief refused
#Payment of Kshs. 120,597.80 being the decretal sum balance after alleged correct PAYE deduction
The deducted PAYE had been remitted to KRA and was no longer in the Respondent's custody; the correct forum is the Tax Tribunal
Costs of the application
Court declined to award costs
Costs
No order of costs - each party to bear their own costs
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Respectfully, the amount so deducted even if erroneous is no longer in custody of the respondent.
The correct forum would in my view be the Tax Tribunal which is then capable of looking into the computation and determine if there was an overpayment thereof and then make orders appropriately.
I find that the application cannot therefore lie and the same is dismissed accordingly. There shall be no order of costs.
Issues in the judgment
#Conflicting dates for the underlying judgment
Conflicting dates for the underlying judgment
Conflicting net payment figures
Ruling dated 2026 postdates application of 27th November 2025 but captioned as 2025 application in a 2017 cause - chronology unusual
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "James Kithinji v Jamii Co-operative Savings and Credit Society Ltd", Case Analysis (2026). ELRC Cause No. 707 of 2017. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2026/2458/eng@2026-09-21
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.