Relief on the Horizon for Kenyan Civil Servants as SRC Tackles Excessive Salary Deductions
In a significant move to alleviate the financial burden on Kenyan civil servants, the Salaries and Remuneration Commission (SRC) has announced a comprehensive review of public sector salaries to address excessive payroll deductions. This initiative aims to ensure compliance with the Employment Act of 2007, which mandates that no employer should deduct more than two-thirds of an employee's basic salary, guaranteeing workers retain at least one-third of their earnings.
The announcement comes in response to growing concerns over deductions that have left many civil servants with take-home pay below the legal threshold. Recent tax measures introduced over the past two years, including a 1.5 percent tax deduction and a 2.75 percent contribution to the Social Health Insurance Fund (SHIF), have significantly reduced workers' net salaries. These deductions, intended to fund social welfare programs, have inadvertently pushed many employees below the constitutionally protected one-third salary threshold, sparking widespread discontent.
The issue gained prominence following a 2022-23 audit report by Auditor General Nancy Gathungu, which revealed that 131 employees in a state department were receiving less than one-third of their basic pay due to excessive deductions. This violation of the Employment Act prompted the Public Accounts Committee of the National Assembly, led by Butere MP Tindi Mwale, to call for urgent discussions with National Treasury Cabinet Secretary John Mbadi. Lawmakers, including Lugari MP Nabii Nabwera and Rarieda MP Otiende Amollo, have emphasized the need to revise existing policies to align with the new tax realities, highlighting the strain on public servants amidst rising living costs.
The SRC's review is seen as a critical step toward restoring financial stability for civil servants, who have faced increasing economic pressures. The commission is expected to evaluate remuneration structures to ensure deductions comply with legal limits while fostering a performance-driven culture in the public sector. Public Service Cabinet Secretary Justin Muturi has previously underscored the government's commitment to fair compensation, noting that a Sh1.5 billion budget allocation for the 2024/2025 fiscal year supported a salary increase under the second phase of the Collective Bargaining Agreement (CBA) with the Union of Kenya Civil Servants (UKCS).
This salary adjustment, effective from July 1, 2024, raised the minimum pay for the lowest cadre (CSG 17) from Sh16,920 to Sh19,340 per month, with corresponding increases across higher grades. For instance, Grade 15 salaries now range from Sh19,340 to Sh23,520, while Grade 5 employees earn between Sh146,360 and Sh245,000. These adjustments averted a planned strike by the UKCS, which had protested delays in implementing the CBA.
However, challenges remain. The Controller of Budget recently reported that unremitted Pay As You Earn (PAYE) deductions rose by Sh3.85 billion, reaching Sh22.89 billion, while pension arrears increased by Sh2.51 billion to Sh35.53 billion. These unremitted deductions, meant for the Kenya Revenue Authority (KRA) and the Public Service Superannuation Scheme (PSSS), highlight systemic issues in payroll management, raising concerns about future pension payments for government employees.
The SRC's initiative has been met with cautious optimism. Civil servants are hopeful that the review will not only address excessive deductions but also streamline compensation structures to mitigate the impact of inflation, which reached 4.1 percent in April 2025. The rising cost of living, coupled with a 4.1 percent decline in real wage growth in 2023, has strained workers' purchasing power, making the SRC's intervention timely.
As the government navigates these challenges, the SRC's efforts are expected to bolster public confidence in the civil service. By ensuring compliance with employment laws and addressing financial pressures, the commission aims to create a more equitable and sustainable remuneration framework for Kenya's public sector workers.