LSK Warns Employers Over Illegal NSSF Deductions, Orders Refund to Workers

There is confusion in the NSSF after the Law Society of Kenya ordered employers to stop deducting the new high NSSF rates.

This comes after the Court of Appeal on May 29, 2026, declined to suspend a 2022 judgment by the Employment and Labour Relations Court that declared the NSSF Act, 2013 unconstitutional.

LSK President Charles Kanjama said employers who continue to deduct money under a law declared unconstitutional are liable to refund it.

“Any employer who makes unlawful deductions on an employee’s payslip is liable to the employee under both law and contract for the deducted amount,” Kanjama said.

The NSSF Act, 2013 changed contributions from a flat rate of Ksh 200 per employee and Ksh 200 per employer to a salary-based system where employees now pay between Ksh 1,500 and Ksh 6,480 monthly, matched by employers.

NSSF Managing Trustee David Koross however directed employers to ignore the court ruling and continue deducting the enhanced rates. He said the Act is still in force following a 2023 Court of Appeal judgment.

The Federation of Kenya Employers (FKE) also told its members to continue with the higher deductions to avoid penalties.

But LSK disagreed. Kanjama said only three deductions are allowed by law: statutory deductions, court-ordered deductions, or voluntary deductions with written employee consent.

He warned that employers who proceed without legal backing risk being sued for unlawful deductions.

The Central Organisation of Trade Unions (COTU) has defended NSSF’s directive.

Workers are now advised to check their payslips. According to LSK, excess money deducted since February 2023 when the court declared the law unconstitutional may qualify for refund.

The final decision now lies with the Court of Appeal which will determine whether Kenya will keep the enhanced rates or revert to the old Ksh 200 system.

RaiderKE feedback-opera-news-app@opera.com