Finance Bill

Members of the National Assembly during a sitting. 

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Employers face more costs in workers compensation plan

Employers face higher costs as a new draft Bill seeks to have them contribute one percent of each worker’s gross monthly earnings to fund a kitty that will compensate employees who suffer an injury while on duty.

Workers will not contribute to the kitty. If passed into law, the proposal will add to employers’ payroll costs, adding to the nascent Housing Levy in which they and their workers contribute 1.5 percent of monthly gross pay each.

The draft Workers’ Injury Compensation Bill 2024 is in the public participation stages, seeking their views before April 30 and will see the formation of a Workers Compensation Fund.

This fund will be for the compensation and the rehabilitation of employees who suffer occupational injuries or contract occupational diseases arising out of, and in the course of their employment, and the case of death, for their dependents.

“An employer carrying on business in Kenya shall, within the prescribed period, submit to the Fund one percent of the gross monthly earnings of every employee as employer monthly contributions,” reads the Bill in part.

In the event of temporary complete disablement, the employer will make periodic payments representing 70 percent of the employee’s monthly earnings at the time of the accident, subject to minimum and maximum amounts to be determined by the minister for labour. Payments will continue until the end of the disability.

In cases of permanent disability, the employee will be paid monthly, and the other terms, including the payout cap, will apply.

The Bill defines an accident as an unexpected and unplanned occurrence, including acts of violence, arising out of or in the course of work, which results in one or more workers

suffering a personal injury, disease, or death, and includes a commuting accident. If the Bill is passed, employers will only be required to file a report to the authority when an injury or death is reported at the workplace, which shall then pay the compensation.

The employer will, within seven days after receiving notice of an accident from the staff, file a report with the fund’s director-general, who will inquire into the matter.

“The employer in whose service an employee is at the time of the accident shall be liable for the payment of the compensation referred above, of the first month from the date of accident and after the expiry of the first month, the director-general shall refund the compensation paid by the employer,” reads the Bill in part.

Beneficiaries of employees who die in the line of duty will receive compensation equal to 40 per cent of the monthly employer contribution.

Employers who fail to comply shall be liable to a fine not exceeding one million or imprisonment for a term not exceeding three years.

Employers will be required to remit the contributions on or before the 5th day of the following month.

The bill seeks to repeal the 2007 Work Injury Benefits Act (WIBA).

This fund's sourcing will come from the employer's mandatory contributions, parliament appropriations, grants and donations among others.

The Ministry of Labour and Social Protection is also asking Kenyans to submit their views on other proposed Bills including the Occupational Safety and Health (OSH) Bill.