What you need to know:
- The Employment Act requires that an employee must retain at least a third of their pay.
- You have the freedom to choose whether you want to be a member of any Sacco.
- Savings can cushion you when you have urgent financial needs which may occur outside your normal salary cycle.
- Do you have a question? Send it to our team: [email protected]
Q I work for a local real estate company and recently, it established a Savings Sacco. The concern is that my boss sent a memo to my colleagues and I stating that we are all expected to join the Sacco and save a minimum of Sh2,000 every month. I am currently surviving on a shoe string budget and I can't afford to stretch it any further. Is it okay for an employer to bring up such rules? What should I do?
You should count yourself lucky because you have an employer who is interested in your welfare. The employer means well in trying to foster a culture of saving. However, they should encourage rather than compel employees to join the Sacco.
Ideally, the Sacco should be a different entity from the employer and should be managed independently in line with the Sacco Society’s Act. The Sacco should take the responsibility of attracting members by explaining the benefits of joining.
The Employment Act requires that an employee must retain at least a third of their pay. Therefore, this rule must be observed.
You also have the freedom to choose whether you want to be a member of any Sacco, and if you are interested in the one that the employer has endorsed.
It is important to save for a rainy day, since savings can cushion you when you have urgent financial needs which may occur outside your normal salary cycle.
You may consider an alternative source of income by using your skills outside employment to generate extra income as long as it is not in conflict with your employment contract at the Real Estate Company.
Sacco provide a host of other benefits other than savings. Most provide an opportunity for investment, some offer benevolent benefits for their members and members also get dividends based on their savings and the financial performance of the Sacco. This is usually paid annually.
You also need to do your due diligence and understand the benefits and requirements to access a loan, before you commit yourself. Joining the Sacco will be beneficial to you in future.
Word of caution, you must establish a circle of friends whom you can guarantee and who in turn extends the same favour when need arises.
This is because there are some members who are not genuine and sometimes take loans, which they don’t service and the guarantors have to pay on their behalf.
Do you have a question? Send it to our team: [email protected]