The Salaries and Remuneration Commission (SRC) has directed all public service institutions to submit their data on all allowances paid to their employees with intention to restructure them.
SRC Chair Lynn Mengich says the move is intended to harmonise allowances paid in the public sector where some employees are paid allowances way higher than their basic salary.
“Submission on allowances from individual PSI is expected by November 30th 2021. The commission will then review and issue advice on allowances to the individual PSI by 29th April 2022,” said Mengich.
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Monthly benefits amongst employees in the public sector are as diverse as the institutions they work for. The proportion of allowances to gross salary varying between 43 percent to 259 percent.
The basic pay determines the pension contributions for employee meaning persons with similar jobs at different institution could be treated differently. It is for this reason that the Salaries and Remuneration Commission seeks to harmonize the allowances.
SRC says at the moment, there are some institutions that pay allowances as a percentage of basic pay while others pay the same allowances in absolute amounts.
In the financial year 2020/21, 874,000 persons were employed in public institutions. The wage bill was Ksh.893 billion while the pension component was Ksh.92 billion.
In the financial year 2018/2019, out of a total of Ksh.795 billion in wage bill, Ksh.322.5 billion comprised allowances. The pension cost was at Ksh.70 billion.
SRC has now released guidelines that will see all allowances paid by public institutions set, reviewed and advised by the commission.
Below are the SRC allowances policy guidelines for the public service
The basic salary will progressively account for 60 percent of the gross salary. All allowances will be paid in absolute figures and no longer as a percentage of the basic salary. For allowances mirrored in the basic salary, they will be scrapped.
With the guidelines, no public institution will be allowed to pay higher amounts in allowances based on their ability to pay. Facilitative allowances like subsistence allowances will be guided by SRC. All redundant or duplicate allowances will be scrapped while allowances will not form basis for calculating pension contributions.
Job-related allowances will eventually be scrapped. They include:
- extraneous allowances,
- responsibility allowances and
- special responsibility allowances.
Instead the amounts will be converted to the worth of a job.
“Job-related allowances are paid to enhance salary. They account for the greatest proportion of allowances in the Kenyan public service. This category of allowances is expected to fall once the relative worth of a job is appropriately determined,” said Mengich
Src chair however assures, that no existing employee will lose their total gross pay.
According to SRC, categories of allowances allowed will include :
- house allowance,
- commuter allowance,
- task related allowance for those carrying out responsibilities outside their scope.
SRC has also warned county governors, MCAs and their speakers against awarding themselves retirement benefits through a draft bill submitted to all county assemblies.
The bill proposes to award retired Governors, deputy governors, and county speakers a lumpsum payment and lifetime pension and maintenance, at the cost of the counties.