Employers to Comply with New Requirements Under the Industrial Training Amendment Act

Under the Act, employers with more than 20 employees are required to register with the National Industrial Training Authority (NITA) and pay an Industrial Training Levy of KES 50 (approx. USD 0.5) for each employee per month towards the Training Levy Fund (the Fund). Failure to pay this levy exposes an employer to a penalty of five percent of the amount of levy payable.

The IT Amendment Act provides that going forward, collection of the training levies from employers will shift NITA to the Commissioner General of the Kenya Revenue Authority (KRA). The IT Amendment Act provides that the training levy shall be paid to the Commissioner at the time when an employee’s salary is payable and not later than the fifth day of the month following the month the levy is due. Importantly, section 5B (5) provides that the levy should not be deducted from the salary of an employee. From the reading of the wording, which was not previously included in the Act and in the Industrial Training (Training Levy) Order 2007, employers will now be required to incur the cost of the levy from their own funds.

It is also important to note that according to the IT Amendment Act, the provisions of the Income Tax Act and the KRA Act apply with respect to: the payment and recovery of levies and penalties; the assessment of levy payable; the filing of returns; the provision of information and production of documents; and the keeping of records. That notwithstanding, the IT Amendment Act does not state how or specifically which of the provisions of the Income Tax Act and the KRA Act will apply with respect to the training levy. This is an area where we can expect further legislation or guidance from the NITA.

Whereas previous disbursements out of the Fund were subject to the discretion of the Director-General acting under the advice of the National Industrial Training Board, the IT Amendment Act has also issued mandatory directions as to how the levies are to be used. In this regard:

• 60% of the training levies are to be used for the reimbursement of employers for the training costs they have incurred;
• 20% used for the funding the establishment and operation of technical and vocational education and training institutions;
• 10% allocated and disbursed to the Higher Education Loans Management Board for the purposes of funding the training of students in technical and vocational education and training institutions; and
• 10% used for such other expenditure related to training as may be approved by the Board.

The IT Amendment Act does not specify how the reimbursement will be done, whether all employers will qualify for the reimbursement and by when the reimbursements will be made. This is also an area where we can expect further guidance from NITA.

Should you have any questions regarding the information in this legal alert, please do not hesitate to contact Sonal Tejpar or Rosa Nduati-Mutero.

Contributors
1. Tabitha Joy Raore – Senior Associate
2. Edwina Warambo – Senior Associate
3. Jacob Odanga – Trainee Lawyer