State to Seize Accounts of Employers not Remitting Saccos contributions
Cooperative Cabinet Secretary has issued a stern warning, indicating that employers failing to remit members’ savings and credit cooperative organisation (SACCOs) contributions may face the seizure of their bank accounts.
Mr Chelugui highlighted the financial struggles of numerous Saccos, attributing this to employers and agencies that withhold employees’ dues for longer.
Mr Chelugui said the recovery of debts will now be legally enforced, subjecting non-compliant employers to severe penalties, including confiscating their bank accounts.
This new measure is part of the provisions outlined in the Cooperative Bill 2023, swiftly advancing through the ministry to enhance governance in the cooperative movement.
The CS said the cabinet has already approved the Bill and has now been forwarded to the State Law Office for polishing.
“My ministry has drafted the Cooperative Bill 2023, already approved by the cabinet and forwarded to the Attorney General for submission to Parliament, once it becomes a law, it will compel employers to remit members contribution on time, failure to which they will be penalised,” said Mr Chelugui.
Section 73(1) of the Cooperative Bill outlines that employers failing to remit deductions within seven days will be liable to pay the sum deducted and compound interest not less than five percent per month.
Additionally, the Commissioner may appoint an agent to collect and recover debts owed to the Cooperative, as specified in the bill.
The bill empowers the Commissioner for Cooperatives to impose stringent penalties on employers failing to remit deducted dues.
The Bill has detailed procedures for recovering unremitted amounts and the charges applicable to employers withholding Sacco member dues.
Regarding outstanding amounts, Mr Chelugui noted a recovery of Ksh500 million out of the initial Ksh4 billion at the beginning of the year.
Defaulters have entered into agreements through mediation by the State Department of Cooperatives to clear balances, with the ministry closely monitoring and preparing for legal action in case of agreement default.