Spectre International Company Limited has been ordered to pay over Sh600,000 as punishment for failing to remit funds to settle a loan taken by one of its employees, who used his pay slip as security.
Justice Stephen Radido of the Labour and Industrial Relations Court in Kisumu said despite making deductions from the employee’s salary for 60 months, the company failed to timely remit the funds to Equity Bank, where the employee, Frederick Otieno Oswe, secured the loan.
“The bank statements placed before the court show deductions were regularly made from Oswe’s pay but were not regularly remitted to Equity.
"As the employer, Spectre was expected to keep records, but it did not present any records to the court to demonstrate that it paid out to Equity all the monthly instalments as they fell due,” said Radido.
“The court has no hesitation in finding that Spectre was in breach of contract as contemplated by section 19 (g) and (h) of the Employment Act, 2007. The missteps by Spectre led to the loan not being cleared on schedule.
"Spectre must bear the liability for the same. A declaration is hereby issued that Spectre is liable to settle the outstanding loan arrears together with interest and penalties due to Equity Bank from Oswe.”
Spectre, a leading gas cylinder-making firm, was also ordered to foot the cost of the suit as Oswe had applied and also pay him Sh117,832; the additional amount Spectre continued to deduct from his salary for eight months after the 60 months had elapsed.
Oswe sued the firm on November 15, 2017, alleging that Spectre had not remitted the loan deductions to Equity despite making deductions from his salary leading to loan arrears of Sh624,579 as of 14 March 2018.
“On February 9, 2010, I signed a loan authorisation form from Equity Bank instructing Spectre to make monthly deductions from my salary through the payroll and remit to Equity. The loan was to be repaid in 60 monthly installments of Sh14,729,” he said.
The claimant also alleged that Spectre had made deductions from his salary beyond the 60 months which he termed “irregular and fraudulent.”
Spectre cited the Limitation Act that bars disputes of over three years from being brought to court, saying the action advanced by the claimant was caught up by the limitation.
