Can employers determine how staff spend pay?

A team leader speaks to a member of her team at a workplace. [Getty Images]

Payday, mayday. Anthony Oliech, who works in a dry cleaner in Nairobi, thinks of payday with the same anxiety believers consider the apocalypse. Within moments of receiving his pay, the bills gobble it up.

A debt here, an unforeseen expense there and he is left with very little in his pockets.

After a little shopping for food, he visits a wines and spirits outlet in the estate and stocks up. Then the cycle begins again: a thankless 30-day toil, an unmotivated hobble to the next payday and tightening the belt.

"My salary is low, and I must admit I do not manage it the best way I can. But sometimes, I wish there was a way the employer could help me manage it. I do not know if that would mean they remit a small fraction to a Sacco or something because once I have the money, it disappears within just a few days," he says.

This begs the question: just how far can an employer go in ensuring that an employee does not sink back into the rut of pennilessness as soon as payday is gone?

In a country where many live paycheck to paycheck, it is a horror moment just before the end of the month.

Faith Kosilbet, a human resource manager, says the employer does not have control over the employee when it comes to how they choose to spend their money.

But because an employer understands their employees' behavioural tendencies, it is imperative for them to come up with internal policies that may, for example, limit employees' wastefulness.

"If one has a labour force where a majority is likely to go into alcohol abuse after payday, depleting their savings, then it is important to find a way in which their spending can be regulated, including ensuring they will not drink away their rent and even transport money," she says.

Companies' internal policies go a long way in helping employees make worthwhile savings and investments.

Ms Kosilbet says that employees' housing allowance should be included in the basic salary (as 15 per cent of basic salary) and every employer should make sure that this is done so the employees always have a roof over their heads.

Decent shelter

For fear that some employees may neglect their well-being, skip meals and not invest in a decent shelter, a number of employers organise meals for their employees and then deduct them from their salaries.

Some do the same for houses, affording employees shelter and slashing the money from their salary.

Ms Kosilbet says that a revision of wages means a subsequent revision of housing allowance.

"Every employer shall at all times, at their expense provide reasonable housing accommodation for each of their employees either at or near to the place of employment or shall pay to the employee such sufficient sum as rent in addition to their wages or salary. This will enable the employee to obtain reasonable accommodation," reads The Employment Act Cap 226, of 2007.

Further, an employer can curb wasteful spending by employees by removing salary advances and making it known to the employees that in the event they have overspent, it is going to be nearly impossible to ask for money to cushion themselves for the remainder of the month.

"Every employer wants the employee to be comfortable and in good shape when they come to the office so they can be as effective and as efficient as possible at work," she says.

The Employment Act indicates that on payment, disposal and recovery of wages and allowances, it shall be made on a working day and during working hours at or near the place of employment or at such other place as may be agreed to between the employer and the employee.

But that place should not be near a drinking den as employees may end up taking very little home.

"Payment of wages shall not be made in any place wherein intoxicating liquor is sold or readily available for supply, except in the case of employees employed to work therein," it says.

Further, the law indicates that the employer cannot dictate how the employee can use their salary, especially if it has anything to do with transacting in a business where the employer has an interest.

"No employer shall limit or attempt to limit the right of an employee to dispose of his wages in a manner which he deems fit, nor by any contract of service or otherwise seek to compel an employee to dispose of his wages or a portion thereof in a particular place or for a particular purpose in which the employer has a beneficial interest whether direct or indirect," says the law.

In-house policies that govern the behaviour of the employee to prevent them from runaway spending could go a long way in saving the company's culture and image.