Allowances for thousands of civil servants could be slashed by early next year as the Salaries and Remuneration Commission (SRC) moves to harmonise what is paid to all cadres of State officers.

Under the new scheme, all public service institutions will have a harmonised allowance policy, with thousands of senior government officials expected to lose chunks of their current perks.

At the end of the exercise scheduled to commence in three weeks, all allowances paid for similar purposes will be merged and renamed while those whose rates are not commensurate to their purpose will be restructured.

This is part of the strategy to promote a sustainable wage bill, enhancing accountability and fairness in payment among all public servants and, ultimately, do away with double compensation.

SRC chairperson Lyn Mengich yesterday said individual public service institutions must submit their data on existing allowances by the end of next month.

She said SRC will then review and issue advice on allowances to individual public service institutions by April 29 next year, following which the compliance checks to enhance adherence to policy guidelines will be conducted from July.

“SRC has released the ‘Allowances Policy Guideline for the Public Service’. The overarching objective of the policy guideline is to provide a structured approach to streamlining the management and administration of allowances, so as to improve transparency, accountability, equity and fairness in payment of allowances across the public service,” said Mengich, in a press conference held at SRC headquarters in Nairobi.

It is mandatory for all public institutions to submit their data, with Mengich saying the commission is the only body mandated to review and advise on remuneration and benefits.

Allowances of institutions that fail submit their current data will cease to apply since they will not be properly advised as per the Constitution.

“The allowances we have today were set by different bodies but that does not mean that they are not valid but since they were set before the Constitution 2010 when SRC had not been established it becomes our mandate to set them,” explained Mengich.

About 10 policy guidelines will apply to ensure affordability and fiscal sustainability of the wage bill in the public service.
She said allowances will be set, regularly reviewed and advised by SRC, while taking into account the principles of affordability and fiscal sustainability.

Institutions will be required to furnish SRC with all allowances payable for review, setting and advice.
SRC will then set, regularly review and advise on allowances payable in the public service, pursuant to Article 230(4) of the Constitution.

On ratio of allowances to gross salary, she explained that the proportion of allowances to the gross salary, as per the 2019 SRC ‘Report on Streamlining Allowances Payable in the Public Service,’ showed it ranges from 43 per cent to 259 per cent, leading to a lower percentage of basic salary to gross salary in the public service.

She said similar allowances are paid as a percentage of basic salary, while others are paid in absolute amounts, resulting in additional distortions in remuneration.

SRC will thus streamline allowances to progressively achieve a proportion of basic salary to gross salary that is no less than 60 per cent, while taking into account the impact on pension.

“Allowances will be paid in absolute amounts and not as a percentage of the basic or gross salary, unless explicitly advised by SRC,” she said.
Pay overlaps

SRC will issue an advisory on streamlining of allowances to progressively attain the desired proportion of basic salary to gross salary to be no less than 60 per cent.

“SRC will issue an advisory on conversion of the allowances that are currently paid as a percentage of the basic salary into absolute amounts, while ensuring consistency across the public service,” she said.

Double compensation was also identified, where there has been payment of allowances for purposes already salaried for in relative worth of a job or whose purpose overlaps with that of the basic salary.

She said the gross remuneration package should not distort the relative worth of a job, thus, allowances will not be paid for purposes already compensated for in the basic salary.

“SRC will identify and streamline allowances that are already compensated in the relative worth of jobs,” she said.

The review will also ensure management of allowances is transparent, fair and equitable across the public service and to create predictability in remuneration and benefits.

“The ability to pay higher allowances by any public service institution will not be sufficient justification for the increase in allowances, if it means that one group of public service employees will earn a gross remuneration package that is out of step with those of comparable groups of public officers,” explained Mengich.

She said disparities in allowances will be progressively harmonised, taking into account the relative worth of jobs, the need to facilitate attraction and retention of requisite skills in different sectors in the public service, as well as affordability and fiscal sustainability.

SRC will ensure institutions are advised on a gross remuneration package that is not out of step with those of comparable groups. There will also be categorisation of allowances.

Mengich explained that standardisation and categorisation of allowances payable in the public service provides a control framework for paying allowances and removes inconsistencies.

Allowances categories will include house allowance, provided to public officers to cater for accommodation or rent in addition to the wages or salary of the employee pursuant to Employment Act 2007 Section 31(1).

However, as per Section 31(2), this does not apply to an employee whose contract of service contains a provision that consolidates, as part of the basic wage or salary, an element intended to be used by the employee as rent.

It will also not apply when it is the subject matter of or is otherwise covered by a Collective Bargaining Agreement (CBA), which provides for consolidation of wages.

Other allowances are commuter, job-related, task-related and labour market adjustment.

Institutions will be required to classify all allowances into the five categories and submit the list to SRC, which will in turn set, review and advise on purpose, eligibility criteria, rate and scope.

Officers working out of their duty station will be entitled to a facilitative allowance at rates set and advised by SRC and standardised across the public service, subject to affordability and fiscal sustainability.