TSC Third Party Transactions [+PDF Download]

TSC Third-Party Transactions: Streamlining Check-Off Facility

In Kenya, the Teachers Service Commission (TSC) oversees third-party transactions, ensuring adherence to strict criteria for admission and engagement.

Here’s a comprehensive guide to the process and requirements for entities seeking to participate in the TSC check-off facility:

Admission Requirements

Entity Eligibility
- Possession of an Income Tax (PIN) Certificate.
- A Tax Compliance Certificate from the Kenya Revenue Authority.
- Certificate of Incorporation or Registration.
- Deduction Code Holder Authorization Letter from DPSM.
- Trading Licenses issued by relevant Government Agencies.
- By-Laws for SACCOs and Affiliated Social Welfare Associations.
- Letter of confirmation from Regulatory Authority of the firm.
Operational Criteria
- Minimum of five (5) years of operation in Kenya.
- Certified audited accounts or latest financial statements.
- Letter of Recommendation from the Regulatory Authority.
- List of at least three (3) government institutions where the entity has been granted a check-off facility system.
- Evidence of presence and branch network in at least fifteen (15) Counties, except for region-based cooperative societies.

Engagement Terms

Third parties admitted into the Check-off Facility must execute an agreement setting out the terms and conditions, including obligations, period of engagement and renewal clauses, conditions of engagement, termination clauses, review clause, and fees payable.

Online T-Pay (Teachers-Pay) System

Efficiency Enhancement
- The T-Pay application platform enables employees and third-party firms to transact check-off deductions, enhancing management efficiency.
- It enforces the one-third rule as per the provisions of the Employment Act (2007).
Fraud Prevention
- The system minimizes fraudulent transactions through built-in controls.
- Employees have control over third-party deductions against their salary.
Data Management
- Third-party firms can manage their data, minimizing errors and enhancing accountability.
- Real-time data capture reduces transaction turnaround time and operational costs.

User Responsibilities

Employees must initiate transactions with the preferred third-party firm, approve deductions, safeguard their online T-Pay system password, provide authentic documents, and understand contract terms before signing.

Third-Party Responsibilities

Obtain legitimate authority from employees before transacting.
Safeguard employee data and use it only for the intended purpose.
Submit accurate data to the Commission and reconcile deduction requests to avoid duplication.

Commission Obligations

Extract approved data on T-Pay application, verify, and upload it onto the payroll.
Receive and forward complaints from employees to the relevant department for action.
Stop unauthorized deductions and blacklist/deregister fraudulent entities.
Reduce from the 3rd party’s subsequent monthly remittances any fictitious, inaccurate or irregular deduction erroneously effected on an employee’s salary whether caused by the 3rd party’s negligence or otherwise and refunded to the affected employee;
The Commission reserves the right to verify and confirm the authenticity and accuracy of any data submitted by 3rd parties before the same is affected on payroll.

One Third (1/3) Rule

The Commission shall only effect deductions (both statutory and voluntary) up to a maximum of two thirds (2/3) of an employee’s basic salary through the checkoff facility.

It shall be the responsibility of the 3rd parties to ensure that the proposed deduction(s) from individual employees meet the one third (1/3) requirement as provided for under the Employment Act (2007) and to confirm the ability of the employee to meet his/her obligation.

Trade Union Dues And Agency Fee

A trade union which has signed a recognition agreement with the Commission as required by law shall have its dues deducted in accordance with Part VI of the Labour Relations Act 14 of 2007 from the salaries of its members who have voluntarily joined, signed and submitted a prescribed membership form and authorized union dues to be deducted at source by the Commission.

he Commission shall deduct and pay to a trade union an agency fee from the salary of each union sable employee, who is not a member of the union, but who has benefited from a Collective Agreement negotiated and concluded between the union and the Commission in accordance with Part VI of the Labour Relations Act 14 of 2007

Stop Order

It shall be the responsibility of a Third Party to stop deductions of an employee who has discharged his/her liabilities with the firm.

A third party shall stop deductions for a discharged liability not later than three (3) days from the date of such clearance by the employee.

In the event that a third party fails to stop a deduction later than three days from the date of clearance, the Commission, upon receipt of authenticated instructions from the employee, shall stop the deduction without reference to the third party.

In the event a stop order that is not effected and an over payment is made to the third party, the same shall be recovered from the third party’s subsequent remittance and refunded to the employee.

An employee may discontinue voluntary payroll deductions by providing a written notification to the Third-Party firm.

For the purposes of this sub-section, voluntary contribution shall not include the un-discharged liabilities of the employee.

The Commission reserves the right to stop any deduction regardless of whether the third party has issued a stop order or not.

In conclusion, the TSC’s third-party transaction process ensures transparency, accountability, and efficiency, benefiting both employees and third-party firms involved.

Third-Party-Guidelines-2021 Download