TSC payroll check-off rules
Every loan repayment, SACCO contribution, insurance premium and union subscription deducted from a teacher’s salary passes through the Teachers Service Commission’s payroll check-off facility, managed through the T-Pay platform.
TSC’s guidelines on the check-off system set out not just how much can be deducted, but who is allowed to deduct it, how they get authorised to do so, and what happens when something goes wrong. This is the full picture.
Why These Guidelines Exist
TSC manages its payroll under a legal mandate derived from Article 237(1) of the Constitution, which establishes the Commission, and Article 237(2), which tasks it with registering, recruiting and deploying teachers.
The TSC Act No. 20 of 2012 further empowers the Commission to formulate policy and manage its payroll, while the Employment Act and Labour Relations Act require it, as an employer, to maintain sound industrial relations.
TSC first developed check-off management guidelines in 2014. After roughly six years of use, the Commission reviewed them — partly to address recurring problems, and partly because of the newly developed T-Pay platform. The rationale TSC gave for the review includes:
- Consistent, numerous complaints from teachers about irregular or unauthorised salary deductions by third parties.
- Third parties using fictitious, forged or inaccurate documents purportedly from teachers to justify deductions.
- Firms failing to verify a teacher’s identity through their Head of Institution before issuing loans — opening the door to impersonation and fraud.
- The rise of online and mobile loans issued without signed contractual agreements.
- Teachers failing to safeguard their T-Pay passwords, exposing themselves to fraud.
- Teachers signing loan contracts without fully reading or understanding them, then disputing the terms later.
- Third-party firms delaying or failing to stop deductions after a teacher has already cleared the debt.
The guidelines exist, in TSC’s own words, to streamline and regulate the check-off facility, establish enforcement mechanisms, and protect teachers from exploitation by third parties.
Key Definitions Teachers Should Know
- Check-off system: the payroll facility TSC uses to deduct a portion of a teacher’s salary for statutory and voluntary purposes.
- Third party: any company, firm or organisation that holds a government-issued deduction code and has met TSC’s requirements to access the check-off facility.
- Deduction code: a unique identifier issued by government authorising an entity to use the check-off facility.
- Stop order: an instruction — from either the third party or the employee — that TSC acts on to halt a specific deduction.
- Discharged liability: a debt or obligation that has been fully paid off.
- One-third (1/3) rule: the minimum net amount of basic salary a teacher must retain after all deductions.
- Ability: having at least one-third of basic salary available, or whatever threshold government sets, to accommodate a deduction.
The One-Third Rule
TSC will only permit deductions — statutory and voluntary combined — up to a maximum of two-thirds of a teacher’s basic salary through the check-off facility. In practice, this means a teacher must retain at least one-third of basic salary after every deduction, as required under the Employment Act (2007).
It is the third party’s responsibility — not just TSC’s — to confirm that a proposed deduction will not push a teacher below this floor before submitting it. Violating the one-third rule is explicitly listed among the offences a teacher or third party can be sanctioned for under these guidelines.
Union Dues and Agency Fees
- A trade union that has signed a recognition agreement with TSC can have its members’ dues deducted at source under Part VI of the Labour Relations Act No. 14 of 2007 — but only from members who have voluntarily joined, signed a prescribed membership form, and authorised the deduction.
- Separately, TSC deducts and pays an agency fee to a union from the salary of a “union-able” employee who is not a member of that union but still benefits from a Collective Bargaining Agreement (CBA) the union negotiated with TSC — also under Part VI of the same Act.
- Agency fee rates are set by each union’s own constitution and CBA terms and have differed between KNUT, KUPPET and KUSNET historically; because rates can shift between bargaining cycles, including under the 2025–2029 CBA, teachers should confirm the current figure with their specific union.
Third-Party Transaction Fees
Third parties pay TSC a monthly transaction fee for using the check-off facility, and must absorb this cost themselves rather than pass it to the teacher:
| Type of Organization | Transaction Fee |
|---|---|
| Commercial Banks and Microfinance Institutions | Sh100 per transaction per month |
| Insurance firms and Hire Purchase companies | 3% of total remittances per month |
| Savings and Credit Cooperatives Societies (SACCOs) | Sh20 per transaction per month |
| Social Welfare Associations (BBFs) | Sh20 per transaction per month |
| Trade Unions/Teachers’ Unions | Sh20 per transaction per month |
Read Also: TSC Promotion Interviews 2026: Scoring Guide, Dates and Documents Required
The Third Party Management Committee
TSC administers the check-off facility through a dedicated Third Party Management Committee, chaired by the Director of Human Resource Management and Development, with the Head of IPPD Division as secretary. Its membership also draws in representatives from ICT, Finance and Accounts, Legal, Labour and Industrial Relations, Risk Management, Integrity, and Corporate Communications, plus an additional officer designated by the HRM&D Director. A quorum is five members.
The Committee’s responsibilities include:
- Receiving and vetting all applications from prospective third parties.
- Maintaining records and documentation for each third party.
- Ensuring every admitted third party signs a formal contract with TSC.
- Evaluating third-party performance and preparing reports.
- Sanctioning or terminating contracts where necessary.
- Receiving employee complaints and forwarding them to the Audit Directorate.
- Building internal controls to prevent fraud on the check-off system.
- Acting on Audit Directorate investigation reports.
- Presenting quarterly reports to management on fraud incidents and the overall health of the check-off system.
How a Third Party Gets Admitted
To be admitted onto TSC’s check-off facility, an entity must provide:
- An Income Tax (PIN) Certificate.
- A Tax Compliance Certificate from KRA.
- A Certificate of Incorporation or Registration.
- A Deduction Code Holder Authorisation Letter from the Directorate of Personnel Management (DPSM).
- Relevant trading licences.
- By-laws (for SACCOs and affiliated welfare associations).
- A letter of confirmation from its regulatory authority.
Beyond these documents, the entity must also:
- Have operated in Kenya for at least five years.
- Provide certified audited accounts or recent financial statements.
- Provide a letter of recommendation from its regulator.
- Show at least three other government institutions where it already holds a check-off facility.
- Demonstrate a branch presence in at least 15 counties (an exception applies to region-based cooperative societies).
Every admitted third party signs a formal agreement with TSC covering obligations, the engagement period (renewable every five years, subject to a positive performance review), conditions, termination clauses, review terms, and fees payable. A successful applicant must pay the admission fee within 30 days, or the application lapses.
Renewal and Termination
Third parties must seek renewal of their admission every five years, following the same application procedure, and pay a renewal fee set by TSC.
Applying for renewal must happen at least three months before the current access period expires; failure to do so bars the firm from submitting fresh deduction requests, though existing deductions continue until they run their full term, after which the firm is deactivated from T-Pay.
TSC can terminate a third party’s access — with 14 days’ notice — where the firm:
- Fails to comply with statutory or government rules on deductions.
- Is affected by a rule change that makes a deduction illegal.
- Becomes bankrupt or is deregistered under the law.
- Engages in fraudulent or illegal practice.
A third party that is refused, barred, suspended or terminated can appeal in writing within 21 days.
How T-Pay Works
Teachers are required to:
- Initiate check-off transactions by sending their payslip online to their chosen third party.
- Approve captured transactions before they are loaded onto payroll.
- Safeguard their T-Pay password.
- Provide authentic documents when seeking check-off services.
- Read and understand a contract’s terms before signing.
- Notify TSC in writing when joining or withdrawing from a third party.
Third parties are required to:
- Obtain legitimate authority from the employee before transacting.
- Capture, adjust and stop deductions online as per the signed agreement.
- Upload a soft copy of the contractual agreement at the point of loading a loan onto T-Pay.
- Safeguard employee data under the Data Protection Act, 2019.
- Be accountable for the integrity of data they submit.
- Reconcile deduction requests against payroll by-products to avoid duplication.
- Undertake due diligence on the validity of submitted documents.
- Refund erroneous or irregular remittances to TSC on demand.
- Stop a deduction within three days of a discharged liability.
TSC’s role includes:
- Extracting, verifying and uploading approved T-Pay data onto payroll.
- Receiving and forwarding employee complaints for action.
- Stopping unauthorised deductions and notifying the relevant third party.
- Blacklisting and deregistering third parties found engaged in fraudulent deductions.
- Recovering fictitious, inaccurate or irregular deductions from a third party’s future remittances and refunding the affected teacher.
Stop Orders and What Happens If a Deduction Isn’t Halted
A third party must stop deducting once a teacher has discharged their liability, and must do so within three days of that clearance. If it fails to, the teacher can send TSC authenticated written instructions, and TSC will stop the deduction directly, without needing the third party’s cooperation.
Any overpayment collected during the delay is recovered from the third party’s next remittance and refunded to the teacher.
An employee may also discontinue a voluntary deduction at any time by notifying the third party in writing — though this does not apply to liabilities that remain undischarged. TSC reserves the right to stop any deduction regardless of whether a formal stop order has been issued.
Read Also: How to Contact TSC HR Directly: Official Email Addresses, Phone Numbers
Action Against Defaulters
Where a teacher defaults, a third party is expected to exhaust all avenues available to it, including legal action, and must notify any guarantor in writing of its intent to recover the debt. A teacher who wilfully or knowingly fails to meet an undischarged obligation commits misconduct and can face TSC disciplinary action.
Offences Under the Guidelines
The guidelines list specific acts as offences or misconduct within the check-off system:
- Submitting inaccurate or misleading data through T-Pay.
- Submitting forged documents, whether by the third party or the employee.
- Violating the one-third rule.
- Failing to stop a deduction for a discharged liability within the required time.
- Failing to notify a guarantor in writing before recovering a defaulted loan.
- An employee wilfully or knowingly failing to meet an undischarged obligation.
- Any act or omission that, in TSC’s view, contravenes the guidelines or any other law.
- Unauthorised access to an employee’s T-Pay account or the T-Pay system itself.
Where a breach is established, TSC can respond with a written warning, disciplinary proceedings against the employee, suspension of the third party from T-Pay, or an outright bar from the facility.
Important Things Readers Should Know
- The one-third rule protects your take-home pay — if it looks unusually low, check your T-Pay account for deductions you didn’t authorise.
- Never share your T-Pay password with anyone, including a loan agent.
- Insist on a signed, written contract — and keep a copy — before agreeing to any check-off loan.
- If a lender fails to stop a deduction after you’ve cleared a loan, you can write directly to TSC to have it stopped, without needing the lender’s sign-off.
- Report suspected fraud or unauthorised deductions to your TSC Sub-County Director’s office.
Read Also: TSC Interdiction Letter: The Official Format, Process and What Can Get It Reversed
Frequently Asked Questions on TSC payroll check-off rules
How much of my salary can legally be deducted?
Up to two-thirds of your basic salary through combined statutory and voluntary deductions — you must retain at least one-third.
What is the difference between union dues and an agency fee?
Union dues are paid by voluntary, signed-up members. An agency fee is charged to non-members who still benefit from a union-negotiated CBA.
How much does TSC charge SACCOs and unions per transaction?
Sh20 per transaction per month for SACCOs, social welfare associations, and trade/teachers’ unions; Sh100 for banks and microfinance institutions; 3% of remittances for insurance and hire purchase firms.
How does a company become an approved third party on T-Pay?
It must submit statutory documents (PIN, tax compliance, incorporation, deduction code authorisation), have operated in Kenya for at least five years, provide audited accounts, show existing check-off facilities with at least three other government institutions, and demonstrate presence in at least 15 counties.
Can I stop a deduction myself?
Yes — notify TSC in writing, especially where a third party has failed to stop a deduction for a loan you have already cleared.
What happens if a third party is found committing fraud?
TSC can issue a written warning, suspend it from T-Pay, or bar it entirely; a barred firm can appeal in writing within 21 days.
TSC payroll check-off rules.
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