CREDIT MANAGEMENT
Recovering Debt From
An Employee
By Wasilwa Miriongi
I
n my many years of debt collection
practice I have come across quite a
number of organizations that seem to
face this problem. One of my classmates
who runs an MPesa agency gave me a
list of about ten former employees who
made away with his money totaling
Kshs.1,000,000/=.
This should not surprise you as long as you
are using cash as a method of payment or
you are in an organization where cash
is handled in large amounts and with
frequency, issues of internal control will
occur and cases of stealing cash cannot
be avoided. It is more about our societal
values as well. A company director of
one leading insurance company while
lamenting about employee theft once said
“give me an honest person and I will hire
him straight away”
There could be many causes of employee
theft that I may not address in this article
but many organizations face this issue.
Companies sometimes overpay their
workers and occasionally even make
loans. This creditor-debtor relationship
between the employer and the employee
can cause frustration if the employee
becomes delinquent.
In most cases, you don't have a clear-
cut, fast and easy path for collecting debt
from an employee. Forceful solutions
such as wage garnishment usually run
afoul of the law. Filing a lawsuit may cost
you more money than the value of the
debt. This means your outlook for success
depends on the employee's willingness to
cooperate with you. Keep that in mind as
you proceed.
Guidelines to recovery of
employee debt
Ensure the employee agrees in writing
that they owe you money. Where he/
she does so, the employer may deduct
the amount owed from the employee’s
last salary and any other payments, such
It is important to capture enough informa-
tion in the employment contract as this may
come in handy in collecting the amount. No
matter how small your business or the num-
ber of employees you have, the labor law
states that you must give your employees a
written document that outlines in writing
the terms and conditions of their employ-
ment. Not doing so, can land you in hot wa-
ter somewhere along the line.
80 MAL29/19 ISSUE
as accrued annual leave, bonus, etc. Of
course, employment act must be observed
when making deductions from the
employee remuneration where applicable.
Most workers appreciate fair treatment
and reasonable accommodation, and by
winning their cooperation, you can avoid
the much more frustrating alternatives.
Approach the employee privately and try
to work out a voluntary repayment plan
that is feasible for the worker and your
company. In particular, seek out a plan
that fits the employee's personal budget.
If the employee won't repay the debt
to you, and you don't have a good
chance of winning a lawsuit, try to use
a debt collection agency. Debt collectors
specialize in this work and have tools and
tactics your company doesn't. Note that
you can only sell a well-documented debt.
The employer may opt to sue the employee
for damages in the civil courts. This is a
protracted and costly process. It may even
be throwing good money after bad, which
may dissuade many an employer from
pursuing. Of course, if the employee has
signed a proper acknowledgement of debt,
which may be used to obtain judgment,
the process may be simplified a little.
Before taking this route the employer
must ensure that employment contract
was duly followed. Simply pursue your
legal remedies with dispassion.
Also, be careful about any decision to fire
the employee. You can often do so legally,
but many exceptions exist and you want
to avoid a wrongful-termination lawsuit.
Focus any decision about continued
employment in terms of what is best for