The Supreme Court of Kenya has issued a major blow to the now defunct National Health Insurance Fund (NHIF) after ruling that its employees are public officers and the Salaries and Remuneration Commission (SRC) has authority over their remuneration.
In a landmark ruling issued on Friday, May 30, the judges settled a dispute between NHIF, the Kenya Union of Commercial Food and Allied Workers (the Union), and the SRC over the validity of collective bargaining agreements (CBAs) negotiated without SRC’s input for the period 2013-2015.
Despite the SRC’s guidelines requiring public institutions to seek its advice on salaries and benefits, NHIF and the Union proceeded with negotiations independently.
When they later submitted the CBA to the SRC, the commission rejected the proposed salary increases, citing unsustainability and non-compliance with its directives, and recommended lower percentage increases and allowances, which the Union found unacceptable.
The core legal issue was whether NHIF employees qualify as public officers and whether the Salaries and Remuneration Commission (SRC) should advise on their remuneration.
The matter was initially heard by the Employment and Labour Relations Court (ELRC), which ruled in favour of NHIF and the Union, stating that SRC’s role was purely advisory and should not interfere with collective bargaining rights.
However, SRC appealed the decision, and the Court of Appeal overturned the ELRC ruling. The appellate court held that NHIF employees are public officers, given that NHIF is a state corporation, and therefore fall under SRC’s oversight.
The court further ruled that while collective bargaining is permissible, NHIF is constitutionally required to consult the SRC, and its advice must be considered.
NHIF’s Management Board escalated the matter to the Supreme Court, which on May 30 upheld the Court of Appeal’s ruling.
“In the above context, we note that NHIF is a State corporation under Section 2 of the State Corporations Act by virtue of being established under an Act of Parliament, the NHIF Act. By parity of reasoning, therefore, the Appellant is bound,” the ruling read in part.
Following the ruling, NHIF has been bound to consult and adhere to SRC’s salary guidelines and cease making any salary decisions without SRC's input.
Any salary agreements made without SRC’s approval have no legal effect as per the Supreme Court's ruling. The SRC ensures financial discipline among public institutions, preventing unsustainable salary increments among civil servants.
