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Court of AppealAllowedCivil Appeal No 156 of 2016· [2024] KECA 419 (KLR)

Salaries and Remuneration Commission v National Hospital Insurance Fund, Management Board & 2 others (Civil Appeal 156 of 2016) [2024] KECA 419 (KLR)

Court of Appeal
26 April 2024
ASAsike-MakhandiaJMJamila MohammedSKS. ole Kantai
9,161 words in judgment
View original judgmentRead on Kenya Law Watch case
AI-assisted case brief
·~37 min to read original · ~4 min brief

The bottom line

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Kenya's Court of Appeal confirmed that state corporation employees are public officers, so the SRC's binding advice must be obtained before any salary decisions.

What this practically means

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Executive summary

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This Court of Appeal decision arises from ELRC Petition No. 40 of 2015, in which the National Hospital Insurance Fund sought declarations that it and its employees do not fall under the mandate of the Salaries and Remuneration Commission, that the SRC Act and 2012 Regulations were unconstitutional insofar as they conferred jurisdiction over non-state public officers, and that NHIF was free to conclude its 2013 CBA with the Kenya Union of Commercial and Allied Workers. Abuodha, J. granted those declarations, holding that SRC's role over other public officers is merely advisory and non-binding. The SRC appealed, compressing eight grounds into three issues: whether NHIF falls within SRC's mandate, whether the ELRC interfered with SRC's constitutional mandate, and whether SRC's advice under article 230(4) is binding. The Court of Appeal allowed the appeal in full. Applying article 260 of the Constitution read with the Public Officer Ethics Act, the court held that employees of state corporations are public officers whose remuneration falls under SRC's jurisdiction under article 230(4)(b) and section 11 of the SRC Act. It further held, relying on article 259(11) and its earlier decision in Teachers Service Commission v KNUT, that SRC's advice is not cosmetic but mandatory and binding, and must be sought before any offer on basic salary is made in collective bargaining. The court set aside the ELRC judgment and all consequential orders in their entirety, and as a public interest matter ordered each party to bear its own costs.

Key legal issues

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01

Whether employees of state corporations such as NHIF are public officers under article 260 of the Constitution

Holding

Employees of state corporations are public officers under article 260, and their remuneration falls within the SRC's jurisdiction under article 230(4)(b) and section 11 of the SRC Act.

Reasoning

The court read article 260 holistically with the Public Officer Ethics Act and affirmed that state corporations are agencies of the national government performing public functions; their remuneration is payable from money provided by Parliament or retained under article 206(1)(b). Relying on prior ELRC and High Court authority, the court held the constitutional definition captures state corporation employees as public officers.

p. 14
02

Whether the advice given by the SRC under article 230(4) is binding

Holding

SRC's advice on remuneration of public officers is binding and must be sought before a CBA offer on basic salary is made.

Reasoning

Article 259(11) requires that a function exercisable on advice be performed only on that advice. The Constitution contains no provisions of mere advice lacking binding force; rendering SRC's advisory role non-binding would render article 230(5) idle and introduce a pick-and-choose discretion in governance. The advice is advice in rem, binding all persons and state organs, without violating commission independence under article 249(2).

p. 18
03

Whether the SRC has a role in the negotiation of a CBA for the 1st respondent

Holding

The SRC has a mandatory role in CBA negotiations involving public officers; the employer must seek SRC advice before tabling proposals to the union.

Reasoning

While a union may negotiate with the employer, terms and conditions touching remuneration of public officers can only be completed after consultation with SRC as required by the Constitution and the SRC Act. The giving of advice on remuneration was one of the reasons SRC was created, and its role is mandatory, not cosmetic.

p. 15

Legal principles established

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  • Officers and persons serving or working in state corporations are public officers within the meaning of article 260 of the Constitution, and their remuneration and benefits are subject to the jurisdiction of the SRC.
  • Advice of the SRC on remuneration of public officers is binding and must be sought before any offer on remuneration is made in a collective bargaining process.
  • A court cannot usurp the role or functions of a constitutional body unless that body has been found to have failed to carry out its functions.

Court orders

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  1. 1.Set aside in entirety the judgment of the ELRC dated March 18, 2016 delivered in Petition No. 40 of 2015
  2. 2.Set aside in entirety all consequential orders and decree ensuing from the ELRC judgment
  3. 3.Each party will bear its own costs of the appeal

Authorities

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Legislation

  • Constitution of Kenya, 2010article 2(6), 10, 230, 232, 249, 259, 260, 206(1)(b)
  • Salaries and Remuneration Commission Act, No. 10 of 2011sections 2, 11, 26
  • Salaries and Remuneration Commission (Remuneration and Benefits of State and Public Officers) Regulations, 2013rule 18
  • Salaries and Remuneration Regulations, 2012
  • Public Officer Ethics Act, 2003section 2, 3
  • Labour Relations Act, 2012article 41(5) reference
  • NHIF Actsection 3
  • State Corporations Actsection 3
  • Exchequer and Audit Act
  • Teachers Service Commission Actsection 37(3)
  • Presidential Retirement Benefit (Amendment) Act No. 9 of 2013
  • Court of Appeal Rulesrule 31(1)
  • ILO Convention on the Right to Organize and Collective Bargaining, 1949 (No 98)

Cases cited (16)

  • Peters vs. Sunday Post Limited
    [1958] EA 424
  • Selle and Another v Associated Motor Boat Company Limited & 2 others
    [1968] EA 123
  • National Union of Water & Sewerage Employees v Mathira Water and Sanitation Company Limited & 2 others
    [2013] eKLR
  • Kenya Union of Domestic, Hotels, Education and Allied Workers (Kudhehia Workers) v Salaries and Remuneration Commission
    [2014] eKLR
  • Rogers Mogaka Mogusu v George Onyango Oloo & 2 others
    [2015] eKLR
  • Frederick Otieno Outa v Jared Odoyo Okello & 4 others
    [2014] eKLR
  • Chemilil Sugar Company Limited & 2 others v Kenya Union of Sugar Plantation and Allied Workers
    [2014] eKLR
  • Kenya National Commission on Human Rights (KNHCR) v Attorney General & Another
    [2015] eKLR
  • Teachers Service Commission v Kenya National Union of Teachers & 3 others
    [2015] eKLR
  • In the Matter of Advisory Opinion of the court, Constitutional Application No 2 of 2011
  • Communications Commission of Kenya & 5 others v Royal Media Services Limited & 5 others
    Petition Nos 14, 14A, 14B and 14C of 2014
  • Shaban Mohamud Hassan & 2 others v Shaban Mohamud Hassan & 3 others
    [2013] eKLR
  • Council of County Governors v Attorney General & another
    [2017] eKLR
  • Centre for Rights Education and Awareness & another v John Harun Mwau & others
    [2012] eKLR
  • South Dakota v North Carolina
    192 US 268
  • Chief Constable of North Wales Police v Evans
    [1982] 1 WLR 1155
On appeal from
Employment and Labour Relations Court
Petition No. 40 of 2015
Jurisdiction invoked
First appeal to the Court of Appeal under rule 31(1) of the Court of Appeal Rules

Key timeline

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Practical implications

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Frequently asked questions

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Later judgments citing this (9)

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Judgments in the corpus that rely on this one. Where the Court said how it treated the authority, that is shown.

Cite this brief

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Cite this brief

Caselaw, "Salaries and Remuneration Commission v National Hospital Insurance Fund, Management Board & 2 others (Civil Appeal 156 of 2016) [2024] KECA 419 (KLR)", Case Analysis (2024). Civil Appeal No 156 of 2016. Source: https://new.kenyalaw.org/akn/ke/judgment/keca/2024/419/eng@2024-04-26

Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.