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ELRCPartially AllowedPetition dated 18th May, 2015· [2016] KEELRC 388 (KLR)

National Hospital Insurance Fund, Management Board v Kenya Union of Commercial, Food and Allied Workers & 2 others [2016] KEELRC 388 (KLR)

Employment and Labour Relations Court
Invalid Date
7,541 words in judgment
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The bottom line

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Kenya's employment court ruled that NHIF staff are not 'public officers', so the Salaries and Remuneration Commission cannot dictate their pay.

What this practically means

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Executive summary

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The National Hospital Insurance Fund petitioned the Employment and Labour Relations Court seeking declarations that a strike notice issued by the 1st respondent union was unlawful, that the Fund does not fall within the mandate of the Salaries and Remuneration Commission, that the SRC Regulations 2012 offend the Labour Relations Act, and that it be at liberty to conclude the July 2013 CBA. The Fund argued its staff were not public officers since its income derives from members' contributions and investments rather than the Consolidated Fund or parliamentary appropriations; the union supported this position, while the SRC contended that the Fund is a state corporation whose monies are public funds and whose staff are public officers under Article 260. The court framed three main issues: the SRC's mandate over the petitioner, whether the 2012 Regulations offend the spirit of collective bargaining, and whether the July 2013 CBA could be concluded. The court held that a public office is one whose remuneration is payable directly from the Consolidated Fund or money provided by Parliament; since NHIF's funds are members' contributions, its staff are not public officers and the SRC has no mandate over it. The SRC's role over other public officers is advisory only, and purporting to fix their salaries exceeded its jurisdiction. The court found the petitioner had been strait-jacketed in negotiations and that the insistence on binding advice offended ILO Convention No. 98 and Article 2(6) of the Constitution. The court granted declarations that the petitioner is outside the SRC's mandate, that the Act and Regulations are null and void to the extent they confer jurisdiction to set remuneration of public officers other than state officers, that the SRC's insistence that its advice is binding is unconstitutional, and that the petitioner may conclude the July 2013 CBA. The strike-related prayers were not granted. There was no order as to costs.

Key legal issues

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01

Whether NHIF and its employees fall under the SRC's mandate

Holding

They do not; the petitioner's funds are members' contributions, not public funds, and its staff are not public officers remunerated by Parliament

Reasoning

The court examined Article 230(4) and Article 260 definitions of public office and public officer, requiring remuneration payable directly from the Consolidated Fund or money provided by Parliament. NHIF's income derives from mandatory member contributions and investments under sections 15, 34 and 35 of the NHIF Act, with no parliamentary appropriation. Members' contributions are private property, not public funds, so the Fund's staff fall outside the SRC's constitutional mandate.

p. 11
02

Whether the SRC Regulations 2012 offend the spirit of collective bargaining

Holding

Yes, to the extent they purport to confer jurisdiction on the SRC to set or restrict remuneration for public officers other than state officers

Reasoning

ILO Convention No. 98 requires voluntary negotiation; the ILO Committee of Experts report warns against intervention cancelling or modifying freely concluded collective agreements. The correspondence showed the petitioner was strait-jacketed, merely communicating the SRC's decisions, which was not negotiation. Since the SRC's role over non-state officers is advisory, it cannot insist its advice be adopted without modification; the regulations, deriving validity from the Constitution, cannot enlarge the SRC's jurisdiction without constitutional anchoring.

p. 12
03

Whether the petitioner may conclude the July 2013 CBA

Holding

Yes, the petitioner is at liberty to conclude the CBA reached in July 2013 with the 1st respondent

Reasoning

Having found that the SRC lacks jurisdiction over the petitioner and that its binding insistence was unconstitutional, the court declared the petitioner free to conclude the CBA negotiated in July 2013 with the 1st respondent.

p. 14

Legal principles established

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  • Public officers are those whose remuneration is payable directly out of the Consolidated Fund or money provided by Parliament; state corporations funded from member contributions are outside the SRC's mandate
  • The SRC may set remuneration only for state officers; its role over other public officers is advisory only
  • Insisting that advisory recommendations on remuneration bind collective bargaining parties is unconstitutional under Article 2(6) read with ILO Convention No. 98

Court orders

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  1. 1.A declaration that the petitioner as constituted under the Act does not fall under the mandate of the 2nd respondent
  2. 2.A declaration that the Salaries and Remuneration Commission Act and Salaries Remuneration Commission regulations 2012, in so far as they purport to confer on the 2nd respondent jurisdiction to set or restrict remuneration and benefits for public officers other than state officers, are inconsistent with the Constitution hence null and void to that extent
  3. 3.A declaration that the insistence by the 2nd respondent that its advice to the petitioner is binding is counter to ILO Convention No. 98 and, by virtue of article 2(6) of the Constitution, unconstitutional
  4. 4.A declaration that the Petitioner be at liberty to conclude the Collective Bargaining Agreement reached in July 2013 with the 1st respondent
  5. 5.No order as to costs

Authorities

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Legislation

  • Constitution of Kenya, 2010Articles 2(6), 41, 41(5), 156, 230, 230(4), 230(5), 252(1)(d), 259, 260, 201
  • National Hospital Insurance Fund ActSections 3, 11, 15, 34, 35, 36
  • Salaries and Remuneration Commission Act, 2011Sections 11, 26
  • Labour Relations Act, 2007Sections 57, 60, 69(b), 76, 78(1)(f), 81(3), 4th Schedule
  • Public Finance Management ActSection 2
  • Public Officers Ethics Act, 2003Section 2
  • Salaries and Remuneration (Remuneration and Benefits of State and Public Officers) Regulations, 2012Regulations 6, 9, 10, 18
  • ILO Convention No. 98 (Right to Organize and Collective Bargaining, 1949)Article 4

Cases cited (6)

  • Chemelil Sugar Company Ltd & 2 Others v. Kenya Union of Sugar Plantation & Allied Workers
    (2014) eKLR
  • National Union of Water & Sewerage Employees v. Mathira Water & Sanitation Company & 2 Others
    (2013) eKLR
  • Kudheiha Workers v. SRC
    (2014) eKLR
  • Engineering Workers Union v. Narcol Aluminium Rolling Mills Ltd
    (2013) eKLR
  • BIFU v. Cosmopolitan Sacco Society
    (2015) eKLR
  • Kenya Plantation and Agriculture Workers Union v. Unilever Tea (K) Ltd
    (2014) eKLR
Jurisdiction invoked
Article 162(2) of the Constitution (employment and labour relations court jurisdiction); petition under the Constitution and Labour Relations Act, 2007

Key timeline

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Practical implications

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Frequently asked questions

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Cite this brief

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Cite this brief

Caselaw, "National Hospital Insurance Fund, Management Board v Kenya Union of Commercial, Food and Allied Workers & 2 others [2016] KEELRC 388 (KLR)", Case Analysis (). Petition dated 18th May, 2015. Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2016/388/eng@2016-03-18

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