Kenya Tea Growers Association & 97 others v Attorney General & 10 others (Petition 38, 34, 35, 49 & 50 of 2014 (Consolidated)) [2022] KEELRC 4124 (KLR)
The bottom line
#Kenya's Employment and Labour Relations Court declared major parts of the NSSF Act 2013 unconstitutional, meaning workers with better pension schemes cannot be forced into NSSF.
What this practically means
#Executive summary
#Questions the Court framed
#The issues the Court set itself to decide, in its own words.
- 1.Whether there was sufficient public participation as envisaged under article 10 of the Constitution of Kenya 2010 prior to the enactment of the NSSF Act No 45 of 2013
- 2.Whether the NSSF Act No 45 of 2013 has implications on County Finances and therefore the Bill ought to have been tabled before the Senate prior to its enactment in terms of articles 205(1) and 110 of the Constitution
- 3.Whether the NSSF Act No 45 of 2013 violates the constitutional rights of the petitioners' members as set out in the consolidated petition
- 4.Whether the NSSF Act No 45 of 2013 is in conflict with the provisions of the Competition Act
- 5.Whether the petitioners are entitled to the reliefs sought
- 6.Who should bear costs
Key legal issues
#Sufficiency of public participation in the enactment of the NSSF Act 2013
Public participation was sufficient; the petitioners failed to discharge the initial burden of proving non-involvement, so the presumption of legality of the Act applied
The court held that petitioners bear the initial burden of proving they were not involved in any reasonable public participation process before the evidential burden shifts to respondents. Stakeholder forums at KICC, COTU and FKE meetings and a Naivasha retreat were documented, with over 4,500 participants. The petitioners, representing the formal sector, attended and did not dispute attendance; the informal sectors they sought to represent had not placed their own objections.
Whether the Act required Senate involvement under articles 110 and 205(1)
The Act concerns county government finances; failure to involve the Senate rendered the Act null and void ab initio
Applying the Supreme Court's Advisory Opinion No 2 of 2013, the court found that the Act deals with matters of concurrent national and county jurisdiction including finance, budget and planning, and public service, because it imposes mandatory pension schemes on public officers including county government employees as employers. Though the Act avoids mentioning county governments expressly, county governments as employers must make contributions from their budgets. Non-involvement of the Senate was therefore fatal to the Act.
Constitutionality of section 13 (Board remuneration approved by the Cabinet Secretary)
Section 13 is unconstitutional because remuneration payable out of public funds must be set by the SRC under article 230(4)
The court traced the SRC's mandate under article 230(4)(a) and the SRC Act, and relied on Kudhehia Workers v SRC to hold that state corporation funds are public funds. Since remuneration of Board and committee members under the NSSF Act is drawn from members' contributions which comprise public funds, the Cabinet Secretary cannot arrogate to himself the SRC's constitutional mandate. For checks and balances the SRC's role is imperative.
Constitutionality of section 19(2) (registration as precondition for accessing public services)
Section 19(2) is unconstitutional to the extent it predicates access to undefined public services on Fund registration
The court applied the article 24 limitation analysis, including the proportionality test from Kenya Human Rights Commission v Communications Authority. It found no legitimate purpose served by linking registration to undefined dealing with or access to public services; the Fund can achieve its objective by encouraging registration through less restrictive means. The precondition violates articles 21(1), 47(1) and 232(1).
Mandatory registration and contributions under section 20 for members of superior schemes
Section 20 violates the free choice of employees already covered by superior contributory schemes and is declared null and void
The court accepted, consistent with RBA's submissions, that employees with superior pension schemes exceeding the statutory 12% should not be compelled to register and contribute to NSSF. It found no constitutional justification to deny contributors choice of pension scheme, contrary to article 49, but found no discrimination in the wider sense since section 26 provides for voluntary registration of the self-employed and others.
Conflict of the Act with the Competition Act
The Act gives NSSF a monopoly in pension and social security provision, conflicting with article 10(1)(b) and (c) as read with section 3 of the Competition Act
The court examined the object of the Competition Act, including protecting consumers and promoting effective competition in markets. It found that the impugned Act favours NSSF over other pension providers as social security providers in the entire country, and its implementation would kill or stifle other pension and social security schemes across the country.
Legal principles established
#- A Bill affecting the finances of county governments must be considered by the Senate under articles 110 and 205(1); failure to involve the Senate in enacting such a Bill renders the resulting Act null and void ab initio
- Section 13 of the NSSF Act, which allows the Cabinet Secretary rather than the SRC to approve remuneration of Board and committee members, is unconstitutional as it usurps the SRC's mandate under article 230(4)
- A statutory precondition tying access to public services to registration with the Fund is an unjustifiable limitation of rights
- Mandatory registration and contribution to NSSF denies contributors with superior alternative pension schemes their freedom of choice
- An Act granting the Fund a monopoly in pension and social security provision conflicts with the Competition Act
Court orders
#- 1.A declaration that the NSSF Act No.45 of 2013 has implications on County Finances and therefore the Bill ought to have been tabled before the Senate prior to its enactment in terms of articles 205(1) and 110 of the Constitution and to this extent the Act is null and void
- 2.A declaration that the NSSF Act No 45 of 2013 provisions are inconsistent with article 10 (1)(b) and (c) of the Constitution as read with section 3 of the Competition Act by giving the Fund a monopoly in the provision of pension and social security services in the country and to this extent is unconstitutional, null and void
- 3.A declaration that section 13 of the NSSF Act is in conflict with article 230(4) of the Constitution and is therefore null and void
- 4.A declaration that section 19(2) of the NSSF Act is in conflict with articles 21(1), 47(1) and 232(1) of the Constitution and to that extent unconstitutional, null and void
- 5.A declaration that section 20 of the NSSF Act violates rights of employees and employers' free choice contrary to article 49 of the Constitution and is hereby declared null and void
- 6.An order restraining the 1st and 2nd respondents from applying the NSSF Act No 45 of 2013 on the petitioners' members (or any other employees who have adequate alternative pension or social security schemes) unless they opt in
- 7.An order of injunction prohibiting and restraining the respondents from demanding, compelling or requiring mandatory registration, enrolment or listing of any employer or employee to register, enroll or list and contribute their earnings or any part thereof in terms of the NSSF Act No 45 of 2013
- 8.Each party shall bear own costs
The bench
#One judgment of the whole court — no separate or dissenting opinions.
Wrote the judgment
Wrote the judgment
Wrote the judgment
- Jurisdiction invoked
- Original constitutional jurisdiction under Article 165 read with Article 2(4) of the Constitution of Kenya 2010; the judgment does not expressly state the invoking provision
- Consolidated with
- Petition No. 35 of 2014 (consolidated petitions; one petition filed by a union representing employees of county governments)
Relief refused
#Declaration that the entire NSSF Act 2013 is null and void ab initio
Public participation was found to have been sufficient; the presumption of legality of the Act was not displaced
Declaration that sections 20(2), 17, 27, 35(4), 37(1), 18(2), 72 and 49(2) of the NSSF Act are unconstitutional
The court found these provisions lawful, reasonable and justifiable or complementary to the regulatory framework
Costs of the petition to the petitioners
The matter raised public interest concerns
Costs
Each party shall bear own costs.
Quotable passages
#Verbatim from the judgment, each located to the page it appears on in the official PDF — so these can be cited and checked directly.
Consequently, failure by the national assembly to involve the senate in the process of enacting the bill was fatal to the New Act. This court finds so without much hesitation and declares that the NSSF Act No 45 of 2013 is null and void abinitio for failure to involve the senate in its enactment
A declaration that the NSSF Act No.45 of 2014 has implications on County Finances and therefore the Bill ought to have been tabled before the Senate prior to its enactment in terms of articles 205(1) and 110 of the Constitution and to this extent the Act is null and void;
An order of injunction is hereby issued prohibiting and restraining the respondents by themselves, their servants, agents, assigns or any person claiming through them or otherwise from demanding, compelling and or requiring mandatory registration, enrolment or listing of any employer or employee
It is the considered finding by the court that the petitioners did not discharge their onus of proof for the burden of rebuttal to shift to the respondents. Therefore, the presumption of legality of the NSSF Act No 45 of 2013 applies in the present case and the court finds that indeed there was reasonable public participation in the enactment of the Bill.
We find and hold that section 13 of the NSSF Act, 2013 is unconstitutional.
We find and hold that section 19(2) of the NSSF Act, 2013 is unconstitutional to the extent of its preconditions and restrictions as a precondition of dealing with or accessing public services undefined under the Act.
there is no constitutional justification to deny contributors their choice of pension scheme to subscribe to as the NSSF Act, 2013 has done which is contrary to article 49 of the Constitution
For reasons outlined above, each party shall bear own costs.
Issues in the judgment
#The final orders misdescribe the Act as 'NSSF Act No.45 of 2014' although the impugned Act throughout the judgment is the NSSF Act No 45 of 2013
The final order declares section 20 unconstitutional by reference to 'article 49 of the Constitution', an article dealing with rights of arrested persons, which appears to be a drafting error given the court's reasoning on free choice of pension scheme
Inconsistent naming of the Competition Act in the final orders ('the Competition Authority Act') versus the body of the judgment
Typographical error in the FKE stakeholders meeting date ('August 23, 2022') in the list of participation evidence, which predates the enactment
The court records reliance on article 49 (rights of arrested persons) for freedom of choice of pension scheme while the submissions and pleadings invoke articles 40, 41 and 46
Key timeline
#Practical implications
#Frequently asked questions
#Cite this brief
#Cite this brief
Caselaw, "Kenya Tea Growers Association & 97 others v Attorney General & 10 others (Petition 38, 34, 35, 49 & 50 of 2014 (Consolidated)) [2022] KEELRC 4124 (KLR)", Case Analysis (2022). Petition No. 35 of 2014 (Consolidated). Source: https://new.kenyalaw.org/akn/ke/judgment/keelrc/2022/4124/eng@2022-09-19
Suggested citation format for research notes or client memos. Always verify the original judgment before relying on any point.