The Employment and Labour Relations Court has ruled that former employees of the defunct National Health Insurance Fund (NHIF) who opt to retire rather than join the newly established Social Health Authority (SHA) are entitled to an exit package.
The court also affirmed that those absorbed into SHA will retain their NHIF salaries unless lawfully altered through negotiation.
In a ruling judgment delivered on July 29, Principal Judge Byram Ongaya declared that the transition under the Social Health Insurance Act (SHI Act) amounts to redundancy for NHIF staff opting for retirement.
“The option to retire by staff of the defunct NHIF rather than to get absorbed in the service of the first respondent is a classical situation of redundancy,” the court stated, stating that such employees must receive severance benefits in line with the Employment Act and established practices.
The petition, filed by Patrick Kiogora Mwirigi and two others, challenged the opacity of the transition process and the refusal to grant exit packages.
Court Ruling on Retirement Package for Ex-NHIF Staff
The court found that the respondents, SHA, the Public Service Commission, and the Attorney General had violated constitutional provisions on fair labour practices.
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Judge Ongaya noted that the denial of severance packages or reduction of salaries for staff transitioning to SHA would amount to discrimination.
Employees are entitled to equality before the applicable law on redundancy per Article 27 of the Constitution and fair treatment as provided under section 5 of the Employment Act
The court ruled that SHA must consult affected employees or their unions before making any changes to their terms.
“An employee cannot be absorbed by a new employer in a transfer of undertaking at a lower salary without consent,” the judge said.
The court directed SHA and the Public Service Commission to compute and pay exit packages to all NHIF staff choosing retirement.
Order on Continuing NHIF Staff Salary
It also ordered that those competitively recruited by SHA will continue to earn their previous NHIF salaries unless adjustments are made through proper consultations.
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This ruling is expected to set a precedent for how public sector transitions are handled, particularly regarding employee rights during structural reforms.
In another ruling on July 23, Justice Byram Ongaya ordered that staff previously working at NHIF who have been redeployed within government institutions must keep their pay unchanged until they exit public service.
The same applies to those absorbed by SHA, with all existing deployment letters to be revised accordingly to reflect this decision.
“Any letters already communicated to the staff of the defunct NHIF who have already been deployed within the wider public service be varied to reflect the retention of salary personal to self,” Justice Ongaya ruled.
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