The Supreme Court has reversed a Court of Appeal ruling that allowed the government to implement the NSSF Act of 2013.

In a ruling delivered on Wednesday, February 21, the seven judges led by Chief Justice Martha Koome reviewed a decision that allowed the government to continue implementing the provisions of the Act despite an earlier ruling that it was unconstitutional.

The case to determine its constitutionality will now head back to the Appellate Court to extend what has been a protracted tussle between the state and the employees opposing the Act.

The tussle started shortly after the enactment of National Social Security Fund Act 2013 (NSSF Act 2013) in 2013. 

Under the new law, all employers were required to register under NSSF regardless of whether or not they had their own pension schemes and handed the state power to revise contribution rates.

Following the enactment, employees and employers filed five petitions challenging its constitutionality and raised questions on its implications to human rights. 

Among the employees who challenged the law include members of the Kenya Tea Growers Association and 14 other employer and employee associations. Their petitions were then consolidated into one case initially heard at the Employment and Labor Relations Court (ELRC) at the High Court level.

When High Court Termed NSSF Law Unconstitutional

The Labour Court ruled that the NSSF Act of 2013 was unconstitutional and thereby annulled it, barring the state from implementing it.

In its verdict, the Labour Relations court ruled that the Act had implications on County Governments’ finances, and therefore ought to have been tabled before the Senate.

Also Read: Ruto Dragged to Court Over New NSSF Deductions

The judge also asserted that the provision of social security through resource allocation was a duty of the State and not the registered members. 

But NSSF appealed against the ruling at the Court of Appeal in a case where a three-judge bench ruled that the ELRC did not have the jurisdiction to hear a case touching on constitutional validity of the NSSF Act 2013. According to the Appellate Court, the issue fell squarely within the jurisdiction of the High Court. 

The CoA also found that the ELRC erroneously concluded that the concurrence of the Senate and National Government was required in enacting the NSSF Act, 2013.

Also Read: NSSF Announces Higher Deductions for Employees

Consequently, the Appellate Court allowed the State to continue implementing the contested Act. Related to the decision is the recent adjustment of NSSF rates announced in January 2024. 

Supreme Court Pronounces Itself on NSSF Law

The case would later escalate to the Supreme Court, with the employees and employers in the case requesting that the case be returned to the High Court for fresh hearing.

After their appeal, the judges have now ordered that the case be heard afresh at the Court of Appeal.

In the ruling, the Apex Court found that the ELRC had jurisdiction to determine the constitutional validity of the NSSF Act 2013. 

“The case is hereby remitted to the Court of Appeal to determine the substantive merits of the ELRC Judgment on an urgent basis,” the Supreme Court judgement read in part.

In addition, the Supreme Court found the Court of Appeal judges were wrong in proceeding to delve into the ruling by the ELRC even after finding that the court had no jurisdiction in the matter.

“After declaring the ELRC Judgment and Proceedings a nullity, the Court of Appeal wrongfully assumed original jurisdiction by determining the concurrence issue in exclusion of other grounds challenging the validity of the NSSF Act 2013; and ii. Where the Court of Appeal determines that a trial court has acted without jurisdiction, it has to remit the case to the court with jurisdiction without going into the merits of the dispute,” the Apex Court ruled.

Following the ruling, the NSSF deduction rates announced in January now face a fresh hurdle, with the employees determined to seek redress in the Court of Appeal.

As per the ruling by CJ Koome and the entire Supreme court bench, the Court of Appeal will delve into the concerns raised by the ELRC about its unconstitutionality.