By KPC Reporter
A Nairobi court has ruled that National Health Insurance Fund (NHIF) staff opting to retire under the country’s new health insurance law must receive exit packages.
In a judgment delivered on July 29, 2025, Justice Byram Ongaya of the Employment and Labour Relations Court found that the retirement option provided under the Social Health Insurance Act (SHI Act) amounted to redundancy.
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As such, staff of the defunct NHIF who choose to retire rather than be absorbed into the new Social Health Authority (SHA) or redeployed in the public service are entitled to severance packages under Section 40 of the Employment Act.
The case was brought by three petitioners; Patrick Kiogora Mwirigi, Angela Kiloko Mutuku, and Irene Wanja.
The trio challenged the SHA’s handling of the transition process.
They argued that the process lacked transparency, violated constitutional rights, and denied NHIF staff their rightful benefits.
Legislative silence
Justice Ongaya agreed, declaring that the SHA and the Public Service Commission (PSC) had failed to uphold fair labour practices as guaranteed under Article 41 of the Constitution.
He rejected the respondents’ argument that the SHI Act did not provide for exit packages, stating that legislative silence does not override constitutional and statutory entitlements.
The court also upheld the recommendations of a transition committee that had advised SHA to include budgetary provisions for voluntary separation incentives (VSI).
These recommendations were based on past NHIF practices and collective bargaining agreements, which had previously provided exit packages to staff under similar circumstances.
In addition to ordering the payment of exit packages, the court ruled that NHIF staff absorbed by SHA through competitive recruitment must retain their previous salaries unless changes are made through lawful negotiation or consent.
Any unilateral reduction in salaries or denial of severance benefits would amount to discrimination and breach of constitutional rights, the judge said.
Redeployment of staff
Earlier, on July 23, 2025, the parties had entered into a partial consent order agreeing that NHIF staff redeployed within the public service would retain their last NHIF salary “personal to self.”
However, the court was left to determine whether those absorbed by SHA would enjoy similar protections.
Justice Ongaya affirmed that they would.
The ruling also addressed broader constitutional concerns, including the right to access information and public participation.
The court found that SHA had failed to provide NHIF staff with adequate information about their transition options, violating Articles 35 and 10 of the Constitution.
