Court Delivers Blow to Ex-NHIF Staff as Order Quashes Plan to Retain Them in SHA

Nairobi Labour Relations Court rules recruitment process limiting positions to former NHIF workers unconstitutional and discriminatory

Former employees of the defunct National Hospital Insurance Fund (NHIF) have suffered a major setback after the Labour Relations Court in Nairobi quashed the Social Health Authority’s (SHA) decision to reserve senior management positions exclusively for them.

Justice Byram Ongaya ruled that SHA’s recruitment process, which restricted eligibility for key positions to former NHIF staff, violated constitutional principles of equality and fair competition. The judge also prohibited SHA from proceeding with the ongoing recruitment for positions including Quality Assurance Officers, County Coordinators, Directors, Deputy Directors, Finance Officers, and Accountants.

The ruling came following a petition by Omar Abdille, a concerned Kenyan citizen, who challenged the March recruitment exercise as unlawful and discriminatory.

“SHA’s recruitment process restricting eligibility and applications to former staff of the defunct NHIF violates Articles 27, 41, 47, and 232 of the Constitution,” Justice Ongaya declared. “The recruitment process was discriminatory, unconstitutional and violated the principles of fair competition and equality of opportunity.”

The court found that SHA had wrongly treated former NHIF employees as “internal applicants” despite the fact that they had not automatically transitioned to become SHA staff under the Social Health Insurance Act of 2023.

Petitioner Abdille argued that the limitation violated multiple laws, including the Social Health Authority Act and the Public Service Commission Act.

He contended that since SHA is a new legal entity created under the 2023 legislation and the NHIF Act was repealed, former NHIF staff ceased to be public servants following the organization’s dissolution.

“By treating staff of the defunct NHIF as ‘internal’ candidates and limiting recruitment accordingly, SHA violated constitutional rights to fair labour practices, equal treatment, and fair administrative action,” Abdille stated in his petition.

He emphasized that the transitional provisions of the Social Health Insurance Act expressly mandate SHA to recruit afresh based on merit, integrity, and suitability rather than through automatic absorption or preferential treatment of former NHIF staff.

The petitioner also referenced the Auditor General’s report for the year ending June 2023, highlighting numerous allegations of corruption and mismanagement that plagued NHIF, contributing to its eventual replacement.

These included documented cases of fraudulent claims involving ghost patients, kickbacks, procurement scandals, misuse of funds, unpaid hospital claims, and fake NHIF cards.

SHA, along with the Cabinet Secretary for Health, the Public Service Commission, and the Attorney-General, had opposed the petition, arguing through legal representatives that former NHIF staff should be given priority in SHA recruitment.

Chief State Counsel Oscar M. Eredi and PSC’s Assistant Director Michael Maurice Ogosso claimed this was the legal basis for internal rather than external advertisements, arguing that the court case aimed to defeat the transition process.

However, Justice Ongaya rejected these arguments, stating that competitive recruitment was required under the law.

The ruling significantly impacts the transition from NHIF to SHA, as it means thousands of former NHIF employees will now have to compete on equal terms with other candidates for positions in the new health authority.

“NHIF being defunct, it was misconceived for SHA to publish a restrictive advertisement limiting prospective applicants to staff of the defunct NHIF,” the judge ruled, adding that there could be no “internal advertisement” with respect to a defunct organization.