Supreme Court returns NSSF rates petition back to Court of Appeal

The Supreme Court has returned a petition challenging the National Social Security Fund (NSSF) Act, 2013 that enhanced contributions to the fund, to the Court of Appeal for a fresh hearing.

A full bench of the apex court presided by Chief Justice Martha Koome remitted the case to the appellate court for hearing stating the judges who determined the matter failed to address all the issues raised.

The top court said the judges of the appellate court dwelt on the jurisdiction of the Employment and Labour Relations Court (ELRC) to deal with the matter and left out other factual and constitutional questions raised in the appeal.

“In the circumstances, this case is to be remitted to the Court of Appeal to determine the substantive merits of the judgment of the ELRC,” said the judges.

CJ Koome added that due to the nature of the matter, the surrounding public interest and the time taken by the case in the corridors of justice, it should be heard on a priority basis.

Several organisations including Kenya Tea Growers Association, Agricultural Employers Association, and the Federation of Kenya Employers had challenged the Act, arguing that they were not consulted nor was the Bill subjected to public debate as required.

Read: Confusion over new NSSF deduction as first year ends

The NSSF board published a notice in the local dailies on January 12, 2024, compelling all employees to implement Year Two Contribution Rates, following the lapse of the first year of contribution.

The government started implementing the Act last February, raising mandatory contributions from a flat Sh200 per employee (with an equivalent contribution from the employer) to a graduated plan that will eventually hit six percent of employees’ salaries.

The implementation of the law requires that the deductions be raised to specific amounts or percentages over the first four years.

The organisations argued that the compulsory registration of employees under the Fund was unconstitutional, unlike the repealed Act, which had exempted their members.

The Attorney General and Cabinet Secretary for Labour defended the Act stating that the enactment process involved full public participation and sensitisation. 

The CS also said Section 21 gives employees the right to opt out of Tier II to join private pension schemes and Section 27 provides that interest charged on members’ late payments is credited to members’ accounts.

The government further argued that since Chapter 258 of the previous Act was repealed by the coming into force of the NSSF Act 2013, its suspension would leave the Fund unregulated.

In a judgment delivered on February 3, last year, the Court of Appeal allowed the appeal by the government and set aside orders granted by the ELRC saying the labour court lacked jurisdiction to determine the matter.

The Supreme Court said once the Court of Appeal determined that a trial court has acted without jurisdiction in determining a matter, it cannot assume original jurisdiction over the same. 

“Having so found, the Appellate Court has to remit the case to the court that is clothed with jurisdiction to dispose of the same without going into the merits of the dispute, for doing so may prejudice the fair determination of the case by the court with jurisdiction,” Justices Koome, Deputy CJ Philomena Mwilu, Mohammed Ibrahim, Njoki Ndung’u, Isaac Lenaola and William Ouko said. 

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