The transition from the National Hospital Insurance Fund (NHIF) to the Social Health Authority (SHA) has been one of the most significant reforms in Kenya’s health sector. For thousands of NHIF employees, this shift raised urgent concerns about job security, redeployment, and potential salary cuts. A recent ruling by the Employment and Labour Relations Court has now provided much‑needed clarity, setting a precedent in Kenyan employment law and offering vital lessons for employees and employers alike.

The Background: From NHIF to SHA

In October 2024, the NHIF was officially dissolved following the enactment of the Social Health Insurance Act 2023, paving the way for the establishment of the Social Health Authority (SHA). While the move was designed to streamline healthcare financing, it left thousands of NHIF staff uncertain about their employment contracts, future roles, and pay structures.

Many employees were redeployed to the Public Service Commission (PSC), while others continued working temporarily under SHA pending new recruitment. Almost immediately, reports of massive pay cuts emerged, sparking protests and legal challenges.

The Court’s Landmark Ruling

On July 23, 2025, Justice Byram Ongaya of the Employment and Labour Relations Court delivered a critical ruling safeguarding the rights of former NHIF employees.

Key Highlights of the Judgment:

  • Retention of Last‑Drawn Salaries:
    All former NHIF staff, whether absorbed into SHA or redeployed to other public service roles, will retain their last‑drawn NHIF salary on a personal‑to‑holder basis until they lawfully exit public service through retirement, resignation, or other valid means.
  • Amendment of Deployment Letters:
    The court ordered the amendment of all redeployment and absorption letters to reflect the salary protection clause, ensuring transparency and enforceability.
  • Public Officer Status:
    The ruling followed a May 2025 Supreme Court decision affirming that NHIF employees are public officers under the Kenyan Constitution. This means their pay structures are subject to the oversight of the Salaries and Remuneration Commission (SRC).
  • Invalid CBAs Without SRC Approval:
    Any collective bargaining agreements (CBAs) negotiated without SRC’s involvement were declared null and void, reinforcing the constitutional requirement for SRC oversight in all public service salary matters.

The Human Impact of Salary Disparities

Before the ruling, many redeployed staff suffered drastic salary reductions. In one reported case, a clerical officer saw their pay slashed from KSh 240,000 to just KSh 40,000, a reduction of over 70%. Such cuts raised concerns about fairness, violation of labour rights in Kenya, and potential constructive dismissal.

The court’s intervention has therefore been hailed as a big win for employees, protecting livelihoods and reinforcing the principle of fair labour practices in Kenya as enshrined in the Employment Act 2007 and the Constitution of Kenya 2010.

Implications for Employment and Labour Law in Kenya

This ruling carries broad implications not just for former NHIF staff, but for all public officers and employees facing redeployment or restructuring:

  • Job Security:
    Employees in government transitions now have judicial assurance that their salaries cannot be arbitrarily reduced.
  • Legal Oversight:
    Employers must comply with SRC guidelines and the Employment Act when restructuring, failing which employees have strong grounds to seek redress.
  • Precedent for Future Cases:
    The judgment strengthens case law on redeployment, salary protection, and public sector employment disputes in Kenya.
  • Protection Against Unfair Labour Practices:
    It reaffirms the role of the courts in upholding employees’ rights against unfair labour practices, ensuring workers are not disadvantaged during institutional reforms.

How Employees Can Safeguard Their Rights

If you are a public servant or employee affected by restructuring, here are key steps you can take:

  • Review Your Deployment Letter: Ensure that it reflects the personal‑to‑holder salary clause.
  • Seek Legal Advice: Consult an employment lawyer in Kenya to confirm that your rights are protected.
  • Document Pay Discrepancies: Keep a clear record of your previous NHIF salary and any changes upon redeployment.
  • Engage the SRC: If you suspect salary misalignment, you may escalate the matter to the Salaries and Remuneration Commission.

Conclusion: Protecting Workers in Kenya’s Changing Labour Market

The court’s ruling on NHIF staff salaries and redeployment under the SHA is a landmark in Kenya’s employment and labour law. It not only secures the financial stability of thousands of affected employees but also sets a crucial precedent for labour rights enforcement in Kenya.

For employees and employers alike, this case highlights the importance of compliance with the Employment Act, the Constitution, and SRC guidelines. If you are facing similar challenges in your workplace, whether involving salary disputes, unfair dismissal, or redeployment, seeking professional guidance from an experienced employment lawyer in Kenya can make all the difference.

Looking for expert advice on employment and labour law in Kenya?
At F.M. Muteti & Co. Advocates, we help employees and employers navigate complex issues such as salary disputes, redeployment, unfair dismissal, and workplace restructuring. Contact us today for professional legal assistance.