Agency bosses face court action over ex-NHIF staff pay

This story has significance for readers across Kenya and beyond.

The Chief Executive Officers of the Social Health Authority (SHA) and Public Service Commission (PSC) risk personal court action for failing to implement orders to pay exit packages to employees of the defunct National Health Insurance Fund (NHIF).

The Employment and Labour Relations Court has given SHA Chief Executive Officer Mercy Mwangangi and her counterpart at PSC, Paul Famba, until September 11, 2026, to address the orders or appear in court to explain why they should not be committed for contempt.

The court said that a judgment issued on July 29, 2025, remains valid because the respondents have not obtained a stay. It directed them to compute and pay exit packages to former NHIF employees who opted to retire during the 2023 transition to SHA.

The dispute arose after NHIF was replaced by SHA under the Social Health Insurance Act, 2023. The law provided for NHIF staff to be competitively recruited into SHA, retire, or be redeployed within the public service.

In the July 2025 judgment, the court ordered SHA and PSC to compute and pay an exit package to staff who chose retirement. It also directed that former NHIF employees competitively recruited and absorbed into SHA retain their NHIF salaries unless lawfully varied through consultation, negotiation or applicable law.

The employees returned to court claiming disobedience of those orders and asked the judge to cite the two CEOs for contempt of court and punish them for disobedience.

The court heard that several former employees of NHIF were deployed to SHA and received letters dated November 7, 2025 directing them to declare the conclusion of their temporary deployment to SHA.

They said some employees were subjected to contradictory deployment instructions, denied implementation of terms personal to them, and suffered financial hardship due to the stoppage of salaries without lawful transition.

Ruling on the contempt application, the court said more than a year had passed without the respondents computing or paying the retirement packages.

“Whereas computation does not require much delay, payment requires the availability of funds,” the court said.

The court rejected the respondents’ position that the absence of a clear formula justified the delay. It found that a collective bargaining agreement dated December 16, 2022, between NHIF and the Kenya Union of Commercial, Food and Allied Workers provided “a sufficient template for computing and paying an exit package upon retirement from service.”

“The refusal to compute and pay the exit packages to retiring employees is unjustified,” the court said.

The petitioners, Patrick Kiogora Mwirigi, Angela Kiloko Mutuku and Irene Wanja, had sought contempt proceedings against the two chief executives. They alleged that former NHIF employees had been removed from the SHA payroll, left without salaries or deployed despite choosing retirement. They said that 25 officers received deployment letters despite opting to retire.

The petitioners further alleged that some deployed workers were downgraded without justification and that former employees had not received their dues since October 2025.

The court said the PSC had made “considerable efforts” to comply, but found that SHA had not done enough. It said the two institutions remained jointly responsible for resolving the employees’ claims without delay.

SHA argued that the petitioners had not proved deliberate disobedience and said payroll migration involved several government agencies. It maintained that administrative errors had been addressed.

PSC said it had advised ministries, departments and agencies receiving former NHIF workers to retain their prevailing salaries. It also said employees opting for retirement should receive benefits under the applicable NHIF retirement scheme.

The court noted that PSC is pursuing proceedings at the Court of Appeal against the July 2025 judgment. However, the judge stressed that no stay had been granted.

“Once a court order has been brought to a party’s attention, there is a requirement to obey it, even when one disagrees with the orders,” the judge said.

The ruling gives the agencies until September 11, 2026, to resolve the outstanding matters. The court has also allowed the parties to negotiate a consent settlement before the September 23 mention.

Reporting originally appeared via Business Daily. Read the full source for additional context.