The offices of the now defunct National Hospital Insurance Fund (NHIF) in Nairobi. MPs want officials of the defunct NHIF investigated and prosecuted over Sh828 million scandal.
The Labour Relations court in Nairobi has quashed the decision of the Social Health Authority (SHA) to reserve senior middle-level management job positions to officers who were working in the defunct National Health Insurance Fund (NHIF).
Justice Byram Ongaya also prohibited the SHA Board from proceeding with the ongoing recruitment process of SHA officers to positions of Quality Assurance Officers, County Coordinators, Directors, Deputy Directors, Finance Officers, and Accountants, among other vacancies, which had been exclusively reserved for former NHIF staff.
The judge issued the order following an application by a concerned Kenyan, Mr Omar Abdille, who argued that the recruitment commenced in March was unlawful and discriminatory.
“A declaration is issued that 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. The continuing or conducted recruitment process by SHA, which limits or limited eligibility for positions to former NHIF staff, was discriminatory, unconstitutional and violated the principles of fair competition and equality of opportunity under the Constitution,” said the judge.
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The internal advertisement was published on SHA’s website portal announcing various positions, including senior and middle-level management roles, but limiting eligibility to former staff of NHIF.
Justice Ongaya ruled that the defunct NHIF’s staff, having not automatically transitioned as staff of SHA, under paragraph 6 of the First Schedule of the Social Health Insurance Act, 2023, could not be treated as internal applicants.
According to the judge, it was wrong for SHA to advertise the jobs and restrict the applications to the employees of NHIF.
The petitioner told the court that the limitation was in violation of the Social Health Authority Act, the Public Service Commission Act and other statutes.
He told court that the limitation was illegal and discriminatory because SHA is a new legal entity created under the Social Health Insurance Act, 2023(SHI Act) and the NHIF Act was repealed under section 75 (1) of the said SHI Act, 2023.
As such, he said the former staff of NHIF ceased to be public servants following the repeal of the law and winding up of the NHIF.
“By treating staff of the defunct NHIF as 'internal' candidates and limiting the recruitment accordingly from participation by candidates from the open public, SHA violated the constitutional rights to fair labour practices, equal treatment devoid of discrimination, equality, public service values, and, fair administrative action,” said Mr Abdille.
He added that it was in breach of transitional provisions of the SHI Act, 2023, which expressly mandates SHA to recruit afresh, based on merit, integrity and suitability and not automatic absorption or preferential internal recruitment of former defunct NHIF staff.
Referring to the Auditor General’s report for the year ended June 2023, the petitioner contended that the defunct NHIF faced numerous allegations of corruption, mismanagement, and inefficiencies over the years, which contributed to its repeal and replacement with SHA.
“The cases of NHIF inefficiency and corruption included documented mismanagement, fraudulent claims and ghost patients, kickbacks and procurement scandals, misuse of funds and poor coverage, unpaid hospital claims leading to collapse of hospitals,and fake NHIF cards and identity theft and, per the Report of the Auditor-General on NHIF for year ended June 20, 2023,” he stated.
SHA, together with the Cabinet Secretary, Ministry of Health, Public Service Commission (PSC) and the Attorney-General, had fought off the case urging for its dismissal.
Through Chief State Counsel Oscar M. Eredi from the office of Attorney General and PSC’s Assistant Director, Legal Services, Michael Maurice Ogosso, they stated that the staff of the defunct NHIF were required to be given priority in the recruitment exercise to be conducted by the SHA.
They said this was the legal basis for the internal advertisements as opposed to the external advertisements.
They argued that the court case was intended to defeat the transition process from the defunct NHIF to SHA.
However, the judge said that according to the First Schedule of the Act about the transitional destiny of the staff of the defunct NHIF, the staff were not to enjoy automatic transition.
He added that the recruitment was supposed to be competitive.
“NHIF being defunct, it was misconceived for SHA to publish on its website a restrictive advertisement for vacancies limiting prospective applicants to staff of the defunct NHIF, because, in any event, there could be no “internal advertisement” with respect to the defunct NHIF,” said Justice Ongaya.
He stated the staff of the defunct NHIF, under the transitional provisions, could be treated as internal applicants as they have never transited as such or become employees of SHA.
