The Supreme Court has affirmed that the Salaries and Remuneration Commission (SRC) has the final say in determination of pay to all public officials, strengthening the latter's position in controlling the public wage bill.
In a case between the defunct National Hospital Insurance Fund (NHIF) and the SRC, the Supreme Court ruled that the SRC’s advice on remuneration to public officers is binding and must be sought.
The decision affirms SRC’s powers in determining what public officers earn and will affect about a million workers in county and national governments, especially state corporations which have been reluctant to obey the commission.
NHIF had sued the SRC for insisting that its advice must be sought and implemented before the fund enters into a collective bargaining agreement (CBA) with its staff.
“It follows therefore, and we agree with the court of appeal, that the advice of the 2nd respondent (SRC) was binding upon the appellant (NHIF). The appellant ought to have sought SRC’s advice before completing the CBA negotiations with the 1st Respondent (Kenya Union of Commercial Food and Allied Workers).
“It therefore follows, that any CBA entered between NHIF and the Kenya Union of Commercial Food and Allied Workers, absent the advice and approval of the SRC prior to entering the said CBA, was of no legal consequence,” the Supreme Court decided.
Disputes over the issue started over a decade ago after the SRC rejected a CBA signed between NHIF and the union in 2014, which had higher remunerations than the SRC recommended.
NHIF and the union held that its workers were not public officers and thus did not fall under the purview of the SRC. The row escalated where the Employment and Labour Relations Court first ruled in SRC’s favour, triggering an appeal from NHIF.
Last year, the court of appeal also decided that SRC’s advice must be sought when public officers negotiate CBAs, a decision the Supreme Court has now affirmed in the May 30, 2025 judgment.
“We are clear in our minds that the provisions as captured above and in the NHIF Act were included because it was the intention of the legislature that the NHIF ought to be regarded as a public office, offering a public service, and its employees, public servants. We so hold,” a bench of five Supreme Court judges decided.
The judges faulted NHIF for arguing that it’s a private entity when its funding is from mandatory workers’ contributions.
The Supreme Court also said that the judgment applies to the Social Health Authority (SHA) which has since taken over operations from NHIF, assuming all the NHIF rights, liabilities, and duties.
“To that extent, we expect that no difficulty will arise from the fact that the appellant is now defunct,” the Supreme Court said.
The effect of the Supreme Court judgment is that all agencies considered as public entities must seek advice from the SRC before implementing any changes in the remuneration to their workers, and that they must implement the recommendations the SRC offers.
The commission considers factors such as how the country’s economy is performing, the financial status of an entity, and the need to create harmony in pay across the public sector when advising an entity on what to pay. Over the past few years, the SRC has been cracking down on allowances paid by public entities as one of the ways to control the public wage bill, and in a bid to create harmony in pay across the public sector.
Kenya’s public wage bill crossed Sh1 trillion in the year to June 2023 and has remained above the mark since, hitting Sh1.17 trillion in the year to June 2024, SRC data shows.
The number of public service workers hit 968,425 in the year to June 2024, and is expected to have grown further.
“The Supreme Court judgment clarifies with finality the supremacy and binding nature of SRC’s constitutional mandate over remuneration and benefits at the national and county government levels, cementing SRC’s oversight, as provided for in the Constitution and SRC Act, 2011,” SRC said following the judgment.
