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NSSF Act ruling sparks debate on court’s role


The recent Court of Appeal ruling on enhanced National Social Security Fund (NSSF) contributions has reignited the debate on the powers of the Employment and Labour Relations Court (ELRC).

The court is established under Article 162(2) of the Constitution to settle employment and industrial relations disputes as well as securing and maintaining good employment and labour relations in Kenya.

It is a special court, which succeeded the Industrial Court after the constitution came into effect in 2010.

However, the debate on the jurisdiction of the Employment and Labour Relations Court has refused to fade away 12 years on.

The case on the NSSF contributions was first filed in the High Court by various parties including the Kenya Tea Growers Association and Agricultural Employers Association.

The cases were also filed in various parts of the country including Nakuru, Kisumu and Nairobi before the files were sent to Nairobi for consolidation because the issues raised were the same — the illegality of the NSSF Act 2013.

The matter was first handled by Justice Mumbi Ngugi, then a judge of the High Court ruled that the matter should be handled by the labour court, before sending the files to the court. The judge ruled that social security and employment issues fall within the jurisdiction of the court.

The matter was then brought before Justice Nduma Nderi who after hearing arguments from various parties, agreed that issues raised in the consolidated petitions were substantial questions of law and which should be handled by a bench of three judges.

A bench of three judges heard the matter and ruled last year that the NSSF Act 2013 was unconstitutional for failure to subject the law to adequate public participation and that the Bill should have sought the concurrence of the Senate and the National Assembly before it was enacted.

The NSSF through senior counsel Fred Ngatia appealed, arguing that the matter should have been handled by the High Court and not the labour court.

The appellate court ruled that the labour court wrongly assumed jurisdiction in a matter that the High Court should have handled.

The judges agreed with Mr Ngatia that the ELRC can only hear matters where constitutional issues are raised in a context of an employer-employee dispute.

The judges said employment cases are not the appropriate mechanism for the ventilation of grievances of litigants’ constitutional issues except where the issues arise in an employer-employment dispute.

“Having identified the germane issue before it as early as at paragraph 1 of the judgment, the ELRC bench fell into a grave error when it failed to appreciate that the issue before it fell within the jurisdiction of the High Court,” the judges said.

The judges further faulted the lower court’s bench, saying it erred by holding the Bill should have sought the concurrence of the Senate and the National Assembly before it was enacted.

“The decision declaring the NSSF Act, 2013 unconstitutional for failure to involve the Senate in its enactment was not supported by the law. On this ground, we hold that the judgment cannot be allowed to stand,” the judges said.

While passing the Act in 2013, NSSF sought to build a bigger retirement pot and offer workers monthly stipends after their retirement as opposed to the current one-off payment.

The contributions were last reviewed in 2001 when the rate was increased to Sh200 from Sh160.

The NSSF Act 2013 increased salaried employees’ monthly deductions from Sh200 to Sh600 for the lowest earner and from Sh320 to Sh1,080 for top earners.

The jurisdiction of a court is a critical component of adjudication as it explains the authority that a court has to determine a dispute before it.

So crucial is the question of jurisdiction that where a court entertains a matter that is beyond its jurisdiction, the proceeding is considered null and void.

In regards, to the jurisdiction of the Employment and Labour Relations Court, the Court of Appeal stated: “Where a court is drained of the jurisdiction to entertain a matter, the proceedings flowing from it, no matter the quantum of diligence, dexterity, artistry, sophistry, transparency and objectivity injected into it, will be marooned in the intractable web of nullity.”

The powers of the court are elucidated by the Employment and Labour Relations Court Act of 2011. Section 12 (1) of the Act provides that among the disputes that the court can handle include disputes arising out of employment between an employee and an employer as well as disputes between an employer and a trade union.

Mr Obura, counsel for the lobby groups urged the court to find that the word “includes” as used in section 12 of the Employment and Labour Relations Court could be interpreted wide enough to cover the matters before the court as they related to service contracts which are matters between an employee and an employer.

In disagreeing with him, the Court of Appeal stated that there is no flexible rule that the word “includes” should always be read as an extension without referring to the context within which it is used.

The court ruled that the question of the constitutionality of the NSSF Act did not arise from an employer-employee dispute, therefore, could not be under the mandate of the labour court.

“Decided cases are in agreement that constitutional issues can be determined by the ELRC only if they arise from an employer-employee dispute.”

Lempaa Suyianka, an advocate of the High Court explained that Article 162 provides that the labour court is mandated to deal with employment issues. The lawyer said the Court of Appeal did not have the right to interpret whether an Act of Parliament is constitutional or not.

Mr Suyianka said the High Court is the one “clothed” with jurisdiction to enquire whether any Act of Parliament is constitutional as per article 165(3) of the constitution.

Elizabeth Muli, a lecturer at the University of Nairobi, explained that the jurisdiction of the ELRC also extended to human rights issues that may arise from employment.

“If there is a violation of the right to dignity of an employee at the workplace, the ELRC can handle the matter,” she said.

The Court of Appeal in the NSSF case said that the ELRC could only entertain a suit involving human rights violations only if the matters arose in an employment dispute.

Adrian Kamotho, an advocate of the High Court, said matters brought before the ELRC should have an employer-employee bearing.

He also faulted the attempt to have a bench composed of judges from both the High Court and the ELRC, saying it would interfere with the different courts’ mandate.

“There are cases that the ELRC cannot handle. In a case where the employer organisation enjoys diplomatic immunity,” Mr Suyianka says.

Lawyer Danstan Omari differed with the Court of Appeal’s decision. “This is a matter that involves employment. NSSF falls under employers and employees; the savings come from salaries.

“Which other court has jurisdiction to deal with salaries and deductions of an employee?” he posed.

The advocate said the Court of Appeal did not clearly indicate which court had the jurisdiction to hear the matter leaving the court in a precarious situation. He suggests that the matter be determined at the Supreme Court to elaborate the mandate of the Employment and Labour Relations Court.

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