Can do, can’t do: The tight rope Serem team must walk

Salaries and Remuneration Commission (SRC) chairperson Ms Sarah Serem at Kenya Institute of Management breakfast meeting on at Laico Regency Hotel on November 6, 2014. The entry of SRC as a player in the regulation of state officers’ pay has been a major cause of anxiety in the country. PHOTO | ANTHONY OMUYA |

What you need to know:

  • A July, 2014 court ruling seemed to close the legal doors when it argued that unions whose members work in state corporations should know their members are public servants and the SRC was constitutionally empowered to regulate their salaries.
  • Months later, Industrial Court judge Nelson Abuodha found that the constitutional provision defining the SRC’s mandate does not include State corporations whose workers are paid from self-generated funds.
  • The judges said that in exercising its powers, Parliament must always be alive to the objects and authority of commissions and independent offices provided by the law.

The entry of Salaries and Remuneration Commission as a player in the regulation of state officers’ pay has been a major cause of anxiety in the country.

A number of unions, which felt their members were not public servants rushed to courts on several occasions seeking protection from the SRC.

Kenya Union of Domestic, Hotels, Education Institutions and Allied Workers (Kudheia) and seven other unions, for instance, argued that their members were not officers in the national or county governments, commissions or agencies established under the Constitution and as such, the SRC did not have the mandate to interfere with their pay check.

A July, 2014 court ruling seemed to close the legal doors when it argued that unions whose members work in state corporations should know their members are public servants and the SRC was constitutionally empowered to regulate their salaries.

On November 27, however, the High Court ruled that SRC has no powers to determine the salaries and benefits of parastatal workers, leaving the functions in the hands of labour unions and the State-owned corporations.

AFFECTED OFFICERS

In the first case, Justice Isaac Lenaola had held that the pay of Kudheia members employed at Moi Teaching and Referral Hospital, Kenyatta National Hospital and public universities should be reviewed by Ms Sarah Serem’s commission.

Also affected were domestic and allied workers in public educational institutions and hotels, as well Kenya Power.

The argument tendered in court was that MTRH, KNH and related institutions were state corporations established under an Act of Parliament.

“Although these institutions do not receive monies from the Consolidated Fund, they are empowered by Parliament to raise income through levies and other commercial ventures.

State corporations also receive funds from Parliament through their respective ministries and fit the description regarding funds from Parliament,” Justice Lenaola said.

He added that ‘Public Fund’ had the meaning assigned to it by the Exchequer and Audit Act.

MEDDLING WITH CBAs
Months later, Industrial Court judge Nelson Abuodha found that the constitutional provision defining the SRC’s mandate does not include State corporations whose workers are paid from self-generated funds.

In a judgment delivered in favour of staff of Chemelil, Muhoroni, and South Nyanza (Sony) sugar millers, Justice Abuodha ruled that the SRC could not meddle in the collective bargaining agreements (CBAs) that employees of State corporations have signed with their employers.

The sugar millers had gone to court for a review of a directive that a CBA they signed with the Kenya Union of Sugar Plantations and Allied Workers (KUSPAW) in September, 2013 be made to comply with the SRC guidelines issued on October 13 of the same year.

Justice Abuodha found that the SRC’s mandate does not extend to parastatals, terming the commission’s intervention as amounting to “meddling with the CBA that was agreeable to the applicants and the labour unions and had been duly registered with the court”.

Justice Lenaola, ruling in the first case, clarified that public money includes revenue, any trust or other monies held, whether temporarily or otherwise by a worker in his or her official capacity, either alone or jointly with any other person, whether an officer or not. 

“Given that definition of public funds and given that Kudheia’s members work for institutions, parastatals or corporations that  provide a public function, they are properly within the public service category and therefore state corporations.

Their employees fall within the meaning of public office and public officers,” the judge said.

WITHIN ITS MANDATE
He added that state corporations were national government entities. For instance, KNH and MTRH are corporations within the Ministry of Health, Kenya Power within the Energy Ministry while public universities fall within the Ministry of Education, Science and Technology.

“That being so, it automatically follows that their employees are public servants and any other finding would be impractical, given the design and structure of our Constitution,” said Mr Justice Lenaola in his July 25 ruling.

“I therefore find that the SRC acted within its constitutional mandate in describing the employees of the state organisations represented by Kudheia as public servants. They are subject to the mandate of the SRC in relation to setting and reviewing of their salaries.”

Similar views regarding the role of SRC were held by a three-judge bench comprising Mr Justice Lenaola, Lady Justice Mumbi Ngugi and Mr Justice Weldon Korir in the case filed to challenge the constitutionality of the decision of the National Assembly to nullify certain gazette notices issued by the SRC in respect of public servants’ earnings.

The judges said that in exercising its powers, Parliament must always be alive to the objects and authority of commissions and independent offices provided by the law.

Additional reporting by Victor Juma