Court thwarts SRC bid to slash NHIF salaries

Wednesday March 18 2020
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The National Hospital Insurance Fund's headquarters in Nairobi. PHOTO | FILE | NATION MEDIA GROUP

By OTIATO GUGUYU

The Labour Court has dismissed attempts by the Salaries and Remuneration Commission to set the pay for workers at the National Hospital Insurance Fund.

The State health insurer has been ordered to increase the pay of its unionised workers over the four years during which the dues have been in dispute.

Justice Maureen Onyango said that while the State insurer can consult SRC, the commission cannot set a figure to be imposed on unions during labour negotiations.

A CBA between Kenya Union of Commercial Food and Allied Workers (KUCFAW) had sought to boost workers pay by eight per cent in 2017 and 2018, 10 per cent in 2019 and 12 per cent in 2020.

SRC recommended a raise of six per cent for each year based on its evaluations which NHIF sought to enforce. “The insistence by SRC that its advice to NHIF is binding is counter to the principle of collective bargaining as envisaged under the ILO convention on the rights to organise and collective bargaining, 1949 (No. 98) and by virtue of Article 2(6) of the constitution, unconstitutional,” said Justice Onyango.

The last audited report by the Auditor-General put unionisable workers at 1,175 and management at 589.

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These 1,764 workers were costing the insurance company Sh2.3 billion in basic salaries.

But NHIF has been whittling down staff numbers over the years, with unionisable employees standing at 800, according to KUCFAW.

In 2017, NHIF spent Sh1.1 billion as termination benefits to slash 60 jobs.

The court ruled that NHIF had agreed to negotiate with the union and, after they had reached an agreement, tried to reverse the process by seeking a SRC advisory.

During the dispute NHIF paid its management staff who are not unionised an increase of 4 per cent.

The ruling might hit hard the State insurer which is under financial strain after it was stopped from punishing defaulters with a penalty of 50 per cent of the monthly contribution for each month paid late, up to 11 months, coupled with a requirement to pay for one year in advance and a restriction of 30 days before being eligible for benefits.

The insurer also increased the waiting period for voluntary members, often the poor, before they could access the fund benefits.

A report by a Health Financing Reforms Expert Panel (Hefrep) showed that the national insurer’s administrative costs remain way too high, which also reflects inefficiencies in the system.

The fund may start running deficits from as early as this year with the main expenditure -- staff costs -- comprising over a half of administrative costs in 2017/18.

NHIF does not have a substantive chief executive since 2018, when the fund’s board sent the then boss Geoffrey Mwangi and acting Finance Director Wilbert Kurgat on compulsory leave to pave the way for investigations into the loss of billions of shillings.

Mr Nicodemus Odongo, who has been serving as the director in charge of strategy, planning and marketing, has been leading the agency in an acting capacity since then, and did not apply for the position.