[2022] KEELRC 4068 (KLR)

Federation of Kenya Employers v National Health Insurnace Fund Management Board & 4 others; Association of Kenya Insurers & another (Interested Parties) (Petition E066 of 2022) [2022] KEELRC 4068 (KLR) (24 June 2022) (Ruling)

Neutral citation: [2022] KEELRC 4068 (KLR)

Republic of Kenya

In the Employment and Labour Relations Court at Nairobi

Petition E066 of 2022

M Mbarũ, J

June 24, 2022

Between

Federation of Kenya Employers

Petitioner

and

National Health Insurnace Fund Management Board

1st Respondent

Cabinet Secretary Ministry of Health

2nd Respondent

Attorney General

3rd Respondent

Senate

4th Respondent

National Assembly

5th Respondent

and

Association of Kenya Insurers

Interested Party

David Manyonge Saratuki

Interested Party

Ruling

1. The ruling herein relates to the 4th respondent Notice of Preliminary Objections dated May 6, 2022 on the grounds that;1. The court lacks jurisdiction to determine this matter because;a)The petitioner lacks locus standi to institute these proceedings.b)The proceedings do not fall under Section 12(1) and (2) of the Employment and Labour Relations Court Act or otherwise.c)The issues raised in the Petition are matters reserved for the High Court under Article 165 of the Constitution and as such the Employment and Labour Relations Court does not have the requisite jurisdiction to handle the matter.d)Under the doctrine of “exhaustion”, where there is an alternative method of dispute resolution established by legislation, courts must exercise their jurisdiction conferred by law and must give deference to such dispute resolution mechanisms established by law with mandate to deal with such specific disputes in the first instance.e)The conservatory orders issued by this court ex parte on April 22, 2022were issued without requisite jurisdiction.2. The petitioner is forum shopping and the court should guard against abuse of its process.3. The petition is grossly incompetent, incurably defective, frivolous, vexatious ad an abuse of court process and ought to be struck out.

2. Parties attended and agreed to address by way of written submissions and oral highlights.

3. The 4th respondent as he applicant submitted that the petitioner challenges the amendments made to the National Health Insurance Fund Act (NHIF Act) through the National Hospital Insurance Fund (Amendment) Act, No.1 of 2022 for inadequate public participation and that the said sections negatively affect employers and therefore unconstitutional. The amendments necessitating the petition are Section 16 which amended Section 15 of the principal Act, Section 17 which amended Section 16 of the principal Act and Section 23 which amended Section 22 of the principal Act.

4. The petitioner is seeking for various declaration that the NHIF Act through the National Hospital Insurance Fund (Amendment) Act, No.1 of 2022 are unconstitutional, there was no public participation, it violates the petitioner members’ property rights and right to fair administrative action under Article 40 and 47 of the Constitution respectively, it is a threat to fundamental freedoms and a permanent injunction should disuse restraining the 2nd respondent for causing to be gazetted any regulations to operationalize the NHIF Act.

5. On these matters, the court lacks jurisdiction to hear and determine the petition and should down its tools as held in Owners of the Motor Vessel “Lillian S” v Caltex Oil (Kenya) Ltd [1989] eKLR that questions of jurisdiction once raised by a party should be decided forthwith on the evidence before court and in the case of Attorney General & another v Tolphin Nafula & 5 others; Attorney General (Interested Party) [2021] eKLR the court held that jurisdictional issues must be determined first before the court issues any conservatory orders or interim orders and any orders issued before the issue of jurisdiction is determined risks being null and void.

6. Section 12(1) and (2) of the Employment and Labour Relations Court Act sets out the jurisdiction of the court with a closed category of disputes which the court can preside over and it is closed to persons who have locus stadi to institute those disputes and if a party fails to apply the defined relationship, this court is without jurisdiction to determine the dispute. This petition ought to be heard by the High Court under Article 165 of the Constitution. the High Court has exclusive jurisdiction to deal with matters of violation of fundamental rights as held in Jasbir Singh Rai & 3 others v Tarlochan Singh Rai Estate & 4 others.

7. Jurisdiction must flow from the constitution or the law and cannot be extended by interpretation or craft as held in Samuel Kamau Macharia v Kenya Commercial bank & 2 others [2012] eKLR. the jurisdiction of this court relates to employer-employee relationship as contemplated under Article 162(2) (a) of the constitution and Section 12 of the ELRC Act. the court is not allowed to extend its jurisdiction as held in Republic v Karisa Chengo & 2 others [2017] eKLR and in Attorney General & 2 others v Okiya Omtatah & othersCivil Appeal No.621 of 2021 the court held that the constitution has granted the High Court the requisite jurisdiction to hear and determine disputes with regard to the violation of the constitution.

8. The interim orders grated herein on the face of the objections with regard to jurisdiction should be vacated and the petition dismissed for want of jurisdiction. Transfer to the High Court will not cure the want of jurisdiction and without it, the court ought to stop and allow the objections with costs.

9. Under Section 12 of the ELRC this court can only entertain parties as contemplated therein and jurisdiction is limited to determination of disputes arising out of employment and labour relations under relationship listed under Section 12(1) of the Act. this court may only hear and determine constitutional issues arising within the course of employment disputes.

10. Under Article 162(2) (a) of the Constitution, This court enjoys the same status as that of the High Court but the same does not confer concurrent jurisdiction as held in Public Service Commission & 4 others v Cheruiyot & 20 others Civil Appeal 119 & 139 of 2017 (Consolidated) [2022] KECA this court has specialised jurisdiction but has no similar jurisdiction as the High Court.

11. The petitioner opposed the objections by the 4th respondent and submitted that there is locus standi and section 12(2) of the ELRC Act provides that an employer or an employer organisation can file suit against the Minister or against any office established by law and in this regard, the petitioner as a federation of various employers has proper standing before this court to urge the instant petition.

12. The nature of the petition before court relate to rights secured under Article 22 of the Constitution and Article 258 which allow any party claiming that a right or fundamental freedom in the Bill of Rights has been denied, violated or infringed or is threatened is at liberty to file a petition with the court. the petition herein is seeking to protect the rights of the petitioners’ members and in the public interests.

13. This court has jurisdiction to hear and determine the petition pursuant to Article 162(2) (a) of the Constitution read together with the ELRC Act which give the court jurisdiction to hear and determined disputes relating to employment and labour relations and for connected purposes. Under Section 21(2) [12(2)] of the ELRC Act, the law contemplates a situation where the court may be required to hear and determine matters under Article 165(3) (b) or (d) of the Constitution as held in International Centre for Insect Physiology and Ecology (ICIPE) v Nancy McNally [20158] eKLR that the ELRC has jurisdiction to hear and determine constitutional issues as and when they arise from employment and labour relations. And in Republic v Clerk County Assembly of Baringo ex parte William Kassait Kamket [2015] eKLR the court held that the use of the term ‘including’ in Section 12 of the ELRC Act is significant as it helps the court to construe the jurisdiction of the court in a way that promotes the purpose, values and principles of the Constitution in establishing a specialist court to deal with employment and labour relations disputes and this is reinstated in Okiya Omtatah Okoiti v Attorney General; Njenga (Interested Party) Petition No.E101 of 2020 [2022] eKLR.

14. The petition challenges amendments to the NHIF Act and under Section 16 employers are required to match the contributions of employees, Section 17 and 22 employers are required to review applicable tariffs without consultations which provisions are unconstitutional and for this purpose, the petition is well placed before this court as it relates to employment and labour relations. The court has previously declared various laws unconstitutional in the case of Okiya Omtatah Okoiti v Attorney General & 2 others;Francis k Muthaura & 5 others [2019] eKLR; Elias Kibathis & another v Attorney General [2021] eKLR, Monica Munira Kibuchi & 6 others v Mount Kenya University; Attorney General (Interested Party) [20121] eKLR.

15. The objections made should be dismissed with costs to the petitioner.

16. The 1st interested party opposed the objections made by the 4th respondent and submitted that the petitioner’s case is that the amendments to the NHIF Act were passed without adequate public participation, violated employers’ rights to property, equality under the law, social and economic rights and the right to fair administrative action and the 4th respondent has challenged the jurisdiction of the court to hear and determine the petition. The 4th respondent has employed a literal meaning to the provisions of Section 12(1) (a) of the ELRC Act in submitting that there exists no dispute arising out of an employer-employee relationship but a wholesome reading of the same law show there need not be an employer-em0loyee but one that arises out of an employment between an employer and employee.

17. The petitioner being the national umbrella body for employers is seeking redress for its members who are affected by the amendments to the NHIF Act through the National Hospital Insurance Fund (Amendment) Act which requires mandatory contributions to the Fund made by an employer on h] behalf of its employees contemplated under Section 21 of the Employment Act read together with the NHIF Act. any amendments to the principal act will affect employers and employees since the Act imposes mandatory requirements for everyone to be registered with the Fund but the quality, nature and scope of services to be offered are neither guaranteed nor disclosed beforehand in violation of their consumer rights.

18. The 1st interested party also submitted that the court has jurisdiction to interpret the constitution as held in United States International University v Attorney General [2012] eKLR that the court by virtue of Article 162(2) and Section 12 of the ELRC Act the court has exclusive jurisdiction to enforce not only Article 41 rights but also fundamental rights ancillary and incidental to the employment relating including interpretation of the constitution within a matter before it.

19. The 2nd interested party opposed the objections by the 4th respondent and submitted that Section 12 of the ELRC Act give the court exclusive jurisdiction to hear and determine disputes referred to it pursuant to the provisions of Article 162(2) of the Constitution and under any provisions of the law with regard to matters of employment and labour relations and including matters and relations listed therein which list is not exhaustive as held in Okiya Omtatah Okoiti v Attorney General; Adrian Kamotho Njenga (Interested party) [2022] eKLR the court held that the Act lists the matters which the court can deal with and it describes those matters as ‘including’ which simply means the listed matters are not exclusive.

20. The jurisdiction of the court is not confined to the narrow path that an employer-emPloyee relationship has to exist as held in George Joshua Okungu v Kenya Pipeline Company Limited & 3 others[2016] eKLR. labour relations has been defined as the collective relations between management f an organisation and its employee and employees’ representatives. It is a set of relations, in a wider context, such as an industry or a national economy and hence cannot be limited to the listed relations outlined under Section 12(1) of the ELRC Act only. Labour relations extent to include other relations not listed therein.

21. The petition herein relates to impugned section 16 of the NHIF (Amendment) Act which places a burden on employees to match the NHIF contributions of employees whereas the impugned section 23 empowers the Minister to unilaterally review the applicable tariffs. These are matter intrinsically connected to and affect collective relations between employers, employees and employees’ representatives and employers’ associations and federations.

22. The petitioner is properly before this court which has jurisdiction to interpret the constitution as held in United States International University v Attorney General & 2 others [2012] eKLR. objections made should be dismissed.

Determination 23. On the objections by the 4th respondent, the written submissions and oral highlights, the issues which emerge for determination are whether the petitioner has locus standi; whether the court has jurisdiction to hear and determine this petition; whether the doctrine of exhaustion is addressed; and whether there is forum shopping.

24. Indeed jurisdiction is everything and without it the court must stop all else and down its tools literally as held by the Court of Appeal stated in Nakuru Civil Appeal No. 119 of 2017 Public Service Commission & 2 Others v Eric Cheruiyot & 16 Others consolidated with Civil Appeal No. 139 of 2017 County Government of Embu & Another v Eric Cheruiyot & 15 Others;Jurisdiction is everything, it is what gives a court or a tribunal the power, authority and legitimacy to entertain a matter before it. …By jurisdiction is meant the authority which a court has to decide matters that are litigated before it or to take cognizance of the matters presented in a formal way for its decision. The limits of this authority are imposed by the statute, charter, or commission under which the court is constituted, and may be extended or restricted by the like means. If no restriction or limit is imposed the jurisdiction is said to be unlimited.

25. And in the case of Owners of the Motor Vessel “Lillian S’ v Caltex Oil (Kenya) Ltd [1989] KLR 1 the court held that;…Jurisdiction is everything. Without it, a court has no power to make one more step. Where a court has no jurisdiction, there would be no basis for a continuation of proceedings pending other evidence. A court of law downs tools in respect of the matter before it the moment it holds the opinion that it is without jurisdiction.

26. In this regard, the jurisdiction of the court is drawn from Articles 162(2)(a) and 162(3) of the Constitution, 2010 which give the court mandate to hear and determine disputes relating to employment and labour relations and also gives Parliament authority to enact legislation and determine the jurisdiction and functions of the court.

27. In this regard, Parliament enacted the Employment and Labour Relations Court Act, 2011 (the ELRCAct) and under Section 12(1) of the Act various relationships and relations are outlined particularly under subsection 12(1)(a) of the Act it provides that;(1)The Court shall have exclusive original and appellate jurisdiction to hear and determine all disputes referred to it in accordance with Article 162(2) of the Constitution and the provisions of this Act or any other written law which extends jurisdiction to the Court relating to employment and labour relations including—(a)disputes relating to or arising out of employment between an employer and an employee;

28. A purposive and wholesome reading of these provisions is that any relationship and relations relating to employment and labour relations including and relating to or arising out of an employer and an employee, the court has exclusive original jurisdiction to hear and determine the same.

29. The Section 12(1) list of employment and labour relations relationships is not exhaustive and the applicable words are;‘The Court shall’‘extends jurisdiction to the Court relating to employment and labour relations including—‘‘including—‘Section 12(1) of the ELRC Act list is hence not exhaustive.

30. To reads these provisions otherwise would be a serious misapplication of the Article 162(2) of the Constitution, 2010 provisions and the entire Section 12 of the ELRC Act. it would create a limitation that was not contemplated by the drafters of the Constitution, 2010 and Parliament in enacting the ELRC Act, 2011.

31. In the petition, the petitioner is defined as;The petitioner is the leading employers’ membership body in Kenya representing all private employers in the country … and comprising the agricultural, hospitality, education, engineering, transport, medical, logistics, textile, banking and manufacturing sectors inter alia with Employers’ Associations in sisal, major and minor engineering, motor trade and timber among others. …

32. Such mandate hence gives the petitioner standing with the court and further under Section 12(2) of the ELRC Act, 2011 affirms the court jurisdiction with emphasis that an employer or employer’s organisation or a federation may lodge its claim with the court against the Cabinet Secretary or any office established under any written law for such purpose.(2)An application, claim or complaint may be lodged with the Court by or against an employee, an employer, a trade union, an employer’s organisation, a federation, the Registrar of Trade Unions, the Cabinet Secretary or any office established under any written law for such purpose.

33. On the substantive issue and subject of the petition is a challenge with regard to the constitutionality of the amendments to the NHIF Act through National Health Insurance Fund (Amendment) Act No.1 of 2022 and the provisions relating to the amendments to Section 15, 16, 17, 22 and 23 of the NHIF Act and the amendments therefrom which the petitioner avers impose a mandatory requirement upon employers and employees to be registered with the NHIF and further imposes a liability on employers to make matching contributions to the NHIF equal to that which an employee is liable to pay and also prohibits employers from deducting matching contributions from employees’ salaries therefore requiring the employers to pay for the same in their capacity as employers.

34. Such requirements directly implicates the provisions of Section 17, 19 and 21 of the Employment Act, 2007 which exclusively relates to rights and responsibility in employment and the court has exclusive jurisdiction.

35. The issue at hand for determination cannot be extricated from the mandate of the court.

36. With regard to the court jurisdiction to interpret the Constitution, in the United States International University (USIU) v Attorney General & 2 Others [2012] eKLR the court held that;Labour and employment rights are part of the Bill of Rights and are protected under Article 41 which is within the province of the Industrial Court. To exclude the jurisdiction of the Industrial Court from dealing with any other rights and fundamental freedoms howsoever arising from the relationships defined in Section 12 of the Industrial Court Act 2011 or to interpret the Constitution, would lead to a situation where there is parallel jurisdiction between the High Court and the Industrial Court. This would give rise to forum shopping thereby undermining a stable and consistent application of employment and labour law.

37. The jurisdiction of the court to interpret the Constitution is appositely captured by the Court of Appeal in the case of Registrar of Trade Unions v Nicky Njuguna & 4 others [2017] eKLR which held that;This same issue was central in the following matters; Prof.Daniel N. Mugendi v Kenyatta University & Others Nairobi Civil Appeal No. 6 of 2012 (Unreported); U.S.I.U v A.G &Others(2012) eKLR Seven Seas Technologies v Eric Chege Nairobi HC Misc. Appl. No. 29 of 2013 (Unreported) and Judicial Service Commission v Gladys Boss Shollei & Another Civil Appeal No 50 of 2014. In all the aforesaid decisions by this Court differently constituted, it was emphasized that although Article 165(3) (c) of the Constitution gives the High Court jurisdiction to determine questions involving violation of the Bill of Rights, the Article did not oust the jurisdiction of ELRC to deal with such issues especially when the interpretation of the Constitution is intricately interwoven with a labour issue or is central to the determination thereof. In any case the Court found that under Article 20, the Constitution gives all courts and bodies powers to deal with constitutional matters; thus the court had jurisdiction to deal with all constitutional matters that arise before it in employment and labour disputes.Such gives an apt summary of the issue.

38. This is not a petition for transfer to the High Court as proposed by the 4th respondent. It is well placed before this court for hearing and determination. The matters arise from an employer’s body and relating to application of the NHIF Act and the amendments thereof within employer and employee relations and for connected purposes. To deny jurisdiction would be to avoid a constitutional role well posited with the court.

39. The 4th respondent also raised the issue of failure by the petitioner to address the ‘exhaustion’ doctrine. However such matter was not gone into.

40. One other issue that the 4th respondent raised was that the petitioner is forum shopping. This aspect was also not addressed. Such allegations are serious and where there is evidence, the court must stop and addressed firmly. It hence required justified and sufficient cause(s) and material. To leave it open and without elaboration is abuse of the opportunity to be heard on a preliminary point of law.

41. without any evidence in this regard, the 4th respondent is simply in abuse of court process.

42. Objections by the 4th respondent dated 6th May, 2022 are hereby found without merit and are hereby dismissed. costs to the Petitioner.Orders accordingly.

DELIVERED IN COURT AT NAIROBI THIS 24TH DAY OF JUNE, 2022. M. MBARŨJUDGEIn the presence of:Court Assistant: Okodoi