Court bars SHA from locking out workers over delayed remittances
Court bars SHA from locking out workers over delayed remittances.
A legal battle is ongoing between salaried workers and the Social Health Authority (SHA) over a contentious system that locks employees out of healthcare services when employers delay remitting monthly deductions.
The Employment and Labour Relations Court has since halted implementation of the Social Health Insurance regulation pending hearing and determination of a petition, which claims that workers with patients suffering from chronic illnesses were denied treatment through SHA.
With billions of shillings already flowing from the workers to SHA, through the Social Health Insurance Fund (SHIF) and millions of people affected, the trial judge has escalated the matter to the Chief Justice for appointment of a three-judge bench to determine the petition.
The court found that the petitioners had proved “on a prima facie basis that SHA’s internal policy unjustifiably limits employees' right to health and dignity under the mandatory SHIF.” It found the monthly lockout policy is unfair to employees who have no control over remittances.
“The policy violates the right to access health services by employees who have been deducted,” the court ruled, adding that the limitation was “neither reasonable nor justifiable in an open and democratic society.”
The dispute centres on the State’s national health coverage digital system that automatically blocks access to healthcare on the 10th day of every month if employers fail to remit deductions by the ninth day.
The case was filed by three doctors—Dr Clarence Eboso Mweresa, Dr Azhar Abdul Gafur and Dr Clare Otwoko. The salary deductions are mandatory under the Social Health Insurance legal framework, and employees cannot opt out once enrolled.
Petitioners told the court that workers often find themselves denied treatment despite having already paid, as employers delay remitting funds to SHA.
They argued that the lockout system causes “untold suffering” to employees and their families, especially those with chronic illnesses requiring continuous care.
“Patients with chronic illnesses, especially those who require specific treatment that is specifically timed, have been suffering every month for a week or more when they have to spend money out of pocket to get the very treatment for which deductions are made to their salary,” said the petitioners.
Court documents highlighted cases of patients forced to pay out-of-pocket for kidney dialysis, chemotherapy, and urgent treatment or miss out on critical healthcare services during the lockout period.
Court filings showed dialysis patients may pay up to Sh20,000 per session, while chemotherapy can exceed Sh100,000 per cycle when cover is denied. The petitioners argued that employees are effectively punished twice—through deductions and denial of care.
Other affected patients include those with kidney failure who require biweekly dialysis sessions, with a dialysis session costing upwards of Sh8,000 to Sh20,000 when paid out of pocket.
“The affected patients include those undergoing cycles of chemotherapy and radiotherapy, with each cycle costing upwards of Sh100,000 and employees with children under five or school-going children who are exposed to frequent respiratory infections that must be treated urgently to prevent complications,” the petitioners narrated.
Health workers who are constantly exposed to environments laden with pathogens that can infect them at any time, needing treatment, are also among those affected by the contested regulation.
The court acknowledged these concerns, noting that the enforcement mechanism unfairly shifts the burden of employer default onto the employees.
“The enforcement measure against employers is considered extreme and disproportionate to the impact on employees who have no choice but to be in the scheme and must pay in cash to access health services, of which they legitimately expected, post-deduction of the SHIF,” said the court.
It was observed that SHA has an alternative remedy of recovery from the employer, with a penalty, without unfairly punishing the employees and consequently violating their right to access health services and to dignity.
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The court found that denying healthcare in such circumstances is neither reasonable nor justified under constitutional standards.
“The limitation is neither reasonable nor justifiable in an open and democratic society grounded in human dignity, equality, and freedom, considering all relevant factors,” the judge ruled.
The authority had defended the system, saying it is necessary to ensure compliance and protect the financial sustainability of the national health fund. It argued that funds cannot be disbursed without verifying that contributions have been received.
It also maintained that responsibility for non-remittance lies with employers, not the authority.
“The nine-day submission deadline is a firm statutory requirement, not an arbitrary internal policy. The system's automated restriction of services on the 10th of the month for unremitted accounts is a necessary compliance mechanism,” said SHA chief executive Dr Mercy Mwangangi.
However, the court said alternative enforcement mechanisms exist to recover funds from defaulting employers without denying workers access to care.
It barred SHA from interrupting healthcare access for employees whose contributions have already been deducted from their salaries pending a full hearing, signalling a landmark constitutional battle that could reshape how Kenya enforces health insurance compliance and protects workers’ rights.
The case comes at a critical time as the government implements a new universal health coverage model, rolled out two years ago under the Social Health Insurance system.
The programme replaced the National Health Insurance Fund as part of wider reforms aimed at expanding access to affordable healthcare.
Under the new model, salaried workers contribute a portion of their income, while employers are required to remit the funds monthly.
The reforms are designed to pool resources across the population and reduce out-of-pocket spending for medical services.
But the transition has faced challenges, including delays in remittances and system disruptions affecting access to care.
The court said the dispute arises from statutory deductions made from employees’ wages, placing it squarely within its jurisdiction.
It dismissed SHA’s objections that the matter should be heard by the High Court. It also certified the case as raising “a novel and substantial question of law” and referred it to the Chief Justice to empanel a three-judge bench. The bench will hear and determine the constitutional issues raised in the petition.
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