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Appeals Court withdraws key NSSF ruling, admits it decided wrong application
The judges said they had mistakenly determined the wrong application and recalled the decision dated May 29, 2026.
What you need to know:
- The reversed ruling had declined an application to suspend a 2022 Employment and Labour Relations Court judgment.
- The decision caused confusion in the labour and pension sector over the status of the enhanced deductions.
The Court of Appeal in Nairobi has withdrawn a key decision that triggered a nationwide dispute over the enhanced National Social Security Fund (NSSF) deductions.
In an unusual judicial step, the judges said they had mistakenly determined the wrong application and recalled the decision dated May 29, 2026. The judges acknowledged that public confidence was at stake.
The reversed ruling had declined an application to suspend a 2022 Employment and Labour Relations Court judgment declaring parts of the NSSF Act, 2013 unconstitutional.
The decision caused confusion in the labour and pension sector over the status of the enhanced deductions, prompting the NSSF, the Law Society of Kenya (LSK), the Federation of Kenya Employers (FKE) and the Central Organisation of Trade Unions (Cotu) to issue contradictory statements on the mandatory deductions.
While NSSF, FKE and COTU asked employers to continue remitting the enhanced deductions, LSK said that, based on the appellate court's May 29 ruling, there was "no judicial basis supporting the continued enforcement of the enhanced contribution framework."
While recalling that ruling, the three-judge bench noted that public confidence in the administration of justice was at stake, since the court had delivered the ruling on an application that was not live and on which the parties had not been heard.
"It is a constitutional imperative that parties should be given the opportunity to be heard before any decision is made affecting their rights or interests," said the judges.
The case affects millions of workers, thousands of employers and the administration of the Sh715 billion State-controlled pension fund.
At the centre of the row is the NSSF Act, 2013, which replaced the long-standing monthly contribution of Sh200 with a phased earnings-based system under which workers now contribute between Sh1,500 and Sh6,480 per month, matched by employers.
The enhanced rates were introduced to increase retirement savings and expand social security coverage.
Workers erecting a sign at NSSF's Social Security House offices in Nairobi.
The judges said the May ruling had been delivered in error because it determined an application that was no longer pending before the court instead of another application that had been heard and reserved for ruling.
In a letter to the Court of Appeal Registrar dated June 2, 2026, Senior Counsel Fred Ngatia, acting for NSSF, asked the court to recall the decision, describing the alleged mix-up as a "monumental error" that had unsettled employers, workers, the labour movement and the wider pension sector.
This was followed by an application by the Attorney General seeking to recall and vacate the ruling. The Attorney General informed the judges that they had determined the wrong application.
"Upon receipt of the communication, the Court set this appeal for mention, and explained to the parties the circumstances leading to the error, which was occasioned by the multiplicity of pending applications before the Court, an error which the Court regretted," the bench said.
The court allowed the Attorney General's application, finding that the ruling had been delivered on "an application which was not live before the court."
"We therefore find that the ruling erroneously delivered by this Court on May 29, 2026, is amenable to being set aside in the interests of justice, and we accordingly set aside the said ruling in its entirety," the judges ruled.
Decade-long legal battle
The decision marks a rare instance of the Court of Appeal recalling one of its own rulings after acknowledging that it had determined the wrong application.
Rather than reconsidering the merits of its earlier decision, the court said it was correcting an error apparent on the face of the record to preserve the integrity of the judicial process.
The dispute stems from a decade-long legal battle over the constitutionality of the NSSF Act, 2013, which replaced the previous flat monthly contribution of Sh200 by employers and employees with phased earnings-based contributions that have steadily increased payroll deductions.
In September 2022, the Employment and Labour Relations Court declared parts of the law unconstitutional following a petition by the Kenya Tea Growers Association and other parties.
The Court of Appeal overturned that judgment in February 2023 on jurisdictional grounds. However, the Supreme Court reinstated the Labour Court's jurisdiction in February 2024 and remitted the dispute to the Court of Appeal for determination of the substantive issues.
The application at the centre of Friday's ruling arose after the Attorney General informed the court that the May 29 decision had mistakenly determined an application for stay of execution filed in October 2022.
According to the court, that application had effectively been overtaken by events after the Court of Appeal determined the substantive appeal in February 2023 before the Supreme Court later remitted the matter for a fresh hearing.
The judges said the only live application awaiting determination was one filed in September 2024 by the Kenya Export Floriculture, Horticulture and Allied Workers Union seeking to be joined as an interested party.
Senior Counsel Fred Ngatia, appearing for NSSF, supported the Attorney General's application and told the court the erroneous ruling had caused prejudice because some people had relied on the perception that the Court of Appeal had declined to grant a stay of the Labour Court judgment.
Lawyers for the Kenya Tea Growers Association and other parties did not oppose the application and urged the court to determine the outstanding joinder application before fixing the substantive appeal for hearing.
The bench said maintaining the erroneous ruling would undermine public confidence in the administration of justice because parties are constitutionally entitled to be heard before decisions affecting their rights are made.
The judges also thanked the Attorney General and NSSF's lawyers for promptly bringing the error to the court's attention, saying that this had helped avert unintended consequences arising from the mistaken ruling.
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