When the National Hospital Insurance Fund (NHIF) was scrapped two years ago and replaced by the Social Health Authority (SHA), the over 1,700 workers expected a seamless transition into the new agency.
Instead, a series of court battles has revealed a stark reality to the employees that there was never a guaranteed path for them to keep their jobs.
In a string of decisions, the Employment and Labour Relations Court found that the shift to SHA required fresh, competitive recruitment, shutting down hopes of automatic absorption even for top managers and long-serving staff.
The court simultaneously opened a second battle front over how the staff exited in one of Kenya’s major public sector overhauls.
Judges have since framed the transition, in key instances, as a redundancy process, triggering claims over severance pay, accrued benefits and fair labour practices.
The result has been a fragmented but consequential legal trail that has effectively determined the fate of more than 1,700 workers, even as disputes over compensation and how the employees were handled continue to play out.
The NHIF building in Nairobi.
Photo credit: File I Nation Media Group
The multiple labour disputes originate from the repeal of the NHIF law and the rollout of a new national health insurance system under the Social Health Authority in 2023.
The shift introduced three funds under the Social Health Insurance Act, 2023, including the Social Health Insurance Fund, targeting universal health coverage. The others are the Primary Healthcare Fund and the Emergency, Chronic and Critical Illness Fund.
But while the policy overhaul focused on financing healthcare, it left a critical question unresolved—what would happen to NHIF’s workforce?
That question landed in court almost immediately. In one of the earliest petitions, the court ruled that the transition clause in the new law did not grant NHIF staff automatic jobs at SHA.
The court held that recruitment into the new authority had to comply with constitutional principles of fairness and competition.
It added that though NHIF staff had to be given priority in SHA hirings, the recruitment eligibility could not be restricted to them and that their qualifications had to be reviewed afresh by the SHA board.
"The staff do not enjoy automatic transition as staff of SHA," the court stated, adding that all positions had to be filled through an open and competitive process.
This finding emerged from a dispute concerning the recruitment of senior and middle-level management roles at SHA.
The ruling dismantled expectations among staff who had assumed continuity of employment. Instead, it established that former NHIF workers would only receive priority consideration during recruitment, not guaranteed placement.
A second case reinforced that position when the court struck down attempts to ring-fence jobs for ex-NHIF staff through internal recruitment processes.
The case started in April 2025, days after SHA published a large internal recruitment advert covering 137 vacancies for mid-level management positions. The advert published included a wide mix of senior, middle-level, and support roles across departments.
The positions included those of quality assurance officers, county coordinators, directors, deputy directors, finance officers, actuarial services, claims and case management, administration, records management, corporate communications, provider management, and primary healthcare fund management.
It also covered positions in beneficiary registration and compliance, legal services, office administration, supply chain, information technology, planning and linkages, human resource management, as well as support roles such as drivers.
In July the same year, SHA advertised 64 senior management positions, including directors, deputy and assistant directors. The court found that limiting vacancies to former NHIF staff violated public service hiring rules.
“Public positions must be subjected to open, transparent and competitive recruitment,” the court ruled, effectively barring SHA from reserving jobs for its predecessor’s workforce.
Those two rulings settled the hiring question. But they triggered a deeper dispute over how employees exited the defunct NHIF.
In a subsequent case filed in July 2025 by former employees, the court examined whether the transition amounted to a redundancy. The workers argued that they had lost their jobs without proper notice, severance pay or clarity on their future.
The court agreed, describing the transition as “a classical case of redundancy” under labour law. It ruled that employees who were retired from the NHIF pursuant to the operationalisation of the Social Health Insurance (SHI) Act were entitled to an exit package.
"The option to retire has been imposed upon the staff of the defunct NHIF at the instance of their employer through the SHI Act and the transitional provisions," the court said.
That finding shifted the legal terrain. Instead of focusing on job retention, the dispute moved to compensation and benefits. The court said affected employees were entitled to redundancy protections, including notice pay and severance, based on their years of service.
It also recognised that SHA, as the successor institution, bore responsibility for handling the consequences of the transition.
However, the ruling did not resolve all claims. Some issues were settled by consent, leaving key questions on exit packages and individual entitlements for determination. The case has since been concluded at the court level, but its implications continue to influence related disputes.
Another recent decision concerning the termination of the NHIF Director of Beneficiary and Provident Management, Robert Ingasira, the court examined whether a valid employment relationship existed between SHA and individuals who continued working after the transition date -October 1, 2024.
SHA absorbed him, and on November 12, 2024, he was appointed the acting CEO, a position he held up to June 2, 2025.
He was later appointed as Director, Funds and Finance Management for a fixed term of five years, but served until November 2025 when his employment was terminated.
The court scrutinised contracts issued during the changeover period and questioned whether they met legal thresholds for employment.
It ruled that the termination was unfair and that SHA failed to consider the petitioner's request for deployment elsewhere in the wider public service as provided in the First Schedule of the SHI Act.
"The action of excluding directors from deployment was therefore discriminatory and in breach of article 27 of the Constitution," the court said, awarding Ingasira Sh3 million damages for breach of his rights.
It ordered SHA to facilitate his redeployment elsewhere in the public service with effect from the date of termination, without loss of benefits until the end of his contract
That case highlights the continuing uncertainty facing some former NHIF staff. It also highlights the fragmented nature of the litigation, with different cases addressing different aspects of the transition.
At the centre of the disputes are two distinct systems. NHIF operated as a single national insurer providing inpatient and outpatient cover. SHA, by contrast, oversees multiple funds, including one for primary healthcare and another for emergency and chronic care.
The structural shift required a new staffing model. But instead of a coordinated transition, the process unfolded through court battles, internal disputes and individual claims.
Some workers secured positions at SHA through competitive recruitment. Others were redeployed within the public service. A significant number exited altogether, triggering claims for compensation.
Figures presented in court indicate that more than 1,700 employees were affected by the transition. The financial exposure from redundancy claims remains unclear, but it includes severance pay, accrued leave and other contractual benefits.
Petitioners argued that the process violated their legitimate expectation of continued employment. They also cited a lack of transparency in recruitment and uncertainty over deployment.
The state, through SHA, maintained that the transition was guided by statute and that no legal right to automatic employment existed. The courts largely sided with that position on hiring. But they opened the door for claims on how workers were treated during the exit process.
Today, the legal position is clearer on paper than on the ground. The courts have settled the principle that jobs are not guaranteed.
