Bench of Three Justices Finds Fund Failed to Demonstrate Risk of Nugatory Appeal; ELRC Judgment Striking Down NSSF Act, 2013 Provisions Remains in Force
The Court of Appeal has dismissed an urgent application by the National Social Security Fund (NSSF) Board of Trustees seeking to suspend the implementation of a landmark Employment and Labour Relations Court (ELRC) judgment that invalidated key provisions of the NSSF Act, 2013.
The decision deals a significant setback to the Fund’s attempt to preserve the current pension framework pending appeal.
A bench comprising Justices W. Karanja, M’Inoti, and Nyamweya ruled that while the appeal raises arguable issues, the NSSF Board failed to demonstrate that the case would be rendered nugatory if a stay was not granted, thereby clearing the way for the continued effect of the lower court’s decision.
The ELRC Judgment
The dispute arises from the ELRC’s September 2022 judgment which struck down several provisions of the NSSF Act, 2013 on grounds including lack of Senate involvement in the legislative process, competition concerns, and alleged overreach into the regulation of pensions and employment benefits.
The NSSF Act, 2013 had introduced sweeping reforms to Kenya’s social security system, replacing the old provident fund model under Cap. 258 with a structured pension scheme.
Among its key features, the law required mandatory income-based contributions of up to approximately 12 per cent of gross earnings shared between employer and employee, expanded coverage to both formal and informal sector workers, and introduced a tiered system allowing part of contributions to be channelled into private pension schemes.
The law also expanded benefits to include retirement pensions, survivor benefits, and disability cover.
However, the ELRC found that aspects of the Act infringed on constitutional and statutory safeguards, including competition rules and legislative procedures, leading to the nullification of critical sections of the law.
The Stay Application
In opposing the stay application, respondents argued that no legal vacuum exists, noting that the previous NSSF framework under Cap. 258 continues to apply and that contributions have remained operational under earlier judicial directions.
The Court of Appeal, in declining to grant interim relief, emphasised that the applicant had not sufficiently demonstrated imminent irreparable harm or systemic collapse of the pension system if the stay was denied. The bench stated:
“We are, therefore, not satisfied that the applicant has shown that a successful appeal on judgment and decree will be rendered nugatory if no stay is granted.”
“We are, therefore, satisfied that the intended appeal is arguable.”
The ruling effectively means the ELRC judgment remains in force as the substantive appeal proceeds, keeping Kenya’s long-running pension reform dispute firmly within the courts.
COFEK’s Position
The Consumers Federation of Kenya (COFEK) welcomes the Court of Appeal’s decision as a reaffirmation of the rule of law and the constitutional principles governing social security legislation in Kenya.
The Court’s refusal to grant a stay sends a clear signal that state institutions and statutory bodies cannot use appellate processes as instruments to delay the implementation of court orders that vindicate the rights of workers and consumers.
COFEK has maintained a sustained interest in Kenya’s pension reform landscape and the protection of contributors’ rights under both the NSSF Act framework and the existing Cap. 258 regime.
We call upon all relevant stakeholders — including the Cabinet Secretary for Labour, the Retirement Benefits Authority (RBA), and the NSSF Board — to ensure that the rights of current and prospective pension beneficiaries are not prejudiced during the pendency of the appeal, and that any transition or status quo arrangements are administered transparently in the public interest.
COFEK further urges Parliament to expedite a constitutional and inclusive review of the NSSF Act framework, ensuring full bicameral participation as envisaged by the Constitution of Kenya, 2010, and genuine public participation that places the welfare of millions of Kenyan workers at the centre of any pension reform.
