NSSF Employer Compliance Obligations
June 29, 2026

NSSF Contributions in Kenya: Understanding Employer Compliance Obligations

The National Social Security Fund Act, No. 45 of 2013 (NSSF Act, 2013) was enacted on 24th December 2013 and commenced operation from 10th January 2014. The Act sought to repeal and replace The National Social Security Fund Act (Cap. 258, Laws of Kenya) by introducing significant reforms to Kenya’s social security framework such as converting the NSSF from a provident fund to a pension scheme and introducing a gradual increase in mandatory NSSF contributions by both employers and employees, replacing the previous flat-rate contribution system.

This update provides a summary of the litigation history around the NSSF Act, 2013, the latest developments on the matter and the practical obligations that employers should comply with while the matter remains pending in court.

Litigation History

Following the enactment of the NSSF Act 2013, a Petition was filed before the Employment and Labour Relations Court in ELRC Petition No. 38 of 2014- Kenya Tea Growers Association & 8 Others versus National Social Security Fund & Others. The Petition challenged inter alia the constitutionality of the NSSF Act on various grounds including the legislative procedure, that the mandatory contributions were unconstitutional and that the Act creates an unlawful monopoly in favour of NSSF to the exclusion of private pension providers. On 19th September 2022, the Employment and Labour Relations Court declared the Act unconstitutional.

An appeal was lodged against the decision of the ELRC to the Court of Appeal, and in February 2023, the Court of Appeal held that the ELRC did not have jurisdiction to hear and determine the Petition.

A further appeal was lodged before the Supreme Court in Kenya Tea Growers Association & 2 Others v National Social Security Fund Board of Trustees & 13 Others, Petition E004 & E002 of 2023 (Consolidated) [2024] KESC 3 (KLR). The Supreme Court affirmed the jurisdiction of the ELRC and directed that the matter be remitted back to the Court of Appeal for hearing and determination on its merits.

The Court of Appeal in Civil Application No. E656 of 2022- National Social Security Fund Board of Trustees v Kenya Tea Growers’ Association & 14 Others, delivered its ruling on an application seeking stay of the Judgment of the ELRC that declared the Act unconstutional, on 29th May 2026. The Court of Appeal was not persuaded that the ELRC judgment has occasioned a legal vacuum that would destabilize the operations of the fund. The substantive appeal on constitutionality of the Act is still pending for hearing and determination by the courts.

On 26th June 2026, the Court of Appeal withdrew its ruling delivered on 29th May 2026 on grounds that the decision was rendered erroneously on an application that was not live before the court for determination.

Way Forward

The recent decision by the Court of Appeal to withdraw its ruling of 29th May 2026 has reintroduced uncertainty regarding the interim operation of the National Social Security Fund Act, 2013. As matters presently stand, the judgment of the Employment and Labour Relations Court declaring the NSSF Act, 2013 unconstitutional has not been stayed or set aside on its merits, therefore there is a strong legal basis for the view that the declaration of unconstitutionality remains operative.

The position maintained by NSSF is that employers continue to remit enhanced contributions in accordance with the NSSF Act, 2013, notwithstanding the ongoing litigation. As at the date of this publication, NSSF has not publicly revised or withdrawn its guidance to employers to continue remitting contributions under the NSSF Act, 2013.

The withdrawal of the ruling means that there is presently no valid appellate determination on the application for stay that had been widely relied upon by employers and legal practitioners.

In the interim, we recommend that:

  1. Employers to take note that the NSSF Act, 2013 remains declared unconstitutional by the Employment and Labour Relations Court, and that no judgment of the Court of Appeal has overturned or set aside that declaration on its merits. Accordingly, the ELRC judgment continues to subsist and remains the operative judicial pronouncement on the validity of the Act, subject only to the ongoing appellate process.
  2. Employers should maintain comprehensive payroll records and documentation of all NSSF deductions and remittances. This will ensure a proper audit trail and position employers appropriately for any reconciliation, refund, or adjustment that may arise following the final determination of the proceedings.
  3. Employers to seek independent legal advice before making or continuing any payroll deductions under the NSSF Act, 2013, particularly where such deductions may expose them to statutory, regulatory, or employee-relations risk in light of the subsisting judgment of the Employment and Labour Relations Court.

Our Employment and Labour Law experts continue to closely monitor developments in this area and will provide further updates as soon as the Court of Appeal issues further directions or delivers its determination on the substantive appeal.

Disclaimer: This publication is for general information purposes only and does not constitute legal advice. Specific legal advice should be sought in relation to particular circumstances. For more information contact us at andrew@aklegal.co.ke or info@aklegal.co.ke  

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