Employers anxious over lack of clarity on NHIF rates deduction

Federation of Kenya Employers Executive Director Jacqueline Mugo says basing statutory payments on gross earnings is punitive to employers and employees. [PHOTO:FILE/STANDARD]

Federation of Kenya Employers (FKE) is calling for immediate suspension of the new National Hospital Insurance Fund (NHIF) rates since there are contentious issues that need to be ironed out before its implementation.

FKE Chief Executive Officer Jacqueline Mugo said employers have issue with the directive that deductions be effected on employee’s gross income. “This is an area of concern to us considering the financial implications and that NHIF has not provided clarity on what constitutes gross income,” she said while attending FKE Coast region 55th annual general meeting in Mombasa.

The employers’ representative said NHIF should move with speed to ensure implementation of these new rates does not run into problems. ‘’We are of the opinion that this paradigm shift of basing statutory payments on gross earnings is misguided and punitive to both employers and employees,” Ms Mugo.

Monthly salary

Under the new rates, gazetted through a Legal Notice published last month, the lowest income earner with a Sh5,999 monthly salary pays Sh150. She said FKE wants further consultations with NHIF on this matter that “we feel need to be addressed otherwise we will resist the implementation of the rates”.

The FKE CEO said they want greater attention to strengthen labour market institutions that includes the National Labour Board, the Wages Councils and the Productivity Centre of Kenya which have not been operating as envisioned as they are inadequately resourced. Mugo said FKE will not support the move by the government on the new NHIF deductions as it is.

She further said NHIF board needs to be reformed and as it cannot transact businesses effectively “because we know the restructuring they embarked to do is not complete and there is no board of trustees in place”.

‘’These labour market institutions are important for both economic growth as well as well-being of the workforce,” said Mugo.

She boss said it is unfortunate that on several occasions, FKE and Central Organisations of Trade Unions have had to resort to court action on certain controversial decisions that had adverse effects on employers and workers interests.

‘’Because we want to avoid such scenarios going forward, we urge NHIF to embrace dialogue over the new rates with all stakeholders,” added Mugo. She said by starting deductions of April salary when the implementation of the rates kicked off and saying that Kenyans will enjoy the health care from July then “NHIF is asking Kenyans to lend them money”.

“Otherwise why would NHIF start the deductions three months before making the services available to the masses,” Mugo posed. She also said National Social Security Fund (NSSF) cannot transact business effectively because there is no board of trustees in place.

“We remain concerned that an institution that has employers and workers as the contributors remains highly exposed and we continue to engage the government to ensure that a board of trustees is properly constituted,” Mugo disclosed.