Justice Chacha Mwita.
By IP Reporter.
NAIROBI, Kenya — The government has been barred from implementing a plan to deduct the 2.75 percent health contribution from employees’ gross salaries, following a court ruling that declared the move unconstitutional.
Justice Chacha Mwita of the High Court said on Monday that the shift from net to gross pay amounts to “an unlawful form of disguised taxation” that would unfairly burden Kenyan workers.
“The deduction, as structured, is a Cabinet Secretary’s outlet for taxation without parliamentary oversight,” Justice Mwibanda ruled. “It violates the principle of fair taxation and the right to property.”
The 2.75 percent deduction was part of the Social Health Insurance Fund (SHIF) scheme, introduced under the government’s Universal Health Coverage (UHC) program.
Workers had raised concerns that calculating the contribution from gross pay — instead of take-home pay — would result in significantly higher monthly deductions.
The ruling is a major setback for the Ministry of Health, which had already begun implementing the SHIF deductions based on gross salary starting in May.
Civil servants, union officials, and private sector employees hailed the decision as a win for labor rights and fiscal justice.
“This is a relief for millions of workers who have been struggling with high costs of living and increasing statutory deductions,” said one representative from a national labor union.
The judge further emphasized that any form of taxation must originate from legislation passed by Parliament and cannot be introduced through regulation by a Cabinet Secretary.
The decision comes amid growing public scrutiny over rising deductions including housing levies, pension contributions, and now health insurance — all of which have strained take-home income.
It remains unclear whether the government will appeal the ruling. However, for now, employers have been directed to suspend the gross-based deductions and revert to the previous system until further notice.
Ends.
