Tuskys reaches out to union over pay cut dispute

Salary reduction was effective April 2020

In Summary

•The retailer says dropped sales and projected poor performance has rendered its wage bill untenable.

•The Kenya Union of Commercial Food and Allied Workers has moved to court to protest the retailer to reduce the salaries of unionised staff.

Tuskys Supermarket
Tuskys Supermarket

Troubled retailer-Tuskys has reached out to its workers’ union seeking to resolve a pay cut dispute currently before the Employment and Labour Relations Court.

The Kenya Union of Commercial Food and Allied Workers  moved to court to protest the move.

The lawsuit was filed on May 19, and the court ordered the parties to negotiate pending further orders by the court.

In a letter to the union, addressed to Secretary-General Boniface Kavuvi, Tuskys has called for a consultative meeting set for Thursday.

“The main agenda for the meeting shall be to seek your assistance in approaching the current business performance in a sustainable way as partners,” Francis Kimani, General Manager -Human Resources, says in the letter.

“After the business took the option of salary cuts and with the matter coming up for determination, it has apparently become unsustainable. Your support will be highly appreciated,” he adds in the letter copied to the Labour Ministry and Federation of Kenya Employers.

Tuskys had informed the union that salaries for staff earning Sh49,999 and below had been reduced by 20 per cent, a 25 per cent cut for those earning Sh50,000 to Sh99,000 and a 30 per cent cut on salaries above Sh100,000.

The retailer argues that the effect of Covid-19 on its business, including containment measures by the government such as curfew, had impacted negatively on its business.

The salary reduction was effective April 2020.

The union yesterday said 8o per cent of salaries for the months of May,June and July have been paid, with Tuskys promising to start paying the remaining 20 per cent before end of this month.

"They remain non-committal on payment of May salaries for the 80 redundant employees," Kavuki said, "We are going with an open mind, hear what they have to say."

Judge Byram Ongaya on July 10, gave Tuskys 10 days to renegotiate and consult with the claimant, “in good faith”, towards an amicable resolution of the dispute as per the recognition agreement and the tripartite agreement dated April 30, 2020.

Tuskys had on April 28, 2020, through a letter, informed the union that it was in the process of reducing working hours from 45 to 36 hours per week and invited the union to a meeting on April 30.

The union, however, termed the notice as short and requested the meeting to be rescheduled.

“No subsequent meeting was scheduled until May 8. 2020 when the claimant (union) learned that salaries for unionisable employees had been reduced without due consultation or mutual agreement,” court papers read in part.

The union has argued that Covid-19 situation which has been experienced by the workers should not be used by Tuskys to "unilaterally alter terms of service in breach of the recognition agreement, CBA and rights of employees."

Tuskys has pegged its decisions on a drop on its sales which between April and May, went down by 35 per cent compared to a similar period last year, with a further decline expected if Covid effects persist.

The dropped sales and projected poor performance has rendered its wage bill untenable, it argues, and unless it takes urgent remedial measures, it will find itself staring an economic crisis.

Tuskys has over 6,000 employees with a monthly wage bill of about Sh200 million.

The latest development comes even as the retailer seeks to sell a majority stake, a move its hopes will save the business from collapsing.

The retailer, which has closed some of its branches, as a result of low business, has struggled to pay its suppliers in recent months, prompting the intervention of the Competition Authority of Kenya.

On Monday, CAK said the retailer has provided documents indicating that it made payments to suppliers in June 2020, as per its order. It had a Sh1.29 billion supplier debt.

CAK director-general Wang'ombe Kariuki said the competition watchdog is monitoring development on shareholders’ plans to seek funding options, including seeking a strategic investor by July 31, 2020.