Tuskys pressured to pay salary arrears after Sh2b bailout

Employees demanding arrears from July

In Summary

•Going forward, Kenya Union of Commercial Food and Allied Workers wants the retailer to pay salaries on time.

•It has pegged hopes on last week's Sh2 billion bailout by Mauritius based fund to help streamline operations , including payment of salaries and wages by the retailer.

Tuskys Supermarket
Tuskys Supermarket

A week after announcing a Sh2 billion financing deal with an unnamed Mauritius based fund, troubled retailer-Tuskys is under pressure from its workers' union to clear salary arrears dating July.

Suppliers and creditors are also on the retailer's door steps, hoping their monies will be paid after a series of stand-offs that threatened to wind up Kenya's second-largest supermarket.

The retailer which owed suppliers in excess of Sh1.29 billion has so far cleared part of its debt, after pressure from its creditors was backed by directives from the Competition Authority Kenya in June, which asked Tuskys to address the the debt stalemate.

The Kenya Union of Commercial Food and Allied Workers is the latest to turn the heat on Tuskys management , counting on the recent bailout to normalise operations and adress salary woes at the retailer.

The union which in May moved to court to protest salary cuts, now wants Tuskys to clear part of July, 2020 wages and salaries which are still outstanding to date , where some members have not received any payments with some being paid half their monthly earnings.

“Kindly do provide a definite date when the balance shall have been cleared . Further, August 2020 wages are almost due and efforts should be made to pay those salaries/wages on time,” the union's Secretary-General Boniface Kavuvi says in a letter to management seen by the Star yesterday.

Kavuvi says the employees have various financial engagements serviced through their salaries and wages.

“These are besides their needs and the needs of their families which must also be met at each month end,” Kavuvi explains, “ Please put efforts to ensure salaries/wages are paid timely and as lawfully required.”

He says the union remains hopeful that after signing of terms if agreement /financing with the Mauritius based fund, the situation will be back to normal.

The salary delays are amid a salary cut by the retailer which in April slashed salaries for staff earning Sh49,999 and below 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 argued that the effect of Covid-19 on its business, including containment measures by the government such as curfew, had impacted negatively on its business.

In response to pay delays, CEO Daniel Githua has assured the union that the retailer is on course to clear all outstanding arrears.

He says salaries for the month of July 2020 has been paid in part up to 50 per cent of the total.

The same has been paid progressively and without discrimination starting with the lower cadre employees, with anticipation of payment in full soonest for the remaining 50 per cent, Githua says in a response letter to the Union, seen by the Star yesterday.

“The Tusker Mattresses Limited Managment regrets for the delay in payments of July 2020 salaries and wishes to clarify that it has no reason whatsoever of holding employee's salaries,” Githua says in the letter copied to the Labour CS, Federation of Kenya Employers, and Tuskys branches.

This is despite a decline on the company's revenue since Covid-19 pandemic hit the country, Githua says, making it impossible for the company to timely meet all its financial obligations up to and including payments of salaries.

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

Last week, it announced it had signed terms of agreement with a Mauritius based fund for the provision of a financing facility worth Sh2 billion.

The retailer’s board said the lifeline is expected to help alleviate the firm’s current capital constraints impacted by Covid-19 and further reposition the business for increasing stakeholders’ value.

“We wish to reiterate our commitment to resolve the underlying working capital challenges quickly. This funding will provide the needed impetus to our overall capitalization journey,’’ chairman Bernard Kahianyau said in a statement.

Although details of the deal are yet to be made public, an internal source involved in regular meetings with angel investors told the Star that a deal of 100 per cent takeover is on the table.