The Labour ministry has given struggling retail chain Uchumi the green light to sack hundreds of employees as it streamlines its operations in a bid to evade the pits of insolvency.
Hellen Apiyo, who had been appointed a conciliator in the dispute between Uchumi and its employees, has ruled the retailer can proceed with declaring some staff redundant, but in line with the law.
Uchumi’s employees moved to the Ministry of East African Community, Labour and Social Protection last year following persistent delay in salary payments and remittance of statutory deductions.
The situation worsened after Uchumi failed to pay its staff in December and January.
The retailer had proposed that some of its workers go on three months unpaid leave starting March 1, before being redeployed to vacant branches across the country.
But the employees, through the Kenya Union of Commercial Food and Allied Workers insisted the country’s labour laws cannot accommodate Uchumi’s proposal.
“In view of the fact that the business situation of the company has been precarious for many months now and it is only reasonable that the suffering of workers is brought to an end,” Apiyo said.
“Thus the company may consider it prudent to proceed to declare a redundancy and lay off the workers following due process laid out in law and to effect the same through making payment of terminal dues in full.”
The retailer told Apiyo it has been struggling to stay afloat since failing to secure funding from an unnamed financier.
Uchumi said business has failed to pick up since 2015, when many of its suppliers bolted after several false promises of payment for goods supplied.
Several Uchumi suppliers in 2015 filed an insolvency petition claiming close to Sh500 million.
The retailer, however, owed suppliers over Sh3 billion at the time.
Uchumi managed to convince its suppliers to withdraw the petition after agreeing on a long-term repayment plan.
From 40 branches in 2015, Uchumi has now been forced to close down 24 branches, the most recent being its Sarit Centre branch in Nairobi, which had been a tenant at the mall for more than 30 years.
The retailer said it has not received support from some suppliers, leaving it unable to settle its obligations.
Employees told Apiyo the supermarket has since July 2016 delayed salary payments and remittance of stautory deductions.
Apiyo told workers they are free to escalate their dispute, which gives them an option of suing at the High Court’s Employment and Labour Relations division.