Mumias Sugar Company has sacked all its employees after the firm went into receivership under the Kenya Commercial Bank.
"Consequent to the company being placed in receivership, all employees contracts stand terminated from the date of receivership," a letter dated November 5 and signed by the receiver-manager read.
"Any payment to the affected employees shall be dealt with in accordance with the provision of the law."
But the company said the affected employees will be lawfully compensated.
New staff will be hired on a temporary basis to keep the company running and priority will be given to the former staff, who have just been fired.
"Accordingly, the Receiver shall engage the services of any employee on a temporary basis on mutually agreeable terms until the time when the operations resume," it read.
It added, "Priority will however be given to the past employees while recruiting the staff on a temporary basis until the time when the company's operations are revived."
