KENYA – Troubled retailer Nakumatt has embarked on a massive layoffs plan targeting 800 employees in a move that has triggered a vicious war with the workers’ union.
The company’s court-appointed administrator, Peter Kahi, said the layoffs are in line with the rescue plan he has crafted for the business that nearly collapsed under the weight of debt.
“As part of the business recovery strategy, we have commenced a rightsizing exercise.
This exercise is geared to aligning the human resource base with the current organisational needs,” Mr Kahi said in an interview.
Nakumatt had “over 4,000 employees” at the height of its growth but the administrator said it was yet to establish how many will be left after the layoff exercise.
The retailer has suffered mass exodus of workers in the past six months as it stumbled to near collapse.
Mr Kahi said the retail chain’s business is currently revolving around 13 branches, but it continues to carry a workforce to run 45 branches necessitating the trimming of staff numbers.
The union representing Nakumatt staff reacted sharply to the retrenchment plan and accused the administrator of breaching labour laws and a Collective Bargaining Agreement (CBA) reached with the workers.
Kenya Union of Commercial, Food and Allied Workers (KUCFAW) secretary-general Boniface Kavuvi said the Nakumatt administrator had issued the sackings notice on account of insolvency, a declaration he said Nakumatt has not obtained as required by law.
Nakumatt in late January got a reprieve when the High Court granted an application to appoint an administrator to run the company, rather than liquidating it as some creditors had demanded.
The family owned business had been battling to keep its heavily-indebted business afloat amid a push by creditors for its liquidation.
Mr Kahi said the layoffs will largely cover staff members, who had earlier been sent on compulsory leave.
Letters of termination given to a section of workers showed some employees have been offered severance pay of up to US$1,976
Mr Kahi says the affected employees will have a preferential claim for arrears of wages/salary up to the date of appointment but not exceeding US$1,976 or four months in arrears.
But the affected workers termed the send-off pay meagre, adding it could not adequately compensate for their services.
“I have worked here for two decades and to be sent home in this manner is very painful,” said an employee who sought anonymity.
Mr Kahi has since announced the appointment of Tusker Mattresses Limited as the new managers for the troubled retailer.
The appointment, which is subject to regulatory approvals, would see Tuskys assume operations in management aspects for the troubled retailer.