Politics and policy

Employers criticise courts for blocking staff layoffs

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A December 3 judgment directed Kenya Airways to reinstate 447 laid off unionisable employees.

A December 3 judgment directed Kenya Airways to reinstate 447 laid off unionisable employees.  

By George Omondi

Posted  Sunday, December 9  2012 at  16:16
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Employers have criticised courts for blocking staff layoffs which firms resort to to cut costs during harsh economic times.

In a joint statement issued on Friday by the Federation of Kenya Employers (FKE), and Kenya Private Sector Alliance, the firms said hefty fines and frequent reversals of their decisions have undermined recovery and growth of their members.

“These judgments are starting to cause uncertainty and anxiety in the labour market,” the team said in a statement read by former FKE chairman Aram Mbui.

The protest came hot on the heels of a December 3 judgment which directed Kenya Airways to reinstate 447 unionisable employees laid off under the airline’s payroll trimming programme.

The programme had hoped to slash Sh1.3 billion annually off KQ’s payroll and boost recovery especially after the firm reported Sh4.8 billion net loss for the six months to September 30.

“Like other arms of government, the Judiciary needs to be supportive of investments by delivering judgments which are sensitive to long term impact on the mucky road of employment creation,” the team said.

Cotu secretary-general Francis Atwoli , however, said employers should follow the law before laying off staff, noting that Kenya Airways employees were reinstated because the airline did not engage the union.

“Layoffs are negotiable and must involve unions and employers,” Mr Atwoli said. Other labour officials viewed the judgment as evidence that the Judiciary was finally gaining independence. Just like labour unions, the two employer bodies were instrumental in pushing for reforms that have given the Judiciary independence after enacting the new Constitution.

On Friday, the team broke its silence on what it now sees as frequent interference in firms’ internal affairs. If left unchecked, the trend could force investors to relocate to ‘‘safer environments within the region’’, the statement added.

Last month, Industrial Court Judge Byram Onganya warned Kenya Literature Bureau’s managing director Eve Obara that she risked contempt charges in her delay to reinstate and pay Sh1.5 to ex-employees for unlawful dismissal. The employers also cited a case where a judge ordered payment of house allowance at 30 per cent of basic salary saying it was contrary to clause four of the Regulation of Wages (General) Order.
The clause provides for 15 per cent of basic salary.

Maximum compensation

“In most cases, the judges have ordered for maximum compensation payments of up to 12-month salary as damages, costs and interest at court rates which are inconsistent and in conflict with the law and established Industrial Relations practice,” Mr Mbui said.

To create jobs, employers require a thriving private sector that has a freehand to do legitimate business and make decisions based on commercial realities, said Mr Mbui.