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Uchumi staff yet to be paid May salaries

Julius Kipng’etich,  Uchumi Supermarkets managing director. FILE PHOTO | NMG
Julius Kipng’etich, Uchumi Supermarkets managing director. FILE PHOTO | NMG 

Retail chain Uchumi Supermarkets #ticker:UCHM is yet to pay its workers May salaries, prompting the union to seek government intervention.
Uchumi, which has about 1,300 employees, Tuesday confirmed the salaries delay but said it had allowed staff to access a fraction of their dues through an interest-free advance.

The delay, which also occurred last month for the April salaries, has prompted the Kenya Union of Commercial, Food and Allied Workers (Kucfaw) to write to the Labour secretary Phyllis Kandie asking for her assistance in resolving the stalemate.

Kenya’s largest retailer Nakumatt, is facing similar financial troubles and has not paid 1,555 employees their May salaries even as it sent more than 100 on compulsory leave, citing low business volumes.

Uchumi attributed the delay in payment of salaries to constrained cash-flows that have rendered it unable to meet some of its obligations.

“We have not been making the normal cycle of sales and, as a consequence, we have not been able to meet some of our obligations such as salaries,” a spokesperson said in an interview.

“The good thing is that when we are unable to pay salaries in the first week, employees can apply for an advance, which is payable at the end of the month. The May and June salaries will be cleared next week,” she said.

Kucfaw, which has 1,200 Uchumi employees as its members, also claims in its letter that Uchumi has defaulted on remission of statutory deductions as well as payment of overtime wages.

Uchumi ,however, said its payments to the National Hospital Insurance Fund (NHIF) are up to date, but was two months late on contributions to the National Social Security Fund (NSSF).

In a May 17 letter to Ms Kandie over the delay in April salaries, Kucfaw secretary general Boniface Kavuvi said his members would “withdraw their labour” if not paid their dues by May 24. The employees were paid on May 26 only for the problem to reemerge this month.

The Labour ministry has in its response to Kucfaw appointed a conciliator, Hellen Apiyo, to liaise with the union and Uchumi management for a lasting solution to the issue.

“The parties are requested to submit in writing to the conciliator their respective proposals within seven days from the date of this letter,” Joseph Yidah, the chief industrial relations officer at the ministry, said in the letter dated June 14.

Uchumi is banking on a taxpayer-funded bailout and sale of stake to a strategic investor to pull out of the red after halving losses in the six months to December. The retail chain’s sales have however tumbled by more than two thirds.

The business reported a net loss of Sh547 million in the period under review compared to Sh1.01 billion in December 2015.

The NSE-listed retailer has 20 branches across the country having recently closed five for non-performance. Uchumi exited Uganda in October 2015, closing five branches, and leaving 800 employees and suppliers demanding payments.

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