Ernst & Young seeks arbitration in ex-CEO pay dispute

Audit and advisory firm Ernst & Young wants a dispute over the retirement perks of its former chief executive officer referred to arbitration.

In a reply to the case by Mr Gitahi Gachahi, the firm said the former CEO was not an employee but a partner and whose relationship with Ernst & Young was governed by a partnership agreement.

Ms Nancy Muhoya, the East Africa Cluster leader and country managing partner said Mr Gachahi was a partner with a commercial relationship, hence the matter is subject to arbitration.

“The relationship is governed by a partnership agreement/deed, which was revised on July 1, 2015. The partnership deed was agreed upon and signed by the then partners of the respondent including the claimant,” she said.

She urged the Employment and Labour court to dismiss the case saying it lacked jurisdiction.

During the hearing yesterday, Mr Gachahi’s lawyer asked for more time to respond to the application and Justice Nduma Nderi allowed him up to March 15, when the case will be argued.

Mr Gachahi said in his court documents that he managed his retirement well but the firm did not act in good faith during his last days of retirement.

He retired on June 30, 2020.

“This variation was made to my earnings without any engagement as is the practice and in accordance with Ernst & Young values. The 22.5 percent variation was discriminatory and biased as no other partner earnings were varied by more than five percent, despite Covid-19,” he said.

He said the controversial decision made by executives in South Africa to change the accounting policy to increase depreciation targeted him to reduce his earnings.

Mr Gachahi argued that his retirement package was incorrectly slashed by Sh10 million after the firm capped his pending leave days at 60 instead of 153 while Sh2.8 million was docked from his pay as part of austerity measures to protect the company from the economic effects of Covid-19.