Companies

Portland plan to put all staff on temporary terms hits snag

Stephen-Nthei

East African Portland Cement acting MD Stephen Nthei. PHOTO | SALATON NJAU | NMG

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Summary

  • Kenya’s oldest cement maker declared redundant all its 270 employees on September 1 and offered to rehire them on a three-year contract with a reduced monthly pay of between 40 and 50 percent on average.
  • This was expected to slash the firm’s wage bill by at least Sh240 million a year.
  • The staff were offered to be paid their benefits such as severance and gratuity within 12 months and were only allowed to sue the cash-strapped firm if the dues were not settled within that period.

Struggling East African Portland Cement Company’s (EAPCC’s) plan to convert all its permanent staff to temporary workers with a pay cut of up to 50 percent has suffered a setback after a section of unionisable staff objected the terms.

Kenya’s oldest cement maker declared redundant all its 270 employees on September 1 and offered to rehire them on a three-year contract with a reduced monthly pay of between 40 and 50 percent on average. This was expected to slash the firm’s wage bill by at least Sh240 million a year.

The staff were offered to be paid their benefits such as severance and gratuity within 12 months and were only allowed to sue the cash-strapped firm if the dues were not settled within that period.

“We ran into teething issues between ourselves and the union. There were a few unionisable staff who did not sign, and that is what we are still discussing and agreeing,” acting managing director Stephen Nthei said.

“Whatever we will discuss and agree between ourselves and the union will apply to everybody, even those who have signed. It should not be a discriminative procedure.”

Unionisable employees are about 150 of the 270 who are expected to work under a three-year contract under the terms of the deal.

The conversion of the employment forms the final of a three-phased “modified” staff redundancy programme which started in mid-2019 after the caretaker management team got board’s approval to reduce the then bloated workforce of 936 employees.

The first phase saw all contractual staff terminated last year upon expiry of their deals and were only rehired after a suitability assessment programme staff that fitted in a revised corporate structure and reduced salary scale.

This was followed by sacking of all administration staff, slashing the workforce to just 270.

“We called it a modified redundancy programme because in the eyes of the law, it cannot pass the test because the firm was unable to pay all the terminal dues on release of the staff,” Mr Nthei said.