News

Court orders Portland Cement to pay Sh350m penalty in 30 days

eapcc

East African Portland Cement’s factory in Athi River. FILE PHOTO | NMG

Summary

  • Court of Appeal judges, while suspending the decree by the Employment and Labour Relations Court on September 14, noted that there are no practical ways for EAPCC to recover the colossal sum from workers in the event its property is sold but gave a stringent condition to the struggling firm.
  • The Labour Court had on August 2 allowed the Kenya Chemical and Allied Workers Union (Kcawu) to recover the colossal sum that Portland owes more than 400 workers under the 2013–2015 CBA, prompting the firm to seek the Court of Appeal’s protection.

Troubled East African Portland Cement Company (EAPCC) #ticker:EAPCC has been given 30 days to deposit Sh350 million in court as a condition to suspend an order allowing the sale of its property to recover Sh1.4 billion it owes workers.

Court of Appeal judges, while suspending the decree by the Employment and Labour Relations Court on September 14, noted that there are no practical ways for EAPCC to recover the colossal sum from workers in the event its property is sold but gave a stringent condition to the struggling firm.

The Labour Court had on August 2 allowed the Kenya Chemical and Allied Workers Union (Kcawu) to recover the colossal sum that Portland owes more than 400 workers under the 2013–2015 CBA, prompting the firm to seek the Court of Appeal’s protection.

“The applicant must deposit in court or provide a bank guarantee in the sum of Sh350 million being approximately 25 per cent of the decretal sum,” the judges ruled, adding that the said deposit or bank guarantee “shall be provided within 30 days or the conditional stay shall automatically lapse.”

EAPCC had in its application pleaded with judges Martha Koome, Hannah Okwengu and J. Otieno-Odek to suspend the decree pending the appeal, arguing that some of the items attached constitute tools of trade.

Portland said attachment of those tools would cripple its business operations making it difficult to meet its obligations.

The union, however, urged the court to deny the cement maker any reprieve, arguing that the firm had not advanced any solid grounds in its appeal.

The judges, however, noted that arguable grounds had been established to warrant granting of reprieve even as they maintained that the stay of execution would lapse with EAPCC’s failure to provide the Sh350 million guarantee.

The decree to recover Sh1,401,585,364 emanates from a long-running dispute arising from EAPCC’s failure to fully implement the collective bargaining agreement (CBA).

The said CBA was the subject of a dispute before the Labour Court and the Court of Appeal.

Portland Cement was particularly aggrieved by the court’s directive that it increases the wages of contract employees.

The court held that the contract staff, who were not part of management and are members of Kcawu by payment of union dues, were entitled to benefit from the negotiated CBA.

EAPCC’s argument that there were separate negotiations for non-management workers, some of who were on contract and others not, was rejected.

The Labour Court found that payment of union dues is what makes an employee a member of a trade union.

Portland had conceded that the dues paid to staff on contract are different from that paid to permanent employees though unionisable.

The reason EAPCC advanced for this was that putting the wages on the same level is unsustainable and if implemented would require Sh71.3 million per month that it was unable to raise. EAPCC and Kcawu have negotiated CBAs since 1961. However, the contract employees were not covered by the CBA until 2011.