16 August 2017

Kenya: Nakumatt Woes Mount As Workers Sue Over Delayed Salaries

Photo: The Monitor
(File photo).

Regional retail chain Nakumatt Supermarket employees have joined the list of creditors and entities seeking legal redress over the company's failure to meet its financial obligations.

The employees, through the Kenya Union of Commercial, Food and Allied Workers (KUCFAW), have moved to court accusing Nakumatt of delaying their salaries, failing to pay them for overtime worked as well as non-implementation of the 11 per cent salary increase from May 1, 2017 as agreed in a collective bargaining agreement (CBA).

The retail chain has also unilaterally reduced the workers' shift hours from 13 to 10 hours with the aim of cutting down their overtime pay.

Nakumatt is also not remitting pensions, pay as you earn (PAYE) deductions, loan repayments, sacco contributions, private insurance schemes deductions, and union dues to the relevant agencies, the employees say in their petition before the High Court.

The suit adds to the long list so far filed by creditors including upmarket Thika Road Mall (TRM), which in July attached the retail chain's goods and equipment to recover Ksh51 million ($491,800) in rent arrears.

A separate insolvency petition filed by one of Nakumatt's top suppliers, seeking to recover Ksh70 million ($675,000) in debt, is also pending determination by the court.

African Cotton Industries Ltd, the manufacturer of popular tissue paper and sanitary towel brands such as Tena, Flora and Medicott, said in its petition that talks with Nakumatt since May last year have not borne fruit.

Three cheques that Nakumatt issued in March this year totalling Ksh11 million ($106,075) have also bounced. Nakumatt has argued that the attachment of its assets by TRM is illegal as there are active insolvency proceedings against it in court.

The employees are also pursuing similar agenda against the retail chain and want Nakumatt ordered to pay end month salaries as required under the CBA, pending the hearing and determination of the case.

"We also want that pending the hearing and determination of our case, Nakumatt be directed to pay PAYE taxes, remit loan, sacco and private insurance scheme deductions, pay union, and authorised overtime dues without delay," Boniface Kavuvi, secretary- general of KUCFAW, says in the court papers.

The employees also want the retail chain ordered to continue operating the 13- hour shift and be restrained from reducing the shift hours to 10 until such intention is discussed and an agreement recorded.

This is because the planned 10-hour shift will grossly affect the employees' earnings enjoyed over a period of time and which have become part of their monthly wages.

"Nakumatt should also be directed to implement 11 per cent general wage increase, which became due on May 1, 2017 according to the CBA," Mr Kavuvi argues.

Nakumatt and KUCFAW have a CBA, which came into effect on May 1, 2016 for a period of 24 months, expiring on April 30, 2018.

Trouble started after Nakumatt failed to honour the CBA and resorted to paying wages by the third week of the following month.

"The statutory deductions being pension and PAYE are not remitted, which has far reaching effects on employees' pension scheme and rendering the said employees as non-compliant with PAYE requirements," Mr Kavuvi in court papers.

Failing to remit loan deductions has affected the employees' loan repayment programmes, yet such deductions have been made at the source from employees' wages.

Mr Kavuvi says the various failures by Nakumatt have far reaching effects on employees, which is a threat to industrial peace and harmony. The case will be heard in September.

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