Kenya: Layoffs Continue at Tuskys

23 September 2020

Troubled retailer Tuskys has sent home hundreds of its unionised staff across the country as it struggles to keep its operations afloat.

The supermarket chain says the fresh layoffs are part of its ongoing business realignments.

In a letter seen by the Nation addressed to the affected employees, the retailer says terminal dues of those affected will be paid out on February 13, 2021.

In the letter, Human Resources General Manager Francis Kimani added that it will only offer payment to the staff members in line with the termination notice including accrued leave days and severance pay.

"Due to the ongoing business realignments, Tusker Mattresses Limited hereby informs you that it will no longer continue to offer you employment and will terminate your employment contract with effect from September 22," the letter said.

According to an affected employee who spoke to the Nation, the fresh layoffs targeted unionised staff who were recently embroiled in a salary reduction battle with the retailer.

Tuskys had on April 28, 2020 informed the Kenya Union of Commercial Food and Allied Workers that it was in the process of reducing working hours from 45 to 36 per week and invited the union to a meeting on April 30.

The retailer had informed the union that salaries for staff earning Sh49,999 and below had been reduced by 20 per cent, and by 25 per cent cut for those earning Sh50,000 to Sh99,000. Those earning above Sh100,000 were expected to get a 30 per cent cut.

The retailer argued that the impact of Covid-19 on its business, including containment measures such as the dusk-to-dawn curfew, had hit it hard.

The salary reductions were effective April 2020.

Last week, ex-staff recently laid off by the troubled retailer held demonstrations in Nairobi to demand their dues.

The more than 45 former employees who had been hired on contract accused the former largest retailer in the country of giving them the runaround for the last three months.

Stephen Owiti, who organised the demo, said some ex-employees had been given post-dated cheques which they doubted would be honoured.

"Some of us have post-dated cheques which we were told to cash at the end of the month, while others have cheques which have not been signed. How can you bank a cheque which is not signed?" he wondered.

On Monday, auctioneers temporarily suspended seizure of Tuskys Supermarket stock at Nairobi's Greenspan Mall over Sh24 million rent arrears, offering a reprieve to the struggling retailer.

Sannex Auctioneers said Tuskys has entered into a deal with the mall proprietor to put the auction on hold and that a consent has been filed in court to compel the retailer to clear the debt within two weeks.

The auctioneers had given the retailer a seven-day notice starting September 14 to pay outstanding rent arrears or have its goods sold through public auction on September 22.

Tuskys' goods that were set for auction include electronics, assorted clothes and handbags, freezers, trolleys and phones among other items.

"The auction has been put off to allow Tuskys time to pay. Today, they went to file consent so that they can be given two weeks to comply," said a representative from Sannex Auctioneers.

"The total amount that was due in rent arrears by the retailer at Greenspan Mall was Sh41 million. As at yesterday, they had paid Sh17 million."

Tuskys Komora in Eldoret is also set to face auctioneers on Wednesday October 7, 2020, over accumulated rent arrears.

According to a notice by Jomuki Auctioneers, the supermarket chain's property is set to be sold in a public auction.

"Under instructions received from our client, we shall sell the following by Public Auction: On Wednesday, October 2020 outside Tuskys Supermarket Wareng Premises in Eldoret town of Uasin Gishu County, starting from 11.30 am," read the notice published in the local dailies.

The retailer is currently undergoing deep cash flow troubles and is seeking to raise funds, including debt and sale of stake to an equity investor in order to clear loans and supplier dues.

It is set to raise Sh2 billion short-term debt from an unnamed private equity firm based in Mauritius. The funds are aimed at stabilising operations to make it more attractive to strategic investors it is courting.

On Friday, Chief Executive Dan Githua said the first tranche of Sh500 million disbursed will cover immediate working capital requirements including partial settlements to staff, suppliers and landlords among others.

"Having received the funds, we are actively releasing due payments to landlords, staff, and suppliers. In particular, the first tranche of the suppliers' old debt amounting to Sh321 million has been settled," he said.

Tuskys, which had a staff base of over 6,000 employees, joins an increasing number of companies which, responding to policy changes and a tough business environment, have opted for this move to remain afloat.

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