East African Portland Cement has declared its entire workforce redundant, effectively firing its entire staff and asking them to reapply under new terms.
In an unprecedented retrenchment decision that has shocked the employees, the cement maker said it has been incurring losses of up to Sh8 million every day and could not continue that way.
“In the last three years, the company’s market share has drastically reduced, impacting negatively on sales and subsequent profitability. This may be attributed to many reasons, key amongst them being increased competition and inadequate working capital,” a leaked internal memo signed by its acting managing director Stephen Nthei said.
Even though MD Nthei did not say how many workers will be fired, but the move is set to see hundreds sent home.
But in its most recent financial report for the year ending June 2018, the firm had a total staff count of 936. Out of this, 448 were permanent and the remaining 488 were on contract.
The loss-making firm, which is majority-owned by the government, has also blamed its poor performance on the dilapidated plant and machinery, which it says is in dire need for modernization to give it a competitive advantage.
“These basic challenges touch on the company’s ability to meet crucial performance indicators including staff costs,” the memo reads.
Consequently, the company says it is now faced with the need to restructure its operations, which will include a staff rationalization program to balance the institution’s running costs and current levels of productivity.
“This process will, unfortunately, render jobs redundant. In the spirit of fairness and in regard to the service rendered by the affected staff, this exercise will be done within the provisions of section 40 of the Employment Act and collective bargaining agreement,” the firm said.
Mr. Nthei says all positions in the company will be declared redundant and all employees let go. He adds that all jobs will be reconfigured in line with a leaner organization structure.
The action by Portland marks a new high in the ongoing sackings in corporate Kenya. No firm has taken a similar action of letting all staff go in the recent past, but it appears the cement maker has taken the action to shield itself from political interference.
According to the terms of termination, staff will be given a notice period according to their individual contracts. They will also be given severance pay for 30 days for every year worked as well as payment of all accrued gratuity to the date of separation.
The company has assured them that they will also be paid their accrued leave days. Also, they now laid-off workers will then be encouraged to compete for the few positions that will be created in the reorganization.