The government is exploring an out-of-court settlement with more than 4,000 workers from four state-owned sugar companies who challenged redundancy notices issued to them. Attorney General Dorcas Oduor said the matter could be resolved outside court, pointing out that negotiations were already underway between the parties.
The affected employees, drawn from Chemilil Sugar Company, South Nyanza (Sony) Sugar Company, Muhoroni Sugar Company, and Nzoia Sugar Company, filed a lawsuit arguing that the redundancy notices were issued in the midst of ongoing discussions about their benefits.
They noted that no clear plan had been shared detailing payments in lieu, accrued leave, severance according to the Collective Bargaining Agreement, or full salary and benefits owed, including pension contributions and statutory deductions.
The Employment and Labour Relations Court has directed the Attorney General to respond to the petition and indicate whether the government’s settlement proposal is acceptable to the workers. The case is scheduled for mention on October 30, a day before the redundancy notices are set to take effect.
“Despite the pending mundane issues and clear confusion, the first respondent (Principal Secretary for Agriculture) has instructed the second, third, fourth, and fifth respondents (the factories) to declare the plaintiffs redundant, thereby causing total disorder and leaving the plaintiffs in limbo,” the petition stated.
During a May 7 meeting, the parties reportedly identified verified salary arrears amounting to Sh4.7 billion. Unverified arrears totaled Sh900 million, and the phased payment plan in the memorandum of understanding (MoU) only accounted for Sh2.5 billion of the verified arrears. The workers contend that the Ministry of Agriculture is responsible for Sh2.2 billion of verified arrears, which remains unaccounted for, contrary to a clause in the MoU.
As part of efforts to revive Kenya’s sugar sector, the Ministry of Agriculture leased the four public sugar factories to private companies: Kibos Sugar and Allied Industries, Busia Sugar Industry Ltd, West Valley Sugar Company, and West Kenya Sugar Company, each on a 30-year lease.
Court documents indicate that the MoU required payment of Sh600 million to workers before the takeover, with the remaining Sh400 million to be paid as salaries starting May 2025. Each company was also allocated Sh150 million to settle staff arrears.
Non-retained employees were to leave through a voluntary early retirement scheme, with an exit package covering notice or payment in lieu, accrued leave, severance, full salary and benefits arrears, and a certificate of service.
However, the petition notes that redundancy notices have already been issued despite the lack of clarity over who will be affected, how selections were made, and what terminal benefits employees will receive.
