State mulls out-of-court settlement with sugar workers over redundancy row
The affected workers are from Chemilil, South Nyanza (Sony), Muhoroni, and Nzoia sugar companies. They moved to court, accusing the government of declaring redundancies while discussions on their benefits and dues were ongoing.
The government is considering an amicable settlement with more than 4,000 workers drawn from four state-owned sugar factories following a court dispute over redundancy notices.
Attorney General Dorcas Oduor informed the Employment and Labour Relations Court that the issues raised by the employees could be handled outside court since talks between the parties were already in progress.
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The affected workers are from Chemilil, South Nyanza (Sony), Muhoroni, and Nzoia sugar companies.
They moved to court, accusing the government of declaring redundancies while discussions on their benefits and dues were ongoing.
In their petition, they claimed there was no structured plan explaining how they would receive payments in lieu of notice, accrued leave, severance pay, or pending benefits such as pension contributions and other statutory deductions.
The court directed the Attorney General to confirm whether the proposed out-of-court solution was acceptable to the workers ahead of the next mention set for October 30, just a day before the redundancy notices 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,” read part of the petition.
The workers said that during a meeting on May 7, all parties agreed that verified salary arrears stood at Sh4.7 billion, with an additional Sh900 million in unverified arrears. However, the payment schedule captured in the memorandum of understanding (MoU) only accounted for Sh2.5 billion of the verified arrears.
They added that the Ministry of Agriculture still owes Sh2.2 billion in verified arrears, which was not included in the MoU despite earlier commitments.
To revive the sugar industry, the Ministry leased the four public factories to private investors under a 30-year agreement.
The beneficiaries were Kibos Sugar and Allied Industries, Busia Sugar Industry Ltd, West Valley Sugar Company, and West Kenya Sugar Company.
Court documents show that the MoU required an initial payment of Sh600 million to workers before the handover, while the remaining Sh400 million was to be settled as salaries from May 2025.
Each company was also allocated Sh150 million to clear staff arrears. The agreement provided that employees not retained under the new management would leave through a voluntary early retirement scheme, receiving full exit packages including severance, leave dues, benefits arrears, and a certificate of service.
However, the petition states that redundancy notices were issued even before the process was clarified. The workers claim that no clear criteria were shared on who would be affected, how selections were made, or what benefits each would receive.
They described the entire process as “opaque, contrary to the provisions of sections 40(1)(a) and (c) of the Employment Act”.
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