This archive report was first published on 9 August 2019.
On August 9, 2019, East African Portland Cement Company (EAPCC) declared redundant all its 800 employees, marking the beginning of a leaner workforce aimed at trimming the company's wage bill.
According to acting EAPCC managing director Stephen Nthei, the company's workforce is too large, with a total cost that is 'very high' compared to productivity. The goal is to operate with less than 600 people earning less than their current wages.
Employees who successfully reapply for their jobs will face a 40% cut on their previous wages. The company had 936 employees at the end of June 2018, but this number has since dropped to about 800.
Mr. Nthei sent a memo to all employees stating that the firm is incurring a Sh8 million loss every day and will have to declare redundancies to avoid collapse. The company has already notified the workers' union and the Labour office.
The first group of employees is set to be laid off early next month. The management estimates it will spend about Sh600 million in the redundancy, citing the high cost of severance pay for unionisable levels.
Permanent workers will receive a golden handshake of 30 days for every year worked, accrued gratuity, as well as outstanding leave days. Those on contracts will only receive payment for contract termination.
EAPCC is also facing a Sh1.5 billion award to contract staff after losing a case in the industrial court in July 2015. The company is stuck in negative working capital with obligations maturing within the next 12 months outstripping current assets by Sh7.3 billion.
However, Mr. Nthei expressed confidence that the company will receive Sh3 billion from the sale of land to Kenya Railways Corporation, which will help match the phased implementation of the redundancy programme.
