CMC workers seek to stop buyout over pension dues

CMC’s showroom in Nairobi. Photo/File 

By GALGALLO FAYO

In Summary

• 86 non-unionisable employees want the court to put on hold CMC’s Extra-ordinary General Meeting planned for next month until the hearing and determination of their case.
• The employees fear that their Sh46.5 million pension contribution arrears due from CMC will be lost in the event of takeover, claiming no provision has been made on settlement of the outstanding sum.

CMC employees have moved to the Industrial Court seeking orders to stop takeover of the motor dealer by Dubai-based conglomerate Al-Futtaim; citing outstanding pension arrears and lack of clarity on effect of the changes on their existing terms of employment.

The 86 non-unionisable employees want the court to put on hold CMC’s Extra-ordinary General Meeting planned for next month until the hearing and determination of their case.

“That the takeover of CMC by the strategic investor Al Futtaim Auto Machinery Company be stopped and/or suspended until CMC provides a security for salaries, retirement benefits of the claimants in terms of a fund to be deposited in an interest earning account,” reads an order sought by the employees.

The employees fear that their Sh46.5 million pension contribution arrears due from CMC will be lost in the event of takeover, claiming no provision has been made on settlement of the outstanding sum.

The employees further argue that the new buyer is planning to retrench staff after takeover, and yet it’s not clear who will shoulder their benefits which have accrued over the years that they have worked at CMC.

CMC through its lawyer Martin Munyu Monday told the Industrial Court they are in talks with the employees with a view to reaching an out-of-court settlement.

Justice Maureen Onyango directed the case to be mentioned next Tuesday to see if the firm had reached an agreement ahead of the shareholders meeting slated for March 10.

Al-Futtaim is in the process of buying out the Nairobi Securities Exchange-listed CMC Holdings at Sh7.5 billion (Sh13 per share), and has already got support of the majority shareholders including Peter Muthoka, Charles Njonjo and Paul Ndungu who control a 50.6 per cent stake.

READ: Al-Futtaim short of 10pc stake for full CMC buyout

But the employee dissent could threaten the buyout deal which is seen as a reprieve for shareholders who have gone without dividends in recent years as board wrangles and loss of the Jaguar Land rover (JLR) Franchise hit its earnings.

The employees claim that as at December 2012, CMC had not remitted Sh46.5 million to AON HEWITT—the employees’ pension manager— but promised to pay the cash in instalments of Sh12.7 million to be complete in 2018.

The petitioners further argue that, CMC’s management has been forcing employees in the JLR division to agree to voluntary retirement against labour laws.