Business

Collapsing Botswana-based Choppies Supermarket Ordered To Deposit Sh7 Million Guarantee

Published

5 years ago

December 11, 2019

Kisumu Senior Principal Magistrate Robinson Ondieki has ordered the collapsing Botswana-based Choppies Supermarket to deposit Sh7 million as a guarantee should the firm exit the country without paying their dues.

While delivering his ruling, Justice Ondieki stated that he was aware of the fact that the Kenyan economy was not sound and that withholding a sum of Sh12 million from the company would be unjust. Former employees had moved to court seeking payment of their redundancy fees.

“I shall allow the application to the extent that the respondent deposits Sh7 million to the courts in the next 28 days and direct that the trial be expedited in order to inject monies back to the economy. The fact that the respondent has foreign roots and that has failed to demonstrate that there are assets in Kenya that can be utilized to satisfy a decree in event of the claimants are successful, the fear of financial loss of claimants is real,” ruled the magistrate.

In September, the Botswana-based Choppies Supermarket terminated contracts of over 200 workers effectively after it emerged that the struggling retailer plans to exit the Kenyan market.

Kenyan markets have become tougher for upcoming retail chain stores. In the past few years, the Kenyan market has seen a massive drop of supermarkets including government-owned Uchumi with Ukwala, that, apparently Choppies liquidated being the most recent to start closing its doors after selling empty shelves for a while.

The affected employees said they ought to have been given their dues before being shown the door. According to an employee, the company’s management hasty decision to issue the termination letter before meeting the union leadership was questionable. They moved to court after the company closed some of its branches but failed to pay them redundancy fees amounting to Sh12.5 million.

“Once you clear and leave, you are no longer an employee, and the company may delay paying the dues or even give less pay since we have not discussed how much to expect,” said an affected employee who sought anonymity.

In the case that will be heard on January 13, 2020, Choppies in their response argued that through a meeting on October 7, the two parties entered an agreement to pay the claimants a terminal benefit on redundancy and terminal dues through Barclays Bank. Choppies told the court that the workers had received a payment of Sh686,485 with respect to their terminal fees according to the respondents.

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