Ex-workers sue Uchumi for Uganda exit

Former employees of Uchumi Supermarket have sued the retail chain for not informing them prior to closure of its Ugandan branches and exiting the country without remitting their salaries.

The ex-Uchumi workers say in a case filed at the High Court in Uganda that their employer tricked them into taking 21 days of leave to allow renovation of the supermarket’s premises.

They aver that they only learnt of the closure from Kenyan media which widely reported Uchumi’s exit from Uganda.

Uchumi shut down its five Uganda outlets as part of a turnaround plan that also saw it exit Tanzania where it had six branches.

The supermarket chain says its Uganda and Tanzania branches have been making losses despite it injecting Sh2.4 billion into them annually.

The 27 former Uchumi employees in Uganda are seeking terminal benefits from the supermarket and want to attach their former employer’s assets to secure USh200 million (Sh6.25 million). The amount, they say, is to cater for their terminal dues.

“On October 4 and 5 while the plaintiffs were on duty at their various Uchumi branches, they were summarily summoned and informed that Uchumi was being temporarily closed for renovations. Up to date, no work has been given by Uchumi. The defendants are engaging in various acts of fraud and deceit,” the former Uchumi workers say.

The former employees have sued Uchumi Supermarkets (Uganda), Uchumi Supermarkets Limited, its group chief executive Julius Kipng’etich, the Industrial and Commercial Development Corporation and Creative Consolidated Systems.

The retail chain said the two countries constituted 4.75 per cent of its entire business but accounted for a quarter of its operating costs, ratios which did not justify the high cash injection which was “straining its liquidity”.

Uchumi’s exit from Uganda and Tanzania has left more than 900 employees jobless. The retail chain has, however, announced that it plans to return to both Uganda and Tanzania in one year’s time.

READ: Uchumi sacks 900 Uganda, Tanzania staff

Uchumi has also announced a sale-and-leaseback plan for two of its properties along Ngong and Lang’ata roads as part of its turnaround plan. The supermarket chain is banking on the sales to strengthen its liquidity and pay off its debts.

Its former Uganda staff say Uchumi has been announcing a temporary closure in Uganda as part of a scheme to move its assets and evade debts it owes to employees and suppliers.

The supermarket is facing another lawsuit from Kampala poultry firm Ugachic which is demanding USh185 million (Sh5.7 million) in outstanding dues.

“Uchumi is misinforming former employees and the general public in Uganda that the branches have merely been temporarily shut down while using this as a cover up to take assets out of the company hence out of reach of the applicants in a manner that will fleece workers,” the ex-employees say.

The retailer made a pre-tax loss of Sh262.3 million in the half year ended December compared to a pre-tax profit of Sh106.9 million a year earlier after sales fell to Sh6.8 billion from Sh7.2 billion during the same period.

Uchumi, whose former management team was accused of cooking books, hid its net lossrofit figures by leaving them out of its financial statements.

SOURCE: BUSINESS DAILY