National carrier Kenya Airways (KQ) is staring at uncertainty following a move by the Kenya Aviation Workers’ Union (KAWU) to reject up to 30 percent salary cuts for employees.
In a notice to employees, KQ CEO Allan Kivaluka announced that the cash strapped carrier would reduce salaries for workers earning Ksh45,000 and above by between 5 percent and 30 percent.
Kivaluka explained that the company had been unable to service its debts, and that the government was worried about the carryovers.
He also announced that KQ is unable to pay accrued salaries, and that the company could not give timelines for the payments.
“We cannot pay these amounts, and further, we do not have a timeline when payment will be possible. Our proposal, however, is that, as soon as we get a sustainable cash injection that can cover our overdues, we will, at that time, commence discussions on the payment of the deferred salaries. Similarly, should our financial situation and ability to pay improve significantly, we will redeem the deferred amounts,” said Kivaluka.
“I have previously communicated that the company has been struggling to meet its financial obligations. We owe our service providers and you, our employees, significant amounts. Our financiers and the Government of Kenya are also challenging the deferred pay arrangement as it is unsustainable,” he says.
Kivaluka says that the company’s debts have unsustainable levels, “leaving us with no option but to stop further accruals”.
KQ posted a Ksh12.9 billion loss in the year ended December 2019, as compared to Ksh7.6 billion loss posted in the year ended December 2018.
In a rejoinder, KAWU secretary general Moss Ndiema accused the management of acting without consulting the union.
Ndiema, in a statement to newsrooms, says thatKQ has no powers to alter downwards emploee salaries without an agreement with the union.
“We will never tire to remind all and sundry that management has no power, either real or imagined, to purport to alter the terms and conditions of service of unionisable employees without any consultation, negotiation and agreement with the Union. Any wish or desire by Management to alter any of these terms unilaterally is illegal and is doomed to fail,” said Ndiema.
Ndiema says that KQ had an agreement in place for payment of accrued salaries, hence the CEO could not deviate from it by saying that the carrier does not have payment timelines.
“The said communication further indicates that the deferred salaries owed to all unionisable employees from April to December 2020 cannot be paid. We are concerned that the CEO is not only laying his grounds for reneging on the agreements reached in the various Memorandums of Agreement (MOAs) signed between parties on this matter, but he has also deliberately failed to give any commitment on the timelines for payment of these caved amounts,” he added.
KQ has been making losses since 2014, but could announce its worst loss for the year ended December 2020, attributed to the effects of Covid-19 to the economy.