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Nairobi’s Employment and Labour Relations Court has frozen bank accounts of Heritage Insurance for allegedly failing to pay more than Sh100 million to employees unfairly terminated.
In a ruling on Thursday, Justice Hellen Wasilwa of the Employment and Labour Relations Court ordered a lockdown of the accounts in favour of 24 former managerial employees, who claim that the firm was reluctant to pay them their dues.
Previously, the former employees won the case in which they sued their former employer for unfair termination of their jobs.
The order issued by Lady Justice Wasilwa is set to affect the firm’s accounts at CFC Stanbic Bank, NIC Bank, Commercial Bank of Africa (CBA) and Diamond Trust Bank (DTB).
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Last year, the labour court found that the services of 24 former top managers of the insurance firm had been unfairly terminated during the implementation of what the company said was a restructuring exercise to improve its business efficiency.
Related:REASONS WHY UAP OLD MUTUAL PLANS TO LAY OFF 100 WORKERS
Kenya’s Heritage Insurance Managing Director Godfrey Kioi had in the lawsuit filed stated that the directors and senior managers up to supervisor level were affected in the last year’s ugly lay off. He termed their eminent sacking abrupt and cruel.
In a judgment delivered on June 3 last year, Labour Court judge Monica Mbaru had directed the insurer to pay Sh101, 678,336 together with interest accrued amounting to Sh4,195,276 as well as costs amounting to Sh2,843,841. The case will be heard on February 23
Profit warning
Heritage is part of Liberty Kenya Holdings Limited which reported last year that it had a 15.3 per cent drop in net profit in the half year ended June, 2016 as a result of higher claims and operating expenses.
The drop in profit came as claims from policyholders increased 41.5 per cent to Sh2.3 billion, with operating expenses also rose 14.2 per cent to Sh1.5 billion.
Massive job losses
Since the capping of interest rate in Kenya’s banking sector, the financial sector has been grappling with the ballooning wage bill, triggering massive job losses in the financial services sector.
In the recent turnaround, a financial services group UAP Old Mutual announced plans to shed off tens of its staff. In a notice issued to shareholders and employees, the insurance and financial service provider said the layoff was part of the plans to trim expenses.