Government Not Obligated to Pay You, Mbadi Tells Ex-KCC Employees

After nearly 30 years of waiting, former employees of Kenya Cooperative Creameries (KCC) face renewed challenges in their bid to recover KES 204 million in unpaid dues.

Cabinet Secretaries and other government officials have been criticized for sidestepping accountability on the issue, leading to sharp rebukes from the Senate Committee on Labour and Social Welfare.

The National Treasury Cabinet Secretary John Mbadi, absent from the latest Committee meeting, asserted in a letter that the government is not responsible for paying the workers’ terminal benefits and SACCO dues, which KCC had deducted but not remitted.

Mbadi recommended dismissing the petition, a suggestion that committee members labeled as “grossly casual.”

In his letter, Mbadi explained that since the employees’ contracts were terminated when KCC was privately owned, the government is under no legal obligation to pay the dues.

He cited a 2003 government buyback of KCC assets and a subsequent court order clearing liabilities as the basis for the Treasury’s position.

“In view of the above, considering the employees' contracts were terminated when KCC Ltd was under the private hands, and having complied with the provisions of section 3(1) and (2) of the Transfer of Business Act, the National Treasury believes that, there is no legal obligation on Government part, and therefore the petition should be dismissed,” said Mbadi

The dispute traces back to a 2013 High Court case in which former employees sued New KCC Ltd and the government for KES 204 million in unpaid dues. Although the High Court ruled in favor of the employees, New KCC Ltd successfully appealed the decision in 2020, with a three-judge panel ruling the corporation was not liable for the payments.

According to the Treasury, when KCC was placed under receivership in 1999 and sold to private owners in 2000, only 196 employees were retained while the rest were terminated and paid according to the law at the time.

The government repurchased KCC in 2003 and transferred its assets to New KCC Ltd in 2005 through a High Court vesting order. The Treasury maintains that, as required by law, a public notice was issued and went unchallenged by claimants, nullifying any later claims.