Kenya’s Employment and Labour Relations Court has stepped in to prevent Wasoko, a Kenyan eCommerce startup, from laying off nine employees amidst its anticipated merger with MaxAB, an Egyptian B2B eCommerce firm. The court issued interim orders on January 31, subsequently extended on February 5 by Justice Nzioki wa Makau.
The employees claimed that the layoff process commenced in December 2023 in preparation for the merger with MaxAB. The two startups had signed a preliminary merger agreement in the same month, marking a pivotal initial phase in the merger process. This non-binding agreement allows negotiations to determine the feasibility of the merger.
Seeking legal intervention
However, the move to reduce the workforce by approximately 10%, announced earlier in January 2024, prompted nine affected workers to seek legal intervention. They expressed concerns about the potential harm they might face if their grievances were not urgently addressed.
In response, the court instructed that the case be heard on February 13th. The workers allege that Wasoko concealed its merger plans from employees for over six months, fearing leaks that could jeopardize the transaction. Also, they argue that the company did not explore viable alternatives for reassigning them and instead instructed them to either shadow or hand over their roles to MaxAB Ltd. agents.
Lack of transparency
The company, in turn, asserts that the application for interim relief is premature and lacks a cause of action, contending that the legal issues have not crystallized, and the redundancy process is yet to complete. In light of this, the dispute raises questions about transparency and adherence to employment regulations, as the employees claim that redundancy notices were not forwarded to the labor office, as required by the Employment Act.
