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Kenya: Court Blocks Sale of Shell Until Staff Dues Are Paid


Business Daily (Nairobi)

Benson Wambugu 2 July 2010

More than 180 employees of Kenya Shell have successfully blocked the oil marketer from selling its business to Oil Libya Holding Company until their statutory dues are settled.

Oilibya is said to have made a Sh160 billion offer for the downstream African operations of the Anglo-Dutch transnational.

An injunction was on Thursday issued by the Industrial Court restraining the oil giant from selling or transferring its assets to Oilibya before receiving written consent that the employees were agreeable to the transition.

Alternatively, the employees want Shell to declare them redundant and settle all their redundancy benefits and accruing claims before it exits.

The court also blocked Shell from applying for any change of ownership in its shares or altering its status with the Registrar of Companies pending the determination of the dispute.

The employees were also granted orders stopping the company from continuing to conduct business in Kenya under any other name, form or arrangement, other than the Royal Dutch Shell-its Hague-based parent company.

The group has announced its exit from 21 African countries to shed downstream operations of the Anglo-Dutch transnational assets and focus on more lucrative oil and gas production.

Constructive dismissal

Through the law firm of Okoth and Kiplagat, the 184 employees submitted in court that Shell intended to divest from Kenya and transfer it business and ownership to a third party.

In their application, the staffers argued that the transfer of the business of Shell to Oilibya “amounts to a constructive dismissal of all the claimants without due regard to the provisions of the applicable statues.”

A sworn statement by Mr Joseph Kahuko Mwangi on behalf of 183 employees, termed the company’s actions as discriminative adding that unless prohibition orders were made on the oil firm, it would exit without paying the staffers their statutory dues.

Before moving to court, the employees claimed the company kept secret its intended divestiture and has declined to provide any official communication and “we only came to know about the intended sale through the media.”

While seeking to know their fate, the employee’s says Shell indicated to them that they had no right to know or decide on whether or not to transit to the new owner.

The staffers argued that the divestiture to a party unknown to them and the re-branding of the business operations amounted to their dismissal.

The employees have also termed the purported sale of the company as a going concern a “legal fiction” saying the new owner would neither carry on business under the Shell brand nor uphold the firm’s standards but will superimpose the buyer’s peculiar culture and values.

Lawyer, Ken Kiplagat, for the employees told the court that the action by Shell to divest in the manner contemplated amounted to the alteration of the implied contractual and equitable obligations owed by the company to its staffers.

Disposable servitudes

The lawyer further submitted that the “going-concern” deception had previously been laid bare by Shell’s own treatment to former employees of Agip Kenya Ltd when it took over its assets.

Court papers indicates that soon after Shell acquired Agip (K) Ltd, it declared more that 90 per cent of the employees redundant even after having been promised continued employment in the new structure.

“Shell employees are likely to be treated and considered as mere disposable servitudes,” submitted Mr Kiplagat, citing the Agip (K) Ltd precedence.

The employees also complained that Standard Chartered Bank had suspended offering unsecured personal loans and demanded additional guarantees from both the company and the employees.

Mr Kiplagat said the staff recognise and accept Shell is at liberty to sell its local business on a going concern, but the transaction would result in rationalisation and redundancies.

“The intended divestiture amounts to constructive redundancies entitling our clients to activate the necessary and applicable statutory safeguards,” said the lawyer.

Shell’s employees want an exit offer that affords them an option to transit to the new owner or a buy-out of employment contracts.

It is based on the argument that workers had not contemplated their continued future employment could be with another party.

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