Labour Cabinet Secretary Alfred Mutua has said ongoing restructuring process in state-owned industries is part of comprehensive reforms programs aimed at restoring efficiency, financial sustainability and competitiveness.

Mutua who was before the Senate plenary to answer questions raised by Senators said that the discharge of workers under the restructuring is guided by lawful redundancy procedures as outlined in Section 40 of the Employment Act.

Kisumu Senator Tom Ojienda asked Mutua to explain the rationale behind discharging workers in state-owned industries particularly in strategic sectors such as sugar and Textile industries and how these decisions comply with Articles 41 and 43 of the Constitution on fair practices and the right to social and economic security respectively.

“The law provides clear safeguards to ensure fairness and transparency for affected workers  by stipulating that before any redundancy is effected the employer must, notify the relevant Union, affected employees,” said Mutua.

He told the house that the Ministry of Labour has to provide justification and scope of the redundancy and pay all statutory and contractual entitlements including notice pay accrued leaver and severance pay.

Mutua told Senators that Kenya Union of Sugar Plantation Workers, the recognized representative of employees had initially gone to court to stop the process until the fate of the workers is known and that relevant government agencies had engaged with the union.

He said the Ministry of Agriculture, the Kenya Sugar Board and the National Treasury engaged Kenya Union of Sugar Plantation Workers and together they came up with a Memorandum of Understanding dated May 7, 2025 to guide and ensure that the process is fair and transparent.

“The mandate of the Ministry of Labour is to ensure that the redundancy process complies with Article 41 of the Constitution Section 40 of the Employment Act and the CBA in force, however the Ministry does not have the power to approve or reject redundancies,” said Mutua.

Ojienda asked Mutua to confirm the number of workers affected by the restructuring carried out in Kisumu County, especially in Chemelil, Muhoroni and Miwani Sugar Companies and clarify whether they have received full severance benefits pensions and gratuities without delay.

Mutua said that the total number of employees affected by the restructuring process carried out in Kisumu County is 1743 with Muhoroni Sugar Company having 747 workers affected with 312 being Permanent and Pensionable and 435 being term contract workers.

The Cabinet Secretary said that Chemelil Sugar Company had 903 workers affected with 376 being Permanent and Pensionable and 527 being term contract workers while in Miwani Sugar Company had 93 workers affected.

“It should be noted that Miwani was not leased but rather was sold to Crossley Holdings Limited in July 2025, the company requested all workers to apply for their positions afresh but only 79 did and they were all absorbed,” said Mutua.

He said that under a memorandum of understanding it was agreed that all employees would receive salary arrears, accrued leave and severance dues, paid by the Ministry of Agriculture and the National Treasury through Kenya Sugar Board in a structured and phased manner with computations having been done and jointly verified by the Government and the Union.

Mutua said that partial payments of salary arrears amounting to Sh1.8 billion have been made between May and August 2025 with the balance of salary arrears amounting to Sh3.8 billion, together with the terminal dues and third-party deductions amounting to Sh15 billion shall be paid in installments up to June 2026.

“How does the Government intend to reconcile fiscal reforms with its constitutional duty under Article 232 of the Constitution on transparency, accountability responsiveness to prevent economic dislocation in counties that rely on state owned industries,” asked Ojienda.

The Cabinet Secretary said that the fiscal reforms are the responsibility of the National Treasury & Economic Planning, which oversees economic policy/ public finance management and fiscal discipline.

 He said that the Ministry of Labour advocates that all fiscal and structural adjustments be implemented in a manner that upholds transparency/ accountability/ and social fairness ensuring that no region or community bears disproportionate hardship in the process of reform.