French oil multinational Total Outre-Mer has been ordered to retain employees of fuel importer Gulf African Petroleum Corporation which it is set to acquire for between one and two years from completion of the ongoing takeover of the business.
The job guarantees are part of the conditions the Competition Authority of Kenya (CAK) has attached to the buyout.
Acquirers often cut jobs soon after taking control of companies for various reasons including to reduce expenses and increase efficiency.
The regulator is increasingly seeking to protect jobs for a few years at target companies in recent acquisitions including at Giro Bank, which was acquired by I&M Holdings.
Total has been ordered to keep employees on short-term contracts for at least one year and those on long-term employment for a minimum of two years, according to a CAK notice in the latest Kenya Gazette.
“The merging parties shall not terminate any of the current short-term employment contracts of Gulf African Petroleum Corporation employees whose contract of employment has a remaining period of validity of less than two years for a period twelve months from the completion date,” reads part of the notice.
“The merging parties shall not terminate any permanent and pensionable long-term employment contracts … before the end of the 24-month period from the completion date.”
The regulator says Total may also extend short-term contracts that are soon expiring to make them last at least a year from the date the deal is sealed.
Gapco employees panicked when acquisition talks between the two companies started, rushing to court to stop the deal until they got “acceptable” terms if they were to be fired as a result of the transaction.
The workers accused Gapco of secretly moving to transfer control of the company to Total to their disadvantage and sought a Sh800 million bonus to be shared amongst them based on a formula they settled on.
The claim was pegged on allegations that local employees have historically been paid lower bonuses than expatriates working at the company.
They also argued that majority of them, 32 of 38, were on two-year contracts that were not guaranteed to be renewed once they are transferred to the new employer.
Firms making acquisitions in their industry have often argued that the job cuts are done to eliminate duplication of services, with some departments also closed if they are not important to the acquirer.
Total is a regional oil marketer, selling petroleum products directly to airlines and diesel power plants besides motorists through its branded fuel stations.
Gapco is also a regional petroleum importer and runs storage facilities that are leased to third parties. The French multinational is set to acquire a 100 per cent stake in Gapco for cash from its minority investors and India’s Reliance Industries which holds a 76 percent equity in the company.
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Credit: Business Daily