A court has ruled that government debts and Covid-19-era cash-flow problems do not absolve employers of their obligation to pay workers, ordering a local engineering firm to settle more than Sh24.6 million owed to a former Ethiopian engineer.
The Employment and Labour Relations Court said employers remain liable for workers’ dues despite delays in government payments or broader economic shocks.
The court ordered Gibb Africa Limited to pay former senior engineer Woldeyesus Shimeles Makonen Sh5 million in salary arrears and $151,054 (Sh19.4 million) in unpaid gratuity after finding that the company failed to prove it had settled the dues.
The company had argued that delayed payments from government agencies, which formed a significant portion of its client base, triggered cash-flow problems that affected its ability to meet salary obligations during the Covid-19 pandemic.
Gibb Africa told the court that government entities experienced budget constraints from 2019, a situation worsened by the pandemic, leading to delayed payments to contractors and service providers.
The firm said the financial disruption affected its revenue streams and made it difficult to pay employees on time. It argued that any salary delays were not deliberate but arose from circumstances beyond its control.
However, the court found that the company failed to support its defence with evidence showing that the engineer had been paid what was due under his contract.
“The claimant set out his case and proved that he was not paid,” the judge said.
“I expected the respondents to counter this by proving how they paid out. This has not been done, and this leaves the claimant’s case uncontroverted.”
Contract dispute
The dispute arose from Mr Woldeyesus’ nearly nine-year employment with the engineering firm.
He joined the company in October 2012 as a senior engineer under a renewable two-year contract.
The contract was renewed in 2014 and again in 2018, with the final term expiring in May 2021.
He told the court that salary payments became irregular in 2019 and 2020. In some months he received only part of his salary, while in others he received nothing at all.
He further claimed that the company stopped issuing payslips and accumulated salary arrears amounting to Sh5 million by the time his contract ended.
The engineer also sought payment of a monthly gratuity of $1,900 that had been promised when he was hired.
Gibb Africa disputed liability for the gratuity, arguing that the benefit had been offered through a letter issued by Gibbal Holdings Ltd and not by the respondent company.
The court rejected that argument after examining the employment documents.
It noted that the gratuity letter expressly referred to Woldeyesus’ appointment by Gibb Africa and was signed by the same director associated with the respondent company.
The court further found that the employer failed to produce payslips, bank statements or payment records showing that either the salary arrears or gratuity had been settled.
“The respondents, despite denying not owing the claimant anything, have failed to produce any evidence to show how they paid the claimant his gross salary and gratuity as per the contract,” the court said.
It concluded that the engineer had proved his claim and entered judgment in his favour.
