Union warns banks of court battles in looming layoffs
Bifu secretary general Isaiah Kubai says due process which includes notifying the union and the Labour ministry of the decision within the stipulated time should be followed
Banks should follow due process in laying off unionisable workers or face court battles, a trade union warned yesterday. The industry is grappling with low margin pressures due to interest controls which took effect on September 14.
There have been fears of job losses if lower cost of borrowing does not result in increased uptake of loans, as banks seek to cut costs amid dwindling profit margins. Mid-tier lender Family Bank became the first to signal a cut in its workforce with a voluntary early retirement plan for workers this month.
“Employees who are eligible will have 14 days from the day of this memo to apply. The offer shall close on 14 October,” the lender said in a memo on September 30. “At the close of the offer period, the bank will review applications received and communicate the final decision. The bank reserves the right to deny any application.”
The Banking, Insurance and Finance Union of Kenya however warned that banks should follow due process in terminating unionisable workers. That, Bifu secretary general Isaiah Kubai said, include notifying the union and the Ministry of Labour of the decision to send the staff home within the stipulated time.
“If they don’t, we will seek to stop them in court,” he said on the phone.
The union said it is optimistic interest margin pressures will be short term, and it expects massive loan volumes to make up for the projected profit.
The banking industry fired 2,036 staff, most in clerical and secretarial units, in 2015 as banks put in place automated systems to enhance operations, the Central Bank said in Banking Supervision Annual Report.
With interest on loans capped at 14 per cent with a floor of seven on interest paid on term deposits, the in- dustry has failed to rule out layoffs as it strives to enhance efficiency in its operations.
“There is no question that efficiency has to come into play...when you have such reduced margins. Hopefully this (interest controls) will bring more customers to the banks – more customers who will be willing not just to borrow but also to save,” NIC Bank managing director John Gachora said on September 14.
Family Bank yesterday said the offer for early retirement should not be construed to mean there’s a looming staff layoff. “The VER programme is part of a wider transformation programme,” it said.
Family Bank chairman Wilfred Kiboro at a past event