Nairobi court delivers damning verdict against telecom giant over unlawful dismissal of 17 sales managers
Safaricom PLC has been dealt a crushing legal blow after the Labour Relations Court ordered the telecommunications giant to pay Sh55 million in compensation to 17 former Area Sales Managers who were wrongfully dismissed in 2018.
Justice Mathews Nduma Nderi delivered the landmark ruling on July 17, bringing to an end a five-year legal battle that has exposed serious flaws in Kenya’s largest company’s internal disciplinary procedures and treatment of employees who raised concerns about problematic projects.
The case stems from Safaricom’s ill-fated 2016 rollout of 90,000 Huawei Y311 handsets, valued at Sh544.5 million, intended to digitize SIM card registration processes.
The devices were distributed to M-Pesa agents across the country through the Area Sales Managers, despite the managers raising early warnings about fundamental design flaws.
The phones were not network-locked, allowing connection to rival networks, and lacked centralized monitoring systems.
When managers flagged these security risks and warned that agents could misuse or sell the devices, Safaricom executives dismissed their concerns and pressed ahead with the rollout.
By early 2018, the project had spiraled out of control.
Thousands of devices had gone missing, with some found operating on competitor networks.
Others had been sold off by agents who had since closed their businesses or disappeared entirely. The company’s Risk Division, now demanding accountability, discovered that many devices could not be traced or recovered.
In a dramatic turn of events in March 2018, Safaricom summoned the Area Sales Managers to headquarters, forcing them to sign witness statements often dictated by the Risk team.
The managers were given an impossible 48-hour deadline to locate devices scattered across vast territories, with some covering entire counties.
Three months later, 39 managers were terminated. While five eventually got their jobs back, 17 decided to challenge their dismissals in court, arguing they had been made scapegoats for a fundamentally flawed project they had warned against from the beginning.
Justice Nderi’s ruling was scathing in its assessment of Safaricom’s conduct.
The court found that the company failed to issue proper show-cause letters, conducted rushed disciplinary hearings, withheld critical audit documents from the accused managers, and set unrealistic recovery timelines.
“The claimants were subjected to the same unfair and impossible work conditions by the respondent and were wrongly accused of negligence when failures of the project were as a result of deficiencies in the operational procedures, policies and systems,” Justice Nderi stated in his verdict.
The judge emphasized that while Safaricom claimed losses of Sh544.5 million from the failed project, this did not justify the flawed termination process, particularly when the managers had raised concerns about the project’s viability from the outset.
Each of the 17 managers will receive compensation equivalent to 10 months’ gross salary plus one month’s salary in lieu of notice.
Individual awards range from Sh935,000 to over Sh4.2 million, with the total exceeding Sh55 million before interest calculations. The court also ordered Safaricom to pay all legal costs and applied interest at court rates from the judgment date.
This ruling marks the second time this year that Safaricom has been found in breach of labor laws, following an earlier case where the company was ordered to pay Sh1.1 million to a former call center employee for wrongful dismissal.
For the affected managers, many of whom have since found employment at smaller firms for lower salaries, the victory represents both financial relief and vindication of their decision to challenge one of Kenya’s most powerful corporations.
Safaricom has 30 days to file an appeal, though legal experts warn that delays will only increase the company’s financial exposure through accumulating interest penalties.
The ruling adds to growing scrutiny of corporate accountability in Kenya and raises serious questions about how the telecommunications leader handles internal dissent and treats employees who raise legitimate concerns.
The case serves as a stark reminder that even Kenya’s most successful companies are not above the law when it comes to employee rights and due process.
For Safaricom, long viewed as a symbol of corporate excellence in East Africa, the judgment represents a significant reputational challenge that may prompt broader reforms in its human resources practices and approach to whistleblower protection.
There's no story that cannot be told. We cover the stories that others don't want to be told, we bring you all the news you need. If you have tips, exposes or any story you need to be told bluntly and all queries write to us [email protected] also find us on Telegram
