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Shell Ethiopia’s Labour Union filed a lawsuit at the
Federal First Instance Court, Kera Area Labour
Bench, alleging that the company has illegally
changed its retirement policies in order to save
money on lay-offs ahead of a possible closure of its
operations in the country.
The complaint, filed by the Labour Union against
Shell on November 22, 2007, stated that Shell
Ethiopia scrapped its ‘Special Early Retirement
Scheme’, which pays up to 55 months salary to
employees who have been terminated or have
voluntarily resigned from their jobs. The company
has instead replaced the scheme with a ‘Voluntary
Severance Package’.
Going by the statement made by the company’s labour
union in the court, the new policy would cut the
amount of money to be paid to the departing
employees by 70pc.
“Having intended to close down its Ethiopia’s
offices by selling the properties, Shell has
introduced the new package such that it would
minimize the expenses as much as it could,” the
labour union stated in the filed complaint,
requesting that the Court intervene to force the
company to reinstate the previous scheme.
One of the first multinationals in Ethiopia, Shell
Company (Read Sea) Limited and Incorporated in
London, started operations in the country in 1929.
Shell Ethiopia Ltd currently employs 144 people, 124
of which are unionized. Until last year, the
petroleum company opened 280 filling stations across
the country and has installed three depots. However,
in 2006, Shell has sold out 63 of its petroleum
stations as well as two depots for Kenya’s Kobil,
which recently entered in the Ethiopian market.
After 75 years of constant possession over Liquefied
Petroleum Gas (LPG), Shell had sold LPG for Ghion
Industrial Group in 2004.
According to information obtained from Ministry of
Trade and Industry (MoTI), at the end of 2005 Shell
was dominating at least 54pc of the oil market in
Ethiopia, though its current share of the market has
since fallen below 30pc.
Shell is vying for the country’s oil products market
with new and old rivals such as TOTAL Ethiopia,
National Oil Company (NOC), Yetebaberut Beherawi
Petroleum (YBP) as well as the newcomer, Kobil.
For almost eight decades, the oil market in Ethiopia
was dominated by four of these petroleum companies:
Shell, TOTAL, Mobil and Agip. These four companies
has exclusive rights to the market owing to policies
by successive governments to prevent new entrants
into the sector. However, when such policies came to
an end in 2003, and the door was opened to more
competition, Agip was the first of the four formerly
dominate companies to pack up its offices in
Ethiopia.
Agip sold its
properties to Shell Ethiopia, followed by Mobil,
which sold out all of its assets to TOTAL and left
Ethiopia about two years ago.
“Now Shell Ethiopia has been identified by its
parent company as one of 10 country subsidiaries to
be placed under review for possible actions that may
include liquidating the assets,” said the union’s
complaint.
As a result, Shell has been placed under a special
managerial structure. By the same token, the company
has taken its first step toward closing down, the
allegations brought forward by the labour union
stated.
By having replaced the previous scheme with the new
package, Shell Ethiopia would save about five
million Br, the labour union argues.
According to the union, the move by the company
would hurt their morale; above all, it compromises
the welfare of the employees. Having stated this
fact, the labour union has been trying in vain to
convince Shell’s local and international managers.
In the case that Shell sells its properties in
Ethiopia, the labour union is asking for each
employee to be given the option to either hold on to
his or her position under the new ownership, or to
take the compensation offered by the previous
scheme.
“Since Shell Ethiopia is out to compromise the
welfare of members of the labour union who sued this
company, let the Court ensure the previous scheme is
reinstated,” the labour union said in the court
document.
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