Chinese companies’ labor dilemma in Kenya

Deng Zhicong

“The workers went on a strike a few days ago with the trade union.” In the eyes of the manager of a Chinese real estate company in Kenya, it’s a common circumstance which makes them worry so much.

This Chinese real estate company builds and sells houses on its own. Therefore, it needs to hire a great amount of local construction workers and salesmen. All of the managing staff of the company are Chinese including the chief engineer, project manager and the foreman. Several days ago, more than ten construction workers went on a strike to ask the employer for the delayed salary. The company paid all the salary to avoid the trouble. The other day, these workers came to the company again with the trade union. They claimed that the real estate company unfairly fired the workers and the workers deserved a certain amount of service fee for serving the company for several years. The company had no choice but call the lawyer to handle it. The lawyer was quite experienced in this kind of cases. He said, first of all, the company didn’t fire these workers verbally or in written form, therefore there existed no unfair termination. Secondly, the workers needed to provide evidence that they had continuously worked for the company for several years. The real estate company did not sign any formal contract of employment with the workers. These workers were casual workers and were paid daily. According to the attendance record of the company, only a few of the workers were present at duty every day and the others were absent from work very often. Additionally, because the workers could not provide enough evidence to prove that they had continuously worked for the company, their claims dropped.

Such conflicts are very common among the Chinese companies in Africa.

In recent years, a growing number of Chinese large state-owned enterprises and small-to-medium-sized companies invest in East Africa. Nowadays China has become Africa’s largest trading partner. Africa has become China’s major importer, the second largest overseas project contracting market and the fourth largest investment destination. According to data from the Ministry of Commerce of China, from 2009 to 2012, China’s direct investment in Africa increased from $1.44 billion to $2.52 billion, with an average annual increase of 20.5% and the stock increased 1.3 times from $9.33 billion to $21.23 billion. Due to the lack of knowledge of local labor law and the understanding of the local staff, the disputes between Chinese employers and local employees occur a lot. In addition, the difference in language, culture, religion and values contribute to the misunderstanding between the Chinese employers and local employees. Some Chinese companies are lack of long-term development plan and do not obey the local laws.

An official in charge of labor disputes of Ministry of Labor, Social Security & Service of Kenya believed that, the majority of Chinese companies in Kenya are not familiar with the Kenyan labor law, making it easy to violate the law without knowing it. According to the data from Ministry of Labor, Social Security & Service of Kenya, the most common types of labor dispute cases are salary below the minimum wage standards and unfair termination. Chinese companies should pay attention to the minimum wage, trade unions, dismissal procedures, holidays, housing, medical care and other benefits. As the common procedure, when an employee is treated unfairly, he should first communicate directly with his employer and complain to the Labor Department if the first approach doesn’t work. If the former two ways cannot solve the problem, he can sue his employer to the Industrial Court. Employees need to be registered as a trade union member to get help from the trade unions. Due to the inability to pay the membership fees, the employees are more inclined to seek help from the Labor Department. After accepting the labor dispute cases, both parties of the dispute will be convened to a meeting together to carry out the labor arbitration. After both parties state their reasons, the labor officer will bring in a verdict.

Ken (alias) had worked for a Chinese company for more than two years as a driver. He earned 24000 Ken shilling per month but he had to work seven days a week from 8:00 a.m. to 11:00 p.m., and sometimes he needed to pick up people of the company in the midnight. He repeatedly asked for leaves but was refused by the company all the time. Later he was fired on the grounds that he did not follow the reasonable instructions of the employer and jeopardized the employer’s property. Ken made a complaint against the company at the Labor Department, requiring the company to compensate the two-year service fee, overtime work salary and a one-month salary for a lieu without notice. After the labor arbitration, the Labor Department judged the company to indemnify Ken the compensation. Ken said that, many of his colleagues had similar experiences, but most of them just let it go because of the long labor dispute settling process and they could not afford a lawyer. The government-appointed lawyer always found excuses to escape the pro bono cases.

A Chinese logistics company in Kenya was also bothered by some labor issues. The company required the sales personnel to finish the clients’ files and information. One local salesman tried to forge a fake client file and was immediately dismissed after being caught. However, the salesman constantly sent threatening text messages to the employer to ask for his service fee and commission. The company signed a formal contract of employment with the employees, therefore the labor disputes can be effectively avoided. When I asked the employer Mr. Zhang (alias) how to deal with these messages, he said that he just reposted them to his HR manager. According to his experience of dealing with the local employees, “you should hire a local HR manager and avoide direct conflicts with the local employees. The local HR manager is more familiar with local employees and it’s easier for them to communicate to avoid misunderstanding and conflicts.”

Bribery is another serious problem in Kenya. Many local employees mentioned, when the labor disputes occurred, Chinese companies would settle the disputes by giving the labor officers, policemen or the members of the trade union some “tips”. Marlin (alias) used to be an waitress in a Chinese restaurant. One day, her boss beat her because she accidentally broke a bowl. She reported to the police and called her employer to the police station. Her employer just gave the policeman some “tips”, and later the policeman just told Marlin to go home to communicate with her employer directly.

Labor issues are problems that the Chinese companies in Kenya must face. Owing to the lower costs of the local labor force and companies’ localization development, many Chinese companies are willing to hire local employees. I visited a number of Chinese companies, local courts, and the Labor Department, where I came to understand the informal employment, wage below the minimum wage standard, absences of welfare, intense relations with the trade unions and language miscommunication are the common problems Chinese companies face in Kenya. Most Chinese companies haven’t signed any contract of employment with the local employees, especially the workers with low educational background.

I asked the employers the reasons for which they didn’t sign the contract of employment with local workers. As responses, they expressed their frustration and concerns.
They complained about local workers’ laziness and spontaneousness. According to them, the workers often skipped work for a few days after they get paid and came back to work when they run out of money. Thus, the companies had no choice but to pay them by day. In addition, due to the fact that the majority of local Chinese companies did not understand the local labor laws very well, the wage and other employee rights often did not meet the requirements of local labor laws.

When talking about the labor issue of the Chinese companies, a local journalist Tony (alias) mentioned, “local employees often complain about the long working hours, low salary and the racial discrimination in the Chinese companies. Also, the cultural and linguistic gap between China and Africa contribute to certain misunderstanding between the Chinese employers and local employees.” He believed Chinese companies should be more active to contact the local media and let the local people understand more about the operation and enterprise culture of the Chinese companies to build mutual understanding and trust.

A senior local lawyer Jacky (alias) said, “Regardless of signing a contract or not, employees are under the protection of local labor laws as long as the actual employment relationship exists. Chinese employers should pay attention to the establishment of employee profiles to keep records of employees’ behavior, attendance and wage in case the labor disputes happen. In the hiring procedure, the employees should be required to provide a copy of ID, certificate of employment from former employer or recommendation letter from school, and certificate of good conduct. Avoid hiring the employees with misconduct is the most effective way in preventing labor disputes.”

A local labor agent Allen (alias) said, “hiring employees through the labor agency can help employers better understand the background of the employees. Additionally, the labor agency can share the risk of labor disputes in the future. When the labor disputes happen, the employers can ask the labor agency to communicate with the employees. Legal method is not the only way to solve problems.”

Chinese companies should understand the local labor laws and learn the successful experience of dealing with labor issues from other companies. It will not only help the companies gain an active position in the labor disputes, but also build a positive image of Chinese companies overseas.

Deng Zhicong is a J.D candidate at Peking University School of Transnational Law. Deng graduated from Zhongnan University of Economics and Law with a major in International Politics. As a legal research fellow of China House, he stayed in Nairobi from May to June in 2014 to investigate the labor issues of Chinese companies in Kenya. He visited the Labor Department of Kenya, local courts and many Chinese companies. Deng also assisted Chinese companies in several labor dispute cases.