Union faults Sh230m pan paper payout, claims workers sidelined

 Webuye Pan African Paper Mills, now operating as Rai Paper. [File, Standard]

The Kenya Union of Printing, Publishing, Paper Manufacturers and Allied Workers has accused the government of sidelining both the union and former employees in the ongoing payout of terminal dues following the collapse of Pan African Paper Mills, now operating as Rai Paper.

The union, through its National Organizing Secretary and former National Vice-Chairman Stephen Watiti, says the process of compensating ex-workers has been mishandled despite the release of public funds meant to settle long-standing claims.

In late November 2025, the national government released Sh230 million to pay terminal dues owed to former Pan Paper employees, a move that was widely welcomed as a breakthrough for 1,349 identified beneficiaries who have waited years for compensation after the mill’s collapse.

However, Watiti says the formula used to compute the payouts is flawed and has resulted in irregular beneficiaries being paid, including former directors who, according to the union, were neither union employees nor part of negotiations when the factory shut down.

“The computation is erroneous. It has opened the door for ineligible individuals to benefit, while genuine former workers are shortchanged,” Watiti said.

He argued that only union workers should qualify for the compensation, insisting that the payable benefits should include 30 per cent of basic pay from the date of closure until the 2017 budget provision, terminal dues up to the time of closure and house rent payments from the date the mill ceased operations.

According to the union, these terms were the outcome of prolonged advocacy efforts, including pressure from the Central Organisation of Trade Unions (COTU) and a 2017 parliamentary motion sponsored by former nominated MP Patrick Wangamati.

The union further raised concerns over the handling of Pan Paper assets after the mill was placed under receivership, alleging that valuable assets were disposed of under unclear circumstances.

The unions vice chair claimed rental income from employee housing, a guest house, apartments in Muthaiga, wood pulp stocks, furnace oil and key machinery were sold or transferred without transparency, denying workers additional value that could have eased the compensation burden.

Despite the ongoing payouts, the union maintains that dissatisfaction remains widespread among former employees, arguing that the amounts paid do not reflect the true liability owed to workers and fall short of expectations created by parliamentary resolutions.

In 2017, Parliament directed the National Treasury and relevant ministries to compile a verified list of former Pan Paper staff and compute their terminal dues in line with the Employment Act, 2012.

Union officials are now demanding that the current payment process be halted and reversed, and that fresh consultations be held with workers and their representatives before any further disbursements are made.

They have warned that legal action will be pursued if their concerns are not urgently addressed.

The Pan Paper saga dates back more than a decade.

The mill was placed under receivership in 2009 following years of financial distress and mismanagement, triggering massive job losses and severe economic disruption in Webuye town and the wider Western Kenya region.