Wasoko merger fallout: employees claim startup hid deal for six months

Wasoko, a Kenyan e-commerce platform, did not share its merger plans with Egypt’s MaxAB with employees for over six months, fearing that leaks could scuttle the transaction, two former employees told TechCabal. The merger is expected to be completed by the end of March 2024.

The B2B e-commerce startup, which was founded in 2013 and raised over $140 million from investors like 4DX Ventures and Avenir Growth Capital, first told employees about the merger in a video call attended by the MaxAB executives in early December 2023, the same month the deal was announced.

The meeting, which was not recorded, surprised many employees, although some had figured out there were plans for a merger and eventual redundancies. On January 15, Wasoko laid off over 100 employees across engineering, product, and business intelligence departments in Kenya and India.

Following the layoffs, nine employees sued Wasoko, claiming they were unfairly fired. They argued the company did not give them sufficient time to prepare for their exit and that while Wasoko said it would follow local labour laws during the layoffs, it was a way out of paying them sufficient severance.

The severance package compensated employees based on how long they had worked with the company, how many leave days they had accrued, and the number of days left before their January 15th exit. The former employees told a court that the severance package favoured those who had been with Wasoko for an extended period.

The court has blocked Wasoko from firing the nine employees.

Other employees said they had taken bank loans, believing their work with the e-commerce platform was secure. Wasoko said it would discuss the matter with its banker, Standard Chartered, and ease repayment for six months, said one former employee. It also promised to provide health insurance coverage until March 2024.

“We initiated notice of intention to declare redundancies for a portion of our staff on December 5, 2023 as previously announced.” Wasoko said in a statement to TechCabal. “Impacted employees were provided with the legally mandated period of notice and are receiving the required severance packages as stipulated by applicable employment law.”

However, the company declined to comment on specific claims since the matter is already in court.

Following the lawsuit, Wasoko has prepared an exit document barring employees from suing the company after receiving their exit packages, one person told TechCabal.

The case will be heard in court on February 13th.