AAR, outgoing Group CEO ordered to negotiate out-of-court deal

The labour court has ordered AAR Hospital and its outgoing Group Chief Executive Officer (GCEO), Steve Okeyo, to negotiate an out-of-court settlement to an ongoing labour dispute.

Mr Okeyo was, until December 8, the GCEO of Hospital Holdings Investment (HHI), the holding company of which AAR Hospital is the flagship subsidiary. He also served as a board member of all five entities that are subsidiaries of HHI.

The HHI is an investment and holding company that oversees management of three other healthcare companies in Kenya and Uganda –AAR Healthcare, Kampala Hospital and Nakasero Hospital, and boasts high-profile investors, including the International Finance Corporation (IFC) of the World Bank and European sovereign funds like French Proparco, SwedFund, FinnFund, and Denmark's IFU.

“Counsels are encouraged to embrace the court-annexed mediation as agreed and endeavor to resolve the matter in good faith and in the best interests of their clients,” Judge Jacob Gakeri ordered, explaining that the constitution allows the court to promote and enhance alternative dispute resolution and traditional dispute resolution mechanisms.

“And, in the court’s view, this is a proper suit for resolution through the court-annexed mediation or arbitration as the parties may agree,” judge Gakeri held. 

Having fallen out with his employer, Mr Okeyo had challenged the decision to be declared redundant. He was serving a notice period that lapsed on December 9, 2023. 

Mr Okeyo argued that the impending termination of employment on account of redundancy was malicious and did not disclose the criteria used or the other roles affected by the redundancy.

In court filings, Mr Okeyo revealed details of his fallout with the board, especially on the strategic direction of the new AAR Hospital along Kiambu Road.

The construction was managed by employees from the lead investor –Holland's International Fund for Health in Africa (IFHA). President William Ruto commissioned it in February 2023.

Mr Okeyo was hired by HHI on June 01, 2021 with a brief to run the new facility, stabilise the rest of the businesses, and position them for growth.

But along the way, Mr Okeyo and his employer fell apart.

Less acrimonious

In his ruling, Justice Gakeri observed that it was clear that HHI had resolved “to let go its GCEO and proposes to resolve the dispute out of court which in the court’s view is the most appropriate mechanism for both parties as it is expeditious, efficient, cost effective, less acrimonious and most significantly private.”

Justice Gakeri said that although Mr Okeyo sought the court’s intervention at the right time, he was not convinced that the interim orders to stop the restructuring process being undertaken by HHI would be an appropriate remedy.

“Although the applicant came to court at the tight time… this court is not persuaded that interim orders to stop the restructuring process being undertaken by the respondent (HHI) would be an appropriate remedy in the circumstances as it would [among other things] stall a legitimate process altogether until the suit herein is heard and determined,” observed Justice Gakeri. 

Mr Okeyo’s advocate, Morara Omoke, had asked the court to consider giving an injunction to the notice of redundancy. He argued that it would enable the parties to negotiate in good faith. The process of negotiation, Mr Omoke told the court, would be of no importance if Steve was already declared redundant. 

HHI, however, told the court that by not letting go of Mr Okeyo, the restructuring process that it was already undertaking would stall –much to its disadvantage. Further, the facility said, by way of statement of claims on record, Mr Okeyo was “praying for monetary reliefs as opposed to injunctive reliefs and [that] the claim was substantively compensatory.”

The facility’s advocate argued that it would be unfair to force it to retain a severed relationship with its employee, especially because confidence and trust had been lost. 

Mr Okeyo and his employer, through their advocates, agreed that the matter proceeds under court-annexed mediation. The court shall mention the matter on December 20.

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Editor's note: This story was updated to reflect the court ruling on the labour dispute between Hospital Holdings Investments and outgoing Group CEO Steve Okeyo.