Exclusive: Ivory Coast workers say Unilever is violating their union rights amid share sale, documents show

Unilever is facing criticism from its Ivory Coast employees who allege the company is violating their collective bargaining agreement amid the sale of its local unit to SDTM. Workers fear job losses and are protesting Unilever's refusal to guarantee severance pay, which the agreement stipulates as one month's salary per year of service up to 18 months, arguing that the sale structure should not negate these obligations. The dispute highlights concerns about potential unequal treatment compared to Unilever's handling of similar situations in Europe, where more generous terms were offered during a recent spin-off.

Analysis

Unilever (ULVR.L) faces allegations from its Ivory Coast workforce of violating a collective bargaining agreement concerning severance pay, amidst the planned sale of its local unit to a consortium led by Société de Distribution de Toutes Marchandises Côte d’Ivoire (SDTM). The unit, employing approximately 160 individuals, generated 34.6 billion CFA Franc in turnover in 2023. A critical point of contention is that SDTM will only acquire Unilever's domestic brand business, leaving the future of its international brands, which accounted for over 60% of the unit's turnover, uncertain and fueling worker fears of layoffs post-sale (expected by June 20). The 2004 collective bargaining agreement, reportedly still valid, stipulates severance pay equal to one month's average gross salary per year of seniority (capped at 18 months) plus six months of medical coverage in case of layoffs due to business disposal. Unilever contends that since the transaction is a share sale, employment contracts continue, rendering severance pay irrelevant. However, minutes from an April 25 Labor Inspectorate meeting indicate Unilever Cote d'Ivoire's head stated that SDTM would determine worker rights, not the existing agreement. This stance contrasts with statutory Ivorian labor law, which mandates employee consent for substantial employment contract modifications, and with Unilever's more generous handling of a recent European ice cream business spin-off, where employment terms were guaranteed for three years. The Ivory Coast workers had requested a similar two-year guarantee, highlighting perceived unequal treatment. The dispute carries a moderately negative sentiment for Unilever and underscores governance and labor relations risks in emerging markets.

Key Decisions for Investors

• Investors should closely monitor the labor dispute in Ivory Coast as it presents potential reputational damage and ESG concerns for Unilever, particularly regarding its commitment to fair labor practices in emerging markets.
• The outcome of this situation could set a precedent for how Unilever manages employee relations and obligations during future divestitures or restructuring activities globally, especially in regions with differing labor law protections.
• While the direct financial impact from the Ivory Coast unit itself may be limited for a company of Unilever's scale, persistent negative publicity or a perceived double standard in employee treatment compared to European operations could attract activist investor scrutiny or affect broader stakeholder sentiment.