Facing a drastic drop in donor funding over the past two years, family planning NGO DKT Ethiopia is now in a pay dispute with its staff who are demanding millions of birr in unpaid sales incentives and commissions, exposing the financial troubles facing the organization.
Donors withdrew crucial funding from the long-established charity, with contributions plummeting, leaving DKT unable to pay money owed to suppliers for ordered imported goods, according to documents and officials of the organization.
But as donations dried up, dozens of DKT Ethiopia employees went to court to demand unpaid incentive packages, which they argue they rightfully earned through sales performance, though the NGO claims the money originated from donors no longer providing funding.
The tensions began when a new country director introduced a revised organizational structure two years ago, resulting in multiple resignations and demands for unpaid sales commissions, according to employees.
Some 57 staff members took their case to the Addis Ababa city government’s Labor Relations Board, which has quasi-judicial powers to adjudicate employment disputes. The Board decided to hear the cases of only 41 employees as the contracts of 16 workers had already been terminated by the organization.
Employees are demanding 11.8 million birr (USD 221,000) in unpaid bonuses and commissions from DKT Ethiopia, according to court documents.
The payments, which were meant to incentivize sales of contraceptive products, were supposed to be paid out over three quarters from 2021 through 2022 but have not been received, the documents show.
DKT Ethiopia has a policy of rewarding top performers with sales commissions calculated based on the volume of contraceptive products sold, paid quarterly.
However, represented by lawyer Adamu Shiferaw, DKT Ethiopia argues it is not obligated to pay the money because the organization has repealed the benefit and incentive package policy, saying only salaries are now paid to employees. The policy change came as donors cut funding, according to the organization.
According to court documents presented by DKT, funding from donors dried up drastically, plummeting from USD 12.8 million in 2015–16 to just USD 5.7 million in 2020–21, the documents reveal.
While donors pledged USD 5.4 million for 2021–22, they allegedly failed to disburse the funds, leaving DKT unable to pay 244 million birr owed to suppliers for ordered imported goods, the court filing states.
However, DKT employees argue a different story.
They counter that donors have in fact disbursed the pledged funds for 2021–22 but DKT claims donor’s suspended payments due to COVID-19. The NGO also argues most donor projects ended in 2021–22, cutting off funding. It says donors give money for beneficiaries in Ethiopia, not employees.
The legal drama intensifies as plaintiffs – representing up to 35 percent of DKT Ethiopia’s staff – claim the NGO terminated their contracts without paying incentive packages, which employees argue they rightfully earned through sales commissions generated within Ethiopia. But DKT insists the money originates from international donors.
In its ruling, the court ultimately concluded that the incentive payments were tied to sales revenue generated within Ethiopia, unrelated to donor disbursements. The incentives were meant to encourage employees to increase sales of DKT products.
The court ordered DKT to pay incentive packages for July, August and September 2021 in line with the organization’s incentive policy at that time. DKT was also ordered to pay incentive packages for October through December 2021. However, for packages claimed for January through March 2022, the court ruled that the plaintiffs were not eligible as DKT had already paid those.
DKT has appealed the decision to a higher court, which is scheduled to determine next week whether the appeal can proceed.
Several current and former DKT Ethiopia employees who spoke to The Reporter blamed the new country director for reckless leadership that caused the resignation of several senior staff. They claim DKT Ethiopia is on the verge of collapse due to mismanagement that is tarnishing the organization’s reputation.
Country Director Muhammad Dawar Waraich dismisses allegations against DKT Ethiopia, claiming he is improving the organization.
He says no layoffs occurred, claiming changes followed organizational law. “I introduced a new structure to maximize operations. Long-tenured staff, taking incentives without performance, resisted making space for fresh hires. Staff stopped sales demanding salary increments,” he claims.
He argues donor funds come for specific projects, ending when projects end. He says affected employees received all benefits owed. “Some went to court giving the organization a bad name,” he claims.
He alleges employees caused a 43 million birr loss last year.
“Donors stopped funding due to the loss. There is no way we continue paying donors’ money to low performers. The money is meant for communities,” he says. Yet some employees in Tigray requested money though no activity occurred there, he claims.
The poor performance has impacted family planning services, according to the Country Director. “Contraceptives’ prices skyrocketed due to malpractices. A 3-condom pack costs 50 birr instead of less than 10 birr,” he says, calling for government regulation. He alleges some employees unfairly profited.
He says affected employees resent new management for regulating malpractices. “When good performers are rewarded, they twist allegations,” he claims. “They have nothing to show for their 20 years except hate for new management for implementing right principles.”
Waraich says DKT Ethiopia closely supports Ethiopia’s sustainable development goals through working with the government and donors to provide sustainable family planning services.
(Daniel Nigussie contributed to this story.)