Trade unions slam Denel management over unpaid salaries, head to court

3rd July 2020

By: Rebecca Campbell

Creamer Media Senior Deputy Editor


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The Solidarity trade union has blasted the South African government and the management of State-owned defence industrial group Denel over their mishandling of the affairs of the company, causing it to be in so bad a condition as to be unable to pay its employees their full salaries. In May, some Denel workers received only 20% of their salaries.

Separately, another trade union, Uasa, had also announced that it was launching an urgent application in the Labour Court, against Denel, over the nonpayment of workers’ salaries by the group. The union had also written to the CEO of Denel, which is a defence industrial group, on behalf of its members, seeking clarification regarding their salaries.

“We know most Denel employees did not receive full salaries and were only paid a percentage of their salaries for May 2020,” stated Uasa. “No further amounts have been received or discussions held as to when the rest of the salaries will be paid to the employees.” The union affirmed that Denel’s failure to pay workers their full salaries in May was a “flagrant breach” of their employment contracts. It also represented a contravention of the 1997 Basic Conditions of Employment Act.

Denel had also been unable to pay employees’ income tax and other statutory deductions to third parties since April. Further, it had indicated to Solidarity that staff salaries for June and July were also at risk and had proposed that its workers give up part of their salaries for June, July and August. Uasa also reported that it had been told that the defence group would fail to meet its statutory and contractual obligations towards its workers for the months of May, June, July and August this year.

“It is ridiculous to think that a company would impoverish its employees through its failure to meet the financial obligations it has in respect of employees,” asserted Solidarity defence and aviation sector coordinator Helgard Cronjé. “It is even more outrageous to expect these employees to impoverish themselves to help the employer, and in particular the State as shareholder, by sacrificing their salaries at the expense of themselves and their families.”

“Uasa members, who were at all times loyal to Denel, find themselves in a desperate financial position as they are unable to comply with their financial obligations towards their creditors and families,” highlighted the union. “We have also written to the Minister of Public Enterprises, Pravin Gordhan, to inform him of the legal action we are now undertaking against the SOE and asking for the government as a shareholder in Denel to intervene.”

“Uasa sent a letter of demand to Denel but we received a very unsatisfactory response,” stated the union. Consequently, Uasa had had no option but to approach the Labour Court, so that it could get a compliance order issued. “Uasa finds it shocking and unbecoming of an SOE such as Denel to not honour their contract with their employees by not paying their salaries in full, or not at all.”

Solidarity was demanding that Denel pay all the outstanding salaries, as well as the outstanding payments to third parties, by July 3. Although the country had been under a lockdown since late March (to counter the Covid-19 pandemic), this was not the only reason why Denel was in such financial distress.

“The State has an undeniable share in this by having appointed corrupt board members in the past and by having allowed State capture and corruption to take place right under its nose,” he charged. “Now, honest employees must pay the price for the State’s incompetence by receiving only partial or no salaries at all and there is even an expectation they would sacrifice their salaries altogether for a few months.”

Denel had a turnaround plan, and the group’s management told the union that government supported the plan. But the State had not provided the funding required to implement the plan.

“The State’s inability to steer this ship left us with no choice but to approach the court again,” explained Cronjé. “The State has a chance to avoid a second South African Airways and [electricity utility] Eskom, but their reluctance to really support the turnaround plans by providing the necessary funding is slowly but surely sending Denel on the same path as other State-owned enterprises. “The State must accept responsibility for its mistakes and not shift it onto employees. Solidarity will continue to take a stand against employers like Denel and the State who abuse and exploit Solidarity’s members.”

Edited by Martin Zhuwakinyu
Creamer Media Senior Deputy Editor


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