Frik van Straten, Uasa’s sector manager for metal and engineering industries, said on Friday that most Denel employees did not receive full salaries and were only paid a percentage of their salaries for May. File Photo: Reuters
Frik van Straten, Uasa’s sector manager for metal and engineering industries, said on Friday that most Denel employees did not receive full salaries and were only paid a percentage of their salaries for May. File Photo: Reuters

Uasa threatens legal action against Denel for unpaid salaries

By Dineo Faku Time of article published Jun 21, 2020

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JOHANNESBURG - The United Association of South Africa (Uasa) has threatened to take legal action against beleaguered Denel over the non-payment of salaries. 

Frik van Straten, Uasa’s sector manager for metal and engineering industries, said on Friday that most Denel employees did not receive full salaries and were only paid a percentage of their salaries for May . He said Denel had informed the union during  a meeting last week that it would not be honouring its outstanding contractual obligations towards its employees for May, June, July and August 2020. 

“The non-payment of Uasa members' full remuneration for May 2020 amounts to a flagrant breach of their employment contracts by Denel and is also in contravention of the relevant provisions of the Basic Conditions of Employment Act, 75 of 1997,” said Van Straten.  

He said that Uasa had sent a letter of demand to Denel over the salary debacle, but it had received an unsatisfactory response. 

“As such Denel has left us with no choice but to launch an urgent application with the Labour Court to issue a compliance order,” Van Straten said.  

Van Straten  called on the government to bailout Denel saying that the state-owned aerospace and military technology conglomerate needed intervention similar to South African Airways.  

He said that the union was scheduled to have a virtual  Minister of Public Enterprise Pravin Gorhdan to raise its concerns.

“We are going to ask Gordhan to tell us  why the state has not intervened in Denel’s crisis. Depending on his answer we will decide on whether or not to proceed with the legal action,” he said. 

During a briefing to the portfolio committee on public enterprises on Denel’s turnaround strategy  chief executive Danie Du Toit  said that the group had an unsustainable cost structure, citing that the company’s typical salary bill was  R144 million a month, which could not be sustained. 

Du Toit also said the company had an unsustainable debt situation.

“Denel is financed on a medium term note programme  on the back of a government guarantee to the value of R3.4 billion.  

The interest burden is significant on the organisation,” said Du Toit.   

Van Straten asserted that Uasa members, who were at all times loyal to Denel, found themselves in a desperate financial position as they were unable to comply with their financial obligations towards their creditors and families 

“Uasa finds it shocking and unbecoming of a state-owned entity such as Denel to not honour their contract with their employees by not paying their salaries in full, or not at all,” said Van Straten.

BUSINESS REPORT 

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