Picture: Siphiwe Sibeko/Reuters
Picture: Siphiwe Sibeko/Reuters

Denel Land Systems staff not getting paid April salaries

By Loyiso Sidimba Time of article published Apr 21, 2021

Share this article:

Johannesburg - The non-payment of employees’ salaries is set to continue this week at state-owned aerospace and military technology company Denel.

Denel Land Systems (DLS) has informed its staff that they will not receive their April salaries, a situation the struggling company attributes to extremely low revenue and a worsening liquidity position.

DLS, which had 507 employees by the end of March last year, still owes workers part of their salaries for May, June and July 2020.

In their communiqué to employees, DLS management indicated that its financial and liquidity position continue to be under extreme pressure and the revenue has been extremely low, resulting in a weak outlook for total sales for this month.

”It is with great regret to inform you that we will not be able to honour our contractual obligations with regards to the payment of salaries on the 25 April 2021. We will continue engaging all relevant stakeholders to try and avert this unfortunate reality,” DLS management told staff on Thursday.

DLS bosses said they were expecting some debtors and clients to make payments this month, which may enable the company to still “pay salaries to a certain extent”.

They undertook to communicate with employees this week on the salary sliding scales to be applied and when the remainder of the outstanding May, June and July 2020 wages will be paid.

Denel has blamed the Covid-19-enforced national lockdown, which further severely impacted its operations, leading to a significant decline in productivity between May and July last year and the inability to pay full salaries and third party payments and statutory obligations such as medical aid.

DLS has described the non-payment of salaries as an “unprecedented storm”.

Denel spokesperson Pam Malinda told Independent Media yesterday that the non-payment of salaries this month only applied to DLS and not the entire Denel.

Malinda said Denel’s divisions have the autonomy to manage their own cash flow.

She described the latest non-payment of salaries as unfortunate and assured the affected employees that meetings were being held to avert the crisis.

”We are positive that things will turn out for the better,” said Malinda.

Last month, trade union Solidarity obtained a warrant of execution to seize assets to the value of around R12.7 million due to Denel’s failure to meet various contractual and statutory obligations.

Denel posted an audited loss of R1.9 billion in the 2019/20 financial year due to a significant decline in revenue attributable to its current liquidity challenges.

In February, Denel told the National Council of Provinces’ select committee on public enterprises and communications that it was going ahead with the implementation of section 189 of the Labour Relations Act (LRA) restructuring as approved by its board.

Section 189 of the LRA permits employers to dismiss employees for operational requirements.

According to Denel, employee salaries are dependent on divisional revenue generating capacity as in its decentralisation model, divisions with contracted productive workload have been able to recover, meet obligations and begin to repay outstanding wages and other statutory payments.

Other divisions such as DLS, Denel Dynamics and Denel Vehicle Systems are still experiencing severe constraints.

The entity has also prioritised paying its suppliers in order to allow daily operations to continue and preserve about 4000 direct jobs and expediting projects that can deliver rapid returns.

[email protected]

Political Bureau

Share this article: