Denel misses court-imposed deadline to pay salaries

07 August 2020 - 18:42 By Katharine Child
A Denel G-6 howitzer tank.
A Denel G-6 howitzer tank.
Image: Business Day

State arms manufacturer Denel has missed a court-imposed deadline to pay all staff their outstanding salaries, pension contributions, insurance and other outstanding payments.

Since May, some staff have received as little as 20% of their salary with others getting up to 60% of salaries in June and July. Most medical aid payments and all pension, life insurance and other amounts have not been paid for the past three months.  

Unions Uasa and Solidarity took the state-owned enterprise (SOE) to court after a two week arbitration process broke down.

On Tuesday, labour court judge Andre Venter ordered the munitions manufacturer to make payment in full by Friday saying it had “breached the most fundamental obligation of an employer in an employment relationship”.

Denel wrote to the unions and asked for an extension to August 14.

“The union’s view is no further postponement is acceptable,” said Helgard Cronje, Solidarity sector co-ordinator for defence and aviation.

Denel, one of the many embroiled in allegations of state capture, has yet to emerge from a turnaround strategy that included cutting R1bn in costs, selling noncore assets, and seeking international strategic partners with the approval of the government.

The business is in a dire financial position and is facing liquidity challenges. In 2019, it received a R1.8bn recapitalisation from the government, and in 2020/2021 it was allocated a further R576m.

Denel said on Friday that it is trying to find the money and has requested more time due to “stringent time frames”, but the judgment is “being taken seriously”. It said the government and the Denel board are “relentlessly working to resolve the short-term challenges the company is currently facing”. 

“Denel remains committed to meeting its obligations and to ensuring it is able to honour the judgment at the earliest opportunity.”