Denel June salaries will not be paid in full


“Ongoing liquidity challenges” at Denel have reached the point where employees will this month not receive full salaries.

An internal memo from the office of chief executive Danie du Toit, dated 24 June, states Denel is “now faced with the unfortunate reality that the company is not in a position to fulfil the 100% salary obligation for June”.

“Regrettably, employees will receive 85% of the salary obligation for June,” the memo states adding those banking with FNB would have been paid on Monday (24 June) and others today (Tuesday 25 June).

A media statement issued by Denel early today (Tuesday 25 June) has it that management of the State-owned company (SOC) is “working tirelessly to ensure delayed portions of salaries will be reimbursed to employees as soon as possible”.

Du Toit’s memo goes on to state Denel acknowledges the inconvenience “in particular the late communication. However, at the time this decision was made, the company had no alternative but to go this route.”

“The shareholder (government in the form of the Department of Public Enterprises), the board and management are continuously working to find sustainable solutions to the liquidity crisis facing Denel. Government is cognisant that Denel is highly leveraged and in need of additional liquidity to rebuild the business,” according to the media statement.

First to respond was Centurion-headquartered trade union Solidarity, which has a substantial number of Denel employees as members with its deputy general secretary Johan Botha pointing out Denel previously undertook to indicate by mid-month what the situation would be as regards salaries.

“We heard with shock Denel can pay only 85% of salaries this month. This follows a Denel undertaking last December to indicate by the 15th of each month whether or not full salaries can be paid. Solidarity is concerned this tendency has started again in view of the expectation that short or non-payment of salaries was over,” he said.

A salary payment scare late last year at Denel was averted thanks to close monitoring of cash flows across companies and business units in the Denel stable. This was in contrast with September last year when managers were short paid, Parliament’s Portfolio Committee on Public Enterprises was told in December.

Botha asked management of the defence and technology conglomerate to be “more cautious when communicating sensitive information which directly impacts the lives of employees”.

In his memo to employee Du Toit ends by stating management will always strive to meet its obligations to Denel employees “in line with employment contracts”.