Denel not paying staff medical aid or pension is fraud – union

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Trade union UASA has said the fact that Denel has not paid June pension contributions and medical aid amounts to fraud, as these were deducted from employees’ salaries but did not get to where they were supposed to go.

On Wednesday UASA noted that Denel’s retirement fund will not be able to process or effect payment of members’ benefits, including death in service and medical disability benefits, resignation benefits, investment return updates and any other benefits payable as provided by the fund’s rules as employees’ retirement fund contributions, both that of the members as well as that of the company. Medical aid contributions were also not paid for June.

According to the Pension Funds Act contributions must be paid before the 7th day of the month following the month for which it is due.

“Despite the fact that the amounts for the retirement fund and medical aid were deducted from the employees’ salaries, it seems the funds never made it to where they were supposed to go, which amounts to fraud,” UASA said.

The union added it was meeting with Denel to discuss the matter.

Denel late last month announced it would only be able to pay its employees 85% of their June salaries due to “ongoing liquidity challenges”, but employees received an eleventh hour reprieve when Public Enterprises Minister Pravin Gordhan announced that a lender, a South African commercial bank, had come to assist Denel and allowed full salaries to be paid.

However, liquidity challenges were blamed for Denel’s inability to pay retirement and other benefits. Denel yesterday said was “working tirelessly to correct a situation in which it was unable to make the June 2019 payment of the employer’s contribution to the Denel Pension Fund. The organisation is also engaging the banks to secure bridging finance to support the company until recapitalisation is received.”

“Denel is in constant communication with the Denel Retirement Fund managers and will advise employees as soon as the issue is resolved,” the company said. “Management is in regular contact with all the labour unions within the company to keep them informed about the situation to maintain the good relations we have with them.”



UASA said from the outset that the donor’s contribution to pay June salaries was nothing more than a temporary solution. “The current situation tells us how poor management and planning affect the lives of workers, not only employees, but also those family members covered under their benefits.”