The North Gauteng High Court in Pretoria has ruled that Denel must pay over the unemployment insurance and taxes deducted from employees’ salaries over the last several months.
The High Court made the ruling today after trade union Solidarity on 31 July brought an urgent application to compel Denel to make the payments. Denel has only been able to pay a certain portion of its employees’ salaries for June and July. Certain statutory compulsory payments such as PAYE, UIF and the skills development levy were indicated on salary slips, but have not been paid over.
Denel had applied to the South African Revenue Service (SARS) for a payment deferment and said it remains committed to paying staff salaries and unemployment insurance. It is understood that Denel has not passed on tax contributions deducted from employees’ earnings to SARS since April this year.
Solidarity, which represents around 1 000 of Denel’s more than 3 500 employees, was alerted to the non-payments by the Denel pension fund early in June.
Anton van der Bijl, head of Solidarity’s Legal Services, said today’s High Court ruling “is a major victory for Solidarity and the Denel employees. However, it is regrettable that we had to go to court just to draw Denel’s attention to payments that it should have made a while ago.”
Denel said it respects the decision of the North Gauteng High Court and is committed to work with all interested parties, including organised labour, to meet its contractual obligations towards employees.
“Denel will also continue to engage with SARS to find solutions regarding our application for payment deferments. The Shareholder, Board and executive management are working hard to find long-term answers for the current challenges facing Denel that can be attributed to liquidity issues. We are confident that we will find solutions that will contribute to the long-term sustainability of the company,” Denel said.
Johan Botha, deputy general secretary of the professional industry in Solidarity, said although today’s ruling is a major step in the right direction for the greater fight against the misuse of taxpayers’ money, Solidarity is still concerned about Denel’s continued survival.
Solidarity’s Helgard Cronje noted that recapitalisation for Denel is coming in September or October, but said government has known about Denel’s predicament since early 2018 should have done something a lot earlier.