Legal action threatened as Denel salaries in jeopardy again


Trade union Solidarity has threatened legal action against Denel as the state owned defence conglomerate has cautioned that it may not be able to pay its staff their July salaries on time.

Denel Group CEO Danie du Toit on 22 July told employees they are in constant engagements with the banks to secure bridging finance to support the company.

“This issue is connected to the current liquidity challenges experienced by Denel, which also resulted in a delayed payment of full salaries and late payments of the employer’s contribution to the Denel Pension Fund in June,” the company said in a statement.

“Once again, I do apologise for the stress and anxiety caused to you and your families as a result of the current uncertainties. I thank you for remaining loyal to the company and for the personal sacrifices you are making for the company”, du Toit said.

Solidarity said it was irate that Denel may not be able to pay July salaries on time and would be forced to take legal action if salaries are not forthcoming.

“Not paying salaries on time must be is totally unacceptable and we condemn it. The implications are immense and far-reaching and Solidarity is ready for the fight,” said Helgard Cronjé, Solidarity’s Sector Coordinator for Defence and Aviation.

“If July salaries aren’t paid Solidarity will be left with no other option but to urgently proceed with legal action against Denel,” the trade union said.

“While Management’s communication to employees is more transparent and unions appreciate management’s efforts, the realities facing our members nevertheless still remain, and as a union we need to do what we need to do to protect the rights of our members,” Cronjé said.

Denel said it noted the positive sentiments expressed by the Minister and Deputy Minister of Public Enterprises during the recent Budget Vote. “We have also noted the recent positive statements from the Minister of Finance regarding the possible recapitalisation of Denel and we remain confident of government’s continued support of Denel, and believe that we will receive the much-needed recapitalisation by end September 2019”, said du Toit. “We furthermore are committed to and aligned with the shareholder expectation that we dispose of non-core assets on an urgent basis and establish strategic equity partnerships across the various divisions of Denel”.

Whilst Denel is confident that it will soon be recapitalised, it should be expected that the next few months “will be very tough. However, it is important to note that the implementation of the turnaround plan is in full steam,” the company said, with the Government, Board and management working to turn the business around.

Denel had trouble paying its full June staff salaries but eventually did, with the assistance of a local commercial bank. However, retirement fund contributions were only paid last week.