Employees of Denel Land Systems (DLS), the company contracted to build a 240 plus fleet of new infantry fighting vehicles for the SA Army, will receive only 20% of their May salaries.
A memo dated 28 May from chief executive Mxolisi Makhatini to staff at the Lyttelton-based division of the embattled State-owned defence and technology company has it employees will receive a fifth of their salaries.
“Having taken into account our actual cash in the bank for the month, overall statutory payment obligations, supplier payment obligations and continuous operational requirements for further revenue generations, an across the board (ATB) percentage payment will be utilised to pay the May 2021 monthly salary,” according to the Makhatini memo.
“All employees will be paid a 20% salary (nett salary); this will also be the same for all terminations for March, April and May 2021. The company will honour payment of medical aid and the risk portion of the pension fund.”
This is not the first time Denel employees have been short paid. The phenomenon – if it can be termed that – goes back to May last year and drew comment from the responsible Cabinet Minister during his budget vote debate last week. Pravin Gordhan, whose public enterprises portfolio includes under fire electricity producer Eskom and the currently grounded national carrier SAA, told the National Assembly it was “regrettable” Denel employees weren’t paid in full.
The Makhatini memo said the situation is unlikely to improve in the short term.
“As the company’s liquidity status worsen (sic), payment of salaries for upcoming months will continue to be a challenge to honour,” he wrote. “Management will continue [to] engage with employees on activities to maximise cash in the coming months.”
Confirmation of salary difficulties at Denel came from spokesperson Pam Malinda. She, according to the TimesLive report, said solutions to the “liquidity problem” were being sought.
Centurion-headquartered trade union Solidarity has won court approval for Denel assets to be sold off to meet outstanding salary and employee benefit payments. A warrant to attach over R12 million of Denel assets was granted to Solidarity earlier this year. Spokesman Helgard Cronjé said it was “a victory” adding assets were being detailed by the sheriff.
“No assets have been removed,” he said early in May, adding “some Denel divisions complied with the order to pay outstanding monies and others not”.
“This means certain warrants can still be executed and others not. Solidarity is finalising further legal action for outstanding monies from August last year to now,” Cronjé told defenceWeb.