Denel Land Systems’ continued financial and liquidity pressures mean it will again be unable to pay salaries, and the division has told employees it will not be able to honour May 2021 salary payments by the 25th due to a lack of cash.
In a notice to Denel Land Systems staff dated 14 May, CEO Mxolisi Makhatini stated, “We will communicate the salary sliding scale and date of payment for the month of May 2021 payroll as soon as our cash position has improved.”
All the statutory benefits such as medical aid, Denret pension contributions, SARS, garnishees, home loans, dispute levies and union subscriptions are at risk of not being paid, the company warned. “These payments are highly dependent on forecasted cash receipts expected towards the latter part of the month. We will attempt to prioritise the payment of medical aid contributions and the pension risk benefit.”
Makhatini urged all employees to support Denel Land Systems in achieving its sales target, which may lead to an improved cash and financial position.
“The situation is truly regrettable and we therefore implore you for your understanding and ask that we work together and ensure the survival of this great business. We thank you for your patience and apologise for the inconvenience and hardship that you continue to endure,” Makhatini concluded.
Last month, Denel Land Systems also announced it was unable to pay April salaries due to low revenue and a poor liquidity situation.
Many Denel divisions are struggling to pay salaries and keep production going, with production standing at around 30-40% of capacity. Between May and July 2020 Denel was unable to pay full salaries and statutory obligations due to a significant decline in productivity, Denel said in a presentation to the Select Committee on Public Enterprises in February. Employees were instead paid a portion of their salaries on a sliding scale.
Many staff at Denel’s divisions, like Land Systems and Dynamics, haven’t had a proper salary in more than a year, prompting many to leave.
This week The Citizen reported that a number of Denel staff have committed suicide and others are at risk of losing their cars and homes.