Denel will still pay performance bonuses to its employees this year after meeting targets for the 2015-16 financial year, the company announced after some employees engaged in protest action due to the late payment of bonuses.
According to Willie Venter, trade union Solidarity’s sector coordinator for the defence and aviation sectors, those bonuses are paid as a rule around June or July each year to eligible employees. “However, on 1 July this year, Denel’s management informed trade unions and employees that payment would only be made by the end of October this year. The company claims that it is currently experiencing a cash flow problem which is the reason behind the postponement of bonus payments. However, the company had already budgeted for bonuses in the previous financial year,” Venter said.
Pamela Malinda, External Communication Specialist at Denel, said “The Denel Group has always paid employees performance based bonuses as an incentive when performance targets have been successfully met by the group and the company can afford bonus pay – this year is no different. The company has been transparent on the matter from the word go. The bonus is an incentive to encourage and recognise employee performance. It is based on three elements – achieving the performance targets set, approval of the incentive pay by the Board and, most critically, the ability of the company to afford paying bonuses at any particular time.
“It is unfortunate that the employees have selected to embark on demonstrations because their bonuses are not paid at a time they expected them to be paid this year. The company appreciates the relationship we have developed with our labour unions over the years, and we regard the response by employees on this issue as only a challenge that we will overcome together with our employees, and continue on the growth trajectory Denel is on.”
Venter yesterday said since the disclosure of the Denel Asia debacle Denel employees have been plunged into uncertainty about the company’s future. “Their fears arise for example from the fact that since the appointment of the new board in 2015 the company has been experiencing financial challenges,” Venter said.
Venter believes the postponement of the payment of performance bonuses to employees probably harmed Denel employees’ trust in management even more.