Trade union, Solidarity says Denel employees are being punished for the company’s financial mismanagement. The state-owned arms manufacturer earlier notified its employees that they would not receive their full salaries this month.
Cash flow problems have been cited as the reason behind payment of only 85% of the salaries to workers.
State arms manufacturer, DENEL, has notified its employees that they will only receive 85% of their salaries this month and the balance will be paid out at a later stage #sabcnews #safmsunrise pic.twitter.com/KPmHGo3w1q
— SAfm news (@SAfmnews) June 25, 2019
The payment shortages of some employees and the last minute notice from the company has caused major inconvenience.
Now, uncertainty and anxiety have plagued the state-owned company as management is yet to find a permanent solution to this problem.
Trade unions have entered the fray in a bid to find reassurance for those affected.
Solidarity deputy General Secretary, Johan Botha says that they are worried about the financial repercussions of the non-payments.
“Employees at this time feel very insecure for not being sure when salaries will come from. This is a great cause of concern. They have debit orders that need to go through and there is financial repercussions.”
Labour union LIMUSA has also expressed concern at Denel’s financial situation.
LIMUSA’s Mawonga Madolo says, “We want an urgent meeting with Denel to discuss when are they going to be paying the salaries, because from what we are getting now because even the commitment they have made has not been paid. Further than the 15% when are they going to pay because there is a contractual obligation on part of the employer to pay employees on time.”
In 2015, Denel paid R855 million for BAE Systems Land Systems South Africa and paid the BEE partners about R100 million each. It is this deal, together with the Gupta-linked VR Laser deal, which brought Denel to its knees.
Denel recorded a loss of nearly R2 billion in the last financial year. The company is still facing liquidity challenges and blames this on the high debtor’s book.
Even with government guarantees, Denel is still struggling to secure funding from financial institutions.
CEO Daniel du Toit says banks want strong commitment from government.
“From the banks perspective, they want a strong commitment from government that Denel will be recapitalised, then they will have more appetite to support us.”
It’s emerged it’s not the first time Denel employees experience non-payment. Trade Unions are now threatening legal action against Denel if the current situation continues.
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