Denel defies court over paymen

G5 artillery piece. Photo courtesy Chris Baxter.

Denel defies court over payment of workers’ salaries

SOE tells unions that, despite a ruling by the Labour Court, it cannot pay employees the money it owes them.

Denel defies court over paymen

G5 artillery piece. Photo courtesy Chris Baxter.

The already disastrous situation at state armaments company Denel took another turn for the worse on Friday when it confirmed that it was unable to meet a court-imposed deadline to pay outstanding salaries owed to its employees.

Both Business Day and news agency Reuters have reported that Denel sent a letter to its unions confirming that it was unable to comply due to having insufficient funds.

Pension and other obligations also unpaid

This followed a ruling by the Labour Court on Tuesday that the state-owned enterprise (SOE) must meet all outstanding salary obligations for May, June and July by Friday.

The court also stipulated that other obligations to workers, such as pension fund contributions, needed to be met by the same date.

Two labour unions serving Denel employees, Uasa and Solidarity, brought the court action.

In his ruling, judge Andre Venter said Denel had “breached the most fundamental obligation of an employer in an employment relationship”.

Working on measures to raise necessary funds

According to Reuters, the letter from the armaments manufacturer’s lawyers to the unions’ legal teams on Friday said, in part: “Our client requests that your clients grant it an indulgence to enable it to work on measures to raise funds.”

The statement added: “The shareholder and the Denel board are relentlessly working to resolve the short-term challenges the company is facing.”

Solidarity has already said that it will now consider contempt of court proceedings. “The union’s view is no further postponement is acceptable,” said spokesperson Helgard Cronje.

To add to Denel’s woes, its group CEO Danie du Toit announced in mid-July that he was resigning after less than two years in the job.