Denel announced paying all outstanding salaries in mid-August with the proceeds of the surplus medical benefit trust and putting in place payment plans for the SA Revenue Service (Sars) and the company pension fund. Image: EPA, KIM LUDBROOK.
Another skirmish is brewing at Denel as unions gear up for a brawl with the state arms manufacturer.
Unions say there may be a hearing possibly next week on the parastatal's intention to retrench at least 663 Denel employees in five categories. Trade unions Solidarity and Uasa confirmed receipt of communication from the Council for Conciliation Mediation and Arbitration (CCMA) to prepare for the sessions which may start very soon.
"We are waiting for the commissioners and trade union officials to be assembled, we can start tentatively next week. We are ready to be part of the process, we are prepared to negotiate," Uasa’s sector manager Rick Grobler said.
Solidarity's public sector deputy secretary-general Helgard Cronjé also confirmed that the union was gearing up for the fight and would represent the interest of its workers at the discussions.
October 1 is a proposed retrenchment date, pending the installation of all necessary consultation and people processes.
This is the first visible move made by newly appointed CEO of the beleaguered arms manufacturer Mike Kgobe, who replaced William Hlakoane on September 1 who has informed organised labour of “possible dismissals based on operational requirements.”
According to defence news portal defenceWeb, the targeted categories include senior officials and managers, professionals, technicians and associate professionals, clerks and “crafts and related trades”.
The letter to organised labour says this will see a reduction in the overall company cost base; improve operating efficiencies and “a possible reduction in operating structure and employee headcount across all operations”.
“If implemented,” the restructuring proposal will ensure effective organisation of Denel operations to “successfully” bring into being the re-purposed company strategy. This, according to Kgobe’s letter, “may give rise to some positions being declared redundant and possible retrenchments”.
Five pages of correspondence set out, in varying levels of detail, the intentions of the Denel board and management to restructure operations. This will evolve into “an optimised operating model and value proposition” for the state-owned defence and technology conglomerate.
The selection criteria for axing include relevant experience and qualifications, competency, skills and diversity.
If a selection cannot be made LIFO (last in, first out) will apply and could include “bumping” (when employees with more years of service take positions from those with less service years).
According to defenceWeb, on the table will be a severance payment equal to a week’s remuneration for each completed year of service. Additionally, retrenched personnel will be fully paid up to termination, including accrued leave pay and “some benefits in accordance with the Social Plan”.
Kgobe's administration has embarked on cost saving measures including freezing expenditure on employee training, supplier development, corporate social investment, new apprentice intakes and engineering bursaries.
Denel contractor numbers are ‘significantly’ reduced with future new business their only opportunity. Those who remain on the payroll are subject to a salary increase moratorium, for which no time frame is given.
Denel is still smarting from the execution of writs on it by organised labour which saw some movable assets being sold at auction.This raised a paltry amount, which has not been disclosed, that would not cover the close to R900 million of salary and bonus obligations for workers who had not been paid since late 2020. This also includes outstanding payments to the South African Revenue Services (Sars).
Denel announced paying all outstanding salaries in mid-August with the proceeds of the surplus medical benefit trust and putting in place payment plans for the SA Revenue Service (Sars) and the company pension fund.
As a result, Solidarity, which had attached Denel's bank account and already auctioned some of its movable property, said it would release the arrangement and repay the auction's proceeds.
Denel has been in the grip of a severe liquidity squeeze for the past three years, during which time a debt of R318 million to employees accumulated.
"Denel has been battling financially for years, it was not our intention to sell off its properties. They can't act as though they have faced detriment from paying outstanding workers salaries, they put the workers in detrimental situations. For now we will see their reaction and be part of the process," Grobler said.
BUSINESS REPORT