All outstanding salaries owed to employees of Denel have now been fully paid, says the Chairperson of the state-owned company, Ms Gloria Serobe.
This is the culmination of a lengthy process of consultation and litigation between Denel, trade unions and organisations representing current and former employees.
“We are pleased to report that this process has been completed. We also have payment plans in place for SARS (PAYE) and the pension fund. This demonstrates our commitment to the welfare of our employees and the high value we place on sound labour practices,” she says.
“We have turned an important page in Denel’s history. We can now proceed with the restructuring and repositioning of Denel as a sustainable enterprise and a valuable and strategic asset for South Africa.”
The cash utilised for the payment of the outstanding salaries were derived from a funding initiative to unlock excess funds in the Denel Medical Benefit Trust (DMBT) that was established in 2002. The Trust is the vehicle through which Denel has been meeting its contractual medical aid obligations towards employees who joined the company before 2002.
Through the years, the assets of the Trust exceeded the actuarial valued liabilities by a significant amount. Denel then developed a strategy to unlock the excess assets while ensuring that the members’ medical benefits were not affected and the pensioners’ interests were dealt with adequately. This intervention is the first step towards starting a sustainable restructuring plan for Denel.
Ms. Serobe says the new restructuring plan, supported by the Board and the Shareholder will create a self-sustaining business with a significant order pipeline. The sale of non-core assets is well underway and together with the recapitalisation application - which the Department of Public Enterprises has applied for through the National Treasury, will address the legacy debt and the introduction of liquidity. This will immediately improve profitability, enable the company to retain and appoint able skills and leadership.
“We wish to thank the pensioner’s forum, the DMBT trustees, and employees who contributed to the process to ensure the payment of the outstanding salaries. We want to thank employees for their support and commitment during the challenging period we faced. Once again, we apologise for the stress and anxieties caused to them and their families. We trust that this will contribute towards the fostering of a productive and normal relationship between Denel and its employees,” says Ms. Serobe.
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