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Court case against SAA may jeopardise business rescue

Unions head to labour court on Thursday to force the airline to pay salaries.
It’s up to the legal system to rule on the matter. Image: Waldo Swiegers, Bloomberg

The Department of Public Enterprises (DPE) says the bid by the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) to have South African Airways (SAA) pay salaries to their members could put the airline’s business rescue process in jeopardy.

Read: SAA unions seek order for wage payments to be made within seven days

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Numsa and Sacca are heading to the labour court on Thursday to try to compel the DPE and SAA’s business rescue practitioners to pay over three months’ deferred salaries to their members.

The unions also want the national carrier’s shareholder to pay members a lump sum consisting of an agreed-to 5.9 % increase backdated to April 2020, as well as an equivalent pro-rata contribution towards a 13th cheque.

This is the same deal the airline struck with four other unions at the airline in December.

Numsa and Sacca declined the offer but now want the DPE and rescue practitioners’ failure to pay their members the same funds paid to members of other unions to be declared unfair and unlawful.

DPE director-general Kgathatso Tlhakudi says Numsa and Sacca’s about-turn could render the airline susceptible to potential future claims.

He adds that the airline could also be held liable for the payment of salaries out of the business rescue post-commencement financing.

Risk of more claims

In court papers, Tlhakudi says the unions’ claim “re-opens the door for a potential claim … for salaries in respect of additional months for members and even non-members of Numsa and Sacca who have already signed the settlement agreement and who have been paid”.

More than 81% of employees (3 599 out of a total of 4 597), including some Numsa and Sacca members at SAA, have accepted the DPE’s settlement offer.

This means only 19% of SAA’s employees have not signed the settlement agreement.

The agreement follows the allocation of R10.5 billion by the government in October to fund the airline’s rescue process.

Tlhakudi has also questioned Sacca and Numsa’s claims that they represent the majority of staff at SAA, considering that some of their members have migrated to other trade unions at the airline.

Read:

In a circular sent to SAA creditors in December, rescue practitioners Siviwe Dongwana and Les Matuson said certain conditions were attached to how the funds could be spent – including that the funds could not be used to pay the salaries owed to workers for the period April to November.

Tlhakudi says R3.5 billion of the funding was made available to the airline at the beginning of November, and that following negotiations with labour unions it was decided that R600 million of this would be ringfenced for the payment of salaries.

According to Tlhakudi the unions also agreed that following the payments to SAA employees and the airline’s creditors, R1 billion of the funds allocated by government would be paid to SAA subsidiaries, including Mango (which is not in business rescue).

SAA employees have not received any salary payments since April because the airline had been conducting limited operations from the time of the initial Covid-19 lockdown in March (it has since suspended operations altogether).

The Ters element

Employees did however receive payments from the UIF’s Covid-19 Temporary Employer-Employee Relief Scheme (Ters).

“Ters was paid on the basis that such employees were deemed to be on unpaid leave … in order to keep their employment contracts intact,” says Tlhakudi.

“They are consequently not entitled to claim salaries for the period during which they were deemed to be on unpaid leave in order to protect them [financially, at the time],” he adds.

Numsa and Sacca have accused the DPE and the rescue practitioners of extorting “desperate” workers who had not had income (other than the Ters benefit payments) for months, leaving them with no choice but to waive their rights and sign the settlement agreement.

The rescue practitioners and the DPE have both rejected the extortion claims.

Tlhakudi says the department was well within its rights to enter into and sign settlement agreements with any SAA employees (unionised and non-unionised).

“[Secondly], the employees understood and appreciated the predicament in which SAA found itself and that full payment would compromise the process of the business rescue.

“Further, the voluntary severance packages were particularly generous to the lower-income employees,” he says.

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Business Rescue? What business rescue? It is all a smoke screen.

Moneyweb can probably save time and money on future articles by replacing SAA with “insert_other_bankrupt_SOE_here.”

Everyone is going to experience a strong deja vu in the future as we see the same story play out with other SOEs.

The corruption and the excessive employees have always been part of the problem.

South African tax payers must be the most patient and polite people ever.

We just pay and pay and pay . This case study should be studied in detail so nobody ever makes these mistakes again.

We are a minority capitalist country , with a tiny portion of super productive people and a majority socialist country with a massive proportion of blood sucking leeches that just want hand outs.

The unions think money grows on trees and most of the ministers in cabinet would agree.

Thank God the US decided to follow suit with their new leftist government , if they stayed the course we would have paid R50 per USD by 2030

Worth keeping in mind that during the last five years (mostly ‘government of the right’ in the US) the rand has APPRECIATED against the dollar. On 28 Jan 2016 it cost R16.20 for a USD and right now a USD costs R15.36 or 5.1% less.

The majority of those gains happened in the last 6 months. When the days of Donald Trump were clearly running out.

And with the 1.9 Trillion USD stimulus , it will only get worse for the USD.

If our government behave with a reasonable amount of sanity , we could go back below the R12 per USD rate

Polite maybe, but remember section 234 of the Tax Administration Act 28 of 2011: “A person who willfully and without just cause (p) fails or neglects to withhold and pay to SARS an amount of tax as and when required under a tax Act is guilty of an offence and, upon conviction, is subject to a fine or to imprisonment for a period not exceeding two years.” Goodness knows, no sane person in his right mind would willfully give these crooks one cent. Only the fear of a prison sentence can get one to do that.

There is no business rescue taking place here, all that is happening is a quiet cash syphon straight into the BR practitioners account.

If a business was rescued it would be wonderful, but if one look at the full stats of the BR practitioners are analyzed, from the existence of BR up to now, how many of its rescue attempts were
successful? maybe wrong but BR is to me something like “lets try again (in the process generate our own BR income) – maybe we can revive this dying / dead entity whilst the entity’s chartered accountants / anybody capable of reasonable logic and basic maths already declared it dead as a door nail.

Say THAT again! Who said looting stopped with the Gupta’s?
Kieswatter can first reverse that R10bn looted by the RPs and Gordhan under the guise of “saving/reviving SAA” before looking to SA tax payers for another dime!

SAA Brp,s are like the executors of a deceased estate continually exhuming the already deceased body !!
How many times must it be killed ???

It’s heartbreaking but no work no pay.

Are SAA flying? Has anyone asked these business rescue prationers if they have ever rescued an airline?

Well, SAA subsidiary and government-owned Mango is urgently in need of rescue; mechanical rescue, that is!

Did you hear about the TWO decompression incidents last week in mid-air between CT and Jhb, and another local route? Experts immediately started questioning Mango’s safety as we all know, SAA Technical (with no money as it’s all going to the Rescue Practitioners) does Mango’s maintenance and repairs.

Should’ve just let SAA go to the wall, would have founded the Vaccine;

“The agreement follows the allocation of R10.5 billion by the government in October to fund the airline’s rescue process”

Yet we lock down the country now to save lives, the paradox is heart breaking

Well now; little birdie tells me SAA aircraft (A350) sent to collect vaccine from India. At what cost?

Should be rather called SANFA = South African Non Flying Airline. Will seemingly still give the world lessons in how to maroon an airline.
Where is Pravin hiding ?

Why should some of the funds received by the BRPs be allocated to SAA Technical, Mango and AirChefs if the employees working for these subsidiaries received salaries. Only SAA was placed in business rescue and NOT the mentioned subsidiaries. Employees working for SAA did not receive any salaries.

Shame, and now SAA subsidiary Mango can’t even fly without major safety scares like decompressing a couple of thousand feet up in the air!
When this happened to TWO separate domestic Mango flights last week, petrified passengers said afterwards overhead oxygin masks fell down as the aircraft took one hell of a dive out of the blue!
It’s that billion rand Gordhan gave Mango from OUR taxes last year to further destabilise the local industry that’s coming to bite him in the proverbial b/s..
Mango isn’t safe to fly – neither is SAA!
So we’ll just stick to the great new airline with the reassuring name of LIFT, and other tried and tested AND reliable, safe airlines FlySafair, British Airways SA / Kulula.
NO interference from Pravin Gordhan at those businesses – they fly like the wind…WOW!

End of comments.

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