Court case against SAA may jeopardise business rescue

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

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.

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.