SAA Technical asks workers to ‘sacrifice’ half their wages

With no flights in the air, there’s little maintenance that has to be done and for South African Airways’ (SAA’s) aircraft maintenance subsidiary, this also means that it won’t be able to pay workers their full salaries at the end of April.  

SAA Technical informed workers that the travel bans and the nationwide lockdown have left the entity’s finances in dire straits, leaving it with just enough to pay only 50% of (some) employee net salaries and full medical and pension contributions. 

In a notice sent to its members on Tuesday, the Aviation Union of Southern Africa (Ausa) said that the company had confirmed that only employees with full leave credits and those who had been working during the lockdown period would receive 50% of their salaries. 

Employees who do not have leave credits will not be paid at all or will receive partial payment based on the number of leave days they have.

For these employees, the company would only cover the admin and risk contributions for the pension fund and while medical aid payments will be made on their behalf, the money would be recovered from their future earnings. 

The loss of earnings for all employees will be partially topped up from the Temporary Employee Relieve Scheme (Ters), once received from the Unemployment Insurance Fund.

Read: Covid-19 crisis funding: Where to apply

Sacrifice

SAA Technical’s general manager Vincent Matlala directed all questions to the group’s communication team, but said that they were still locked in talks with organised labour and these discussions would continue on Thursday. Employees are paid around the 27th of each month and nothing had been finalised as yet.  

Read: Employees at SA Express face not being paid for March

In an update sent to employees following discussions with labour, where a question was asked on whether employees would receive the balance of their salaries at a later stage, Matlala said that the current cuts would be “on a salary sacrifice basis”. 

President of Ausa Frank Mckenzie said labour is against the suggestion that employees should sacrifice their salaries, saying there’s no trust between the company and workers because they failed to honour a wage hike agreement signed last year.  

Matlala explained in the update that the company could not commit to more because of the uncertainty facing the business due to the lockdown and the impact of the Covid-19 pandemic on the aviation industry.

Under the country’s lockdown regulations all international and domestic flights are prohibited irrespective of the risk profile of the country of origin. The only flights that have been allowed to operate are those involved in the repatriation of local and foreign citizens and cargo flights. 

“We fully appreciate that the majority of employees will be aggrieved by this, but this is not business as usual,” said Matlala.

Read: Unions respond to SAA severance package offer

 “We all have a role in sharing in the inconveniences caused by travel bans”. 

The International Air Transport Association’s (Iata’s) latest assessment on the impact of Covid-19 across the globe found that flights were down by almost 80% at the start of April with the industry “virtually grounded” outside of the United States and Asia’s domestic markets. 

“Bear with us”

Iata anticipates that the return to activity in the aviation industry will be gradual, beginning with domestic markets in quarter three and a slower move to opening up international markets, this will lead to $314 billion loss in passenger revenue in 2020. 

According to SAA’s 2016/2017 annual report published in 2018, SAA Technical has just under 2 400 employees and provides maintenance work to SAA and other third-party airlines. In that financial year, it contributed R703 million to the group’s revenue. 

In another communique seen by Moneyweb from SAA Technical’s acting head of the department of supply chain management Schalk Human, he states that while employees are entitled to payment because they have been placed on compulsory leave and some are engaged in essential services the actual payment will depend on the company’s ability to secure funding. 

Read: Government meets with SAA unions, and there’s still no money for the airline

Schalk said the company had not been able to secure additional funding from its shareholder and only had payment from the work that it has been able to do during the lockdown period, which is not enough to cover the company’s obligations such as full salaries, due taxes, and due payments to service providers. 

Workers have been encouraged to continue providing essential services, with Schalk warning that if the limited operations are disrupted this would only “worsen the already dire situation, and will likely put the business in a point of no return where [SAA Technical]  may end up collapsing”.

Salary woes

Despite dealing with financial issues that may possibly collapse the company rescue process, SAA confirmed to all its workers in South Africa, regional and international stations that it will be able to pay salaries in April. 

The notice sent in mid-April by the acting general manager of human resources Martin Kemp, states that this excludes subsidiaries such as Mango, SAA Technical and Air Chefs.

The airline, which placed all employees who are not engaged in essential services on compulsory leave when the lockdown began on March 27, said it will pay workers for the annual leave days they have taken. All other days not covered by annual leave will be considered unpaid leave. 

Read: Incomplete applications hold up UIF relief

SAA has also applied to the UIF to get top-ups for the unpaid leave component. 

Similarly state-owned airline SA Express, which is currently facing the possibility of liquidation, has also applied to the UIF Temporary Employer/Employee Relief Scheme (Ters) to pay salaries for April. 

The Department of Public Enterprises (DPE) which is supporting the application said some payments had already been made by the UIF. 

SA Express has yet to pay salaries March. An application made to the UIF’s Covid-19 Ters fund was rejected because it only covered losses from April onwards. 

“The DPE is trying everything in its ability to ensure the welfare of employees,” said the department’s spokesperson Sam Mkokeli.

“Ultimately, the business rescue practitioners [with board and executive] are responsible for ensuring the business is able to meet its obligations,” he said. “Regrettably this situation is the result of wholesale corruption at this entity for which the people concerned still have to face consequences”.

Source: moneyweb.co.za