Cash-strapped Denel can't pay full salaries for June

Employees at state-owned arms manufacturer Denel will only receive 85% of their salaries for June.

The group's Chief Executive Officer, Danie du Toit, said in a statement on Tuesday that the company had no alternative but to cut back on salaries.  

“Due to ongoing liquidity challenges we are now faced with the unfortunate reality that the company is not in a position to fulfil the 100% salary obligation for June 2019,” he said. 

Denel said government was "cognisant of the fact that Denel is highly leveraged and in need of additional liquidity to rebuild the business" but did not provide further information. 

Du Toit said management would "strive to meet the company’s obligations to them in line with their employment contracts".

Solidarity said in a statement that the union was "shocked" to hear the news.

Its deputy general secretary Johan Botha said Denel undertook in December last year that it would indicate by the 15th of every month whether it was able to pay salaries.

“We are concerned that this tendency has now started again because there was an expectation that the non-payment of salaries was something of the past,” Botha said, adding that the uncertainty for staff in relation to salaries led to "unnecessary pressure and stress". 

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