Denel promises to honour employee contracts as Solidarity heads to court

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Denel's office in Pretoria (Reuters)
Denel's office in Pretoria (Reuters)

Arms utility Denel has reiterated its commitment to honour its contractual obligations in the face of an urgent court application by union Solidarity to have outstanding tax and unemployment insurance deductions paid.

Solidarity took legal action, stating that Denel deducted taxes, unemployment insurance and other monies from employees' salary payments, but did not pay the funds to the relevant custodians, including the South African Revenue Service (SARS). 

Denel applied to the SARS for a payment deferment amid ongoing liquidity challenges.

The union's urgent application is due to be heard in the North Gauteng High Court in Pretoria on Tuesday morning. This comes after Denel fought through serious financial constraints to pay Denel staff salaries in July.

The company made use of bridge financing to pay salaries and has also received a commitment from government for recapitalisation by late September.

Denel spokesperson Pam Malinda told Fin24 on Monday afternoon that the arms utility had no intention of reneging on its contractual obligations towards staff in terms of salaries or unemployment insurance.

"Please note that Denel is committed and will always strive to meet the company’s contractual obligations towards the employees in line with the employment contracts," said Malinda.  

She said Denel was continuing to work with SARS to seek a viable solution for both the company and its staff.

"Denel is engaging with SARS to find solutions regarding our request for payment deferment application," Malinda said. 

Malinda repeated the shareholder, the board and management of Denel were continuously working to find sustainable solutions to the liquidity crisis facing Denel.

Solidarity's legal services head Anton van der Bijl confirmed in a statement by the union that Solidarity was taking legal steps to address the issue of mandatory payments that were indicated on employees' payslips but not paid over to SARS.

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