When consumers were panic-buying at supermarkets on 25 March, two days before the start of a three-week Covid-19 lockdown, Grace* couldn’t afford to participate in the shopping frenzy or even buy baby formula for her nine-month-old son.
Every month, the 25th is an important day for SA’s economy because it has become a standard for when employers pay workers their salaries. And the day is supposed to be liberating as the spending power of workers is restored.
But for Grace, an SA Express worker based in Durban for the past seven years, 25 March meant the beginning of chaos in her life. To date, she hasn’t been paid a salary by SA Express, the second state-owned airline that is in the throes of business rescue but on the verge of liquidation.
“I’m not even from Durban and when I didn’t receive my salary, I couldn’t afford to pay the mortgage or buy formula for my baby. For the entire month of March, we worked for SA Express, but we have been left in limbo about our salaries. No one is telling us anything,” she said.
Grace’s life partner stepped in to pay her monthly bills.
Linda*, another SA Express worker, based at the airline’s headquarters in Gauteng’s Kempton Park for the past five years, is in a similar situation.
“During the lockdown, my family is at home and hungry as there is no money to buy food. We cannot even buy the so-called essential items such as hand sanitisers or soap, which the government said we must buy to wash our hands. We are going to die of depression or hunger before coronavirus gets us.
“It’s like SA Express and the government wants us to die like dogs.”
Grace and Linda are just two of many SA Express workers that have not been paid March salaries because the airline has run out of money.
It’s unclear if all SA Express’s 691 workers have been affected as the airline and its business rescue practitioners, Phahlani Mkhombo and Daniel Terblanche, didn’t comment on the exact number of workers that haven’t been paid March salaries.
However, trade unions representing SA Express workers said only 100 workers – mostly general workers, drivers and those working in customer care services – have been either paid their full or half salaries.
SA Express is facing a working capital crunch and cannot generate revenue from ticket sales because its planes have been grounded – long before the government banned air travel because of the lockdown. SA Express planes were grounded because the company couldn’t pay aircraft leases and insurance on time.
Workers in the crossfire
SA Express workers were told by the office of Mkhombo and Terblanche via email on 24 March that the airline wouldn’t be able to pay salaries on 25 March. In the email, which was obtained by Business Maverick, the duo implored workers to “make necessary arrangements with their banks directly”.
An undertaking was made that salaries might be paid within seven days after 25 March – as required under the Basic Conditions of Employment Act – but the subsequent deadline of 1 April was missed.
SA Express workers have been caught in the middle of a dispute between the government and rescue practitioners over how the airline should be restructured since it was placed under involuntary business rescue by the High Court in Johannesburg on 6 February.
This dispute has led to delays in the Department of Public Enterprises (DPE) and National Treasury approving funds of between R438-million and R691-million – in the form of a government guarantee – requested by the rescue practitioners. These funds would enable SA Express to continue operating and cover operational expenses while a final business rescue plan was put in place. However, the rescue practitioners have given up on restructuring SA Express as they have launched a court application to liquidate it.
The financial position of SA Express is so dire that it hasn’t paid statutory obligations on behalf of workers such as pension contributions, Unemployment Insurance Fund (UIF), PAYE and medical aid contributions since the airline was placed under business rescue.
The non-payment of medical aid contributions worries Linda the most at a time when SA faces a Covid-19 crisis.
“We can’t even get medication at a pharmacy because the medical aid is not paid. If we get coronavirus, we will be in big trouble,” she said.
Although SA Express hasn’t made UIF contributions in recent months, the DPE (on behalf of the airline) has asked the UIF for emergency assistance to pay March salaries. The DPE wants assistance from the UIF, which has a disaster benefit called the Temporary Employee Relief Scheme (Ters) that was recently put in place by the government to assist financially distressed companies to deal with the economic fallout from the Covid-19 lockdown.
Asked how much funding SA Express wants from the UIF, the airline’s board chair, Tryphosa Ramano, said the amount cannot be disclosed but it is equivalent to “March salaries”, which she also didn’t disclose.
“The UIF application has been made and [we] are awaiting [the] outcome,” said Ramano.
Meanwhile, DPE spokesperson Sam Mkokeli said the government was “concerned about the hardship and anxiety being experienced by the airline’s staff”.
“It is in this context that we rolled up our sleeves to help with the UIF application,” said Mkokeli.
The rescue practitioners didn’t respond to a request for comment.
Two factors might work against SA Express urgently getting money from the UIF’s Ters. The first is that SA Express will probably have to join a long queue for UIF money. Underscoring this is that employment and labour minister Thulas Nxesi said the UIF had received 7,000 claims from individual workers in recent weeks.
The second is that Nxesi said the UIF’s Ters benefits are only effective from April, meaning that companies cannot apply for benefits to cover March employment expenses (salaries) – putting SA Express in an awkward position.
No plan B
If the DPE’s UIF application bombs out, Ramano said, SA Express has no plan B.
“SA Express has no contingency plan. The shareholder (DPE) is the one that can provide relief or guidance. In absence of money and PCF [post-commencement financing that is linked to the business rescue process], there is nothing the company can do,” she said.
And if the UIF funding application is approved, SA Express workers might only get half or even less of their salaries. Depending on their monthly salary, workers who are either retrenched, unemployed or have exhausted their paid sick leave, usually receive – under normal UIF benefits – minimum payments of R3,500 (linked to the minimum wage) that can be capped at R6,500.
But this doesn’t sit well with SA Express workers, among them, Grace. “Some of us are just waiting for SA Express to say it is retrenching us so we can get our pension money. We don’t have faith anymore in DPE and Pravin Gordhan [minister of DPE].” BM
*Full names are known to Business Maverick.
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