South Africa Government Offers SAA Staff Less Than Legally Required

(Bloomberg) -- South Africa’s Department of Public Enterprises has asked workers at the bankrupt national airline to accept three months’ pay rather than the eight months they are entitled to by labor law and the terms of a business rescue plan, according to a labor union leader.

The offer was made at the weekend and will not be accepted “on our watch,” Grant Back, chairman of the South African Airways Pilots Association, said in an interview on Monday. The department paid 1.5 billion rand ($99 million) to the administrators of the airline last week, but the money can’t be used because the administrators say the conditions imposed breach labor and companies regulation.

South African Airways, which was placed under administration in December last year, hasn’t flown commercially since March and its business rescue plan details a hierarchy of payments including severance packages for dismissed workers.

“The DPE considers the agreement reached with some unions” for three months payment to be fair, the department said in a statement on Monday. “Certain unions are deliberately undermining the process and seem to be in alliance with opposition parties to undermine the business rescue process.”

Under South Africa’s companies act when a firm is placed under so-called business rescue advisers are the first to be paid, followed by secured creditors and employees for work done during the business rescue period. The department wants some of the money to be given to SAA subsidiaries, which weren’t part of the business rescue, Back said.

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