Unions win better terms for South African Airways workers

A new agreement between unions and the South African government will see the ailing airline retain 2,000 jobs and offer better terms in the voluntary severance package

July 09, 2020 by Peoples Dispatch
SAA South Africa
(Photo: SAA)

A thousand more jobs could be saved at the ailing South African Airways (SAA). This was after the Department of Public Enterprises (DPE), under immense pressure by majority unions, tabled a better offer for workers at the airline.

The National Union of Metalworkers of South Africa (NUMSA) and the South African Cabin Crew Association (SACCA) said in a joint statement on July 8, Wednesday, that the two unions have finally “secured an agreement through bilaterals with the Department of Public Enterprises (DPE)” over the future of SAA.

This agreement between the unions and the DPE envisions retaining 2,000 jobs at the national airline. The previous plan supported by the DPE stipulated retaining only 1,000 of the 4,700 workers, while laying off the rest.

The unions pointed out that in addition, 1,000 more workers will be placed on a training lay-off scheme for up to 12 months. During this period, 75% of the worker’s salary will be paid by the Sector Education and Training Authority (SETA), which falls under the department of labor.

In addition, SAA will make a monthly contribution up to “R4,650 towards employees pension, UIF and company medical aid. We have consistently called for this scheme to be implemented in order to provide support for workers whilst the airline ramps up, and we are pleased that DPE has agreed to this arrangement,” the unions’ statement reads.

Also, the Voluntary Severance Package (VSP) that will be offered to the remaining 1,700 workers “is now a significantly improved package”. 

According to the previous plan, the package that the DPE had agreed to included a month’s notice pay, pay for the accumulated leave and a week’s salary for each year of service of the employee, along with a 13th cheque, which is a form of gratuity bonus, and “a top-up of severance packages calculated on a back-dated 5.9% wage increase which was agreed to in November last year.”

The new plan adds to this package an incentive pay. Those employees whose Total Cost of Employment (TCE) per year is upto R450,000 will receive an incentive of R100,000. Workers whose TCEs fall between R451,000 to R550,000 will be paid R75,000, and those in the TCE range of R551,000 to R750,000 will receive R50,000.

“It is important to note that the VSP is in its very nature voluntary. Nobody is compelled to  accept  it.  For  those  workers who do not accept  it, we  will  continue  to  negotiate  to minimize job losses and we will ensure that any forced retrenchments occur in a fair and lawful manner,” the unions clarify.

The new agreement, however, is not yet final. The Business Rescue Practitioners of SAA – whose previous business rescue plan was rejected by the majority unions as well as a majority of the creditors at the stakeholder’s meeting on June 25 – have now revised the plan to reflect this agreement between the unions and the DPE.

“The BRPs have sent us the (revised) plan and there are some changes (in it),” NUMSA’s national spokesperson Phakamile Hlubi Majola confirmed to Peoples Dispatch, adding that the unions are carefully studying the plan to ensure it reflects the new agreement with the DPE accurately. 

This revised plan has to be passed at the next stakeholders’ meeting on July 14, with a 75% vote from the stakeholders in the Leadership Consultative Forum (LCF), which includes the creditors and the unions, with the former’s vote numbering the latter’s.

A failure to secure 75% of the votes would trigger liquidation, which will result in all employees being laid off with a severance pay of no more than R32,000, subject to availability of funds.

Should the plan be passed, the last uncertainty that remains is whether or not the treasury will agree to pay to implement the plan. Earlier this month, the treasury had made statements before a parliament’s finance committee to the effect that it does not intend to cough up any more funds, except what is required to service the government guaranteed debt of SAA.

Unions remain concerned that this statement may prejudice the vote of the creditors who may go against the plan and trigger a liquidation.

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