SAA allegedly attempting an UIF retrenchment bailout by stealth

30 January 2020

It has come to the attention of the Democratic Alliance (DA) that South African Airways (SAA) Business Rescue Practitioners, Les Matuson and Siviwe Dongwana, may intend to have the Unemployment Insurance Fund (UIF) pay out SAA’s retrenchment packages. This comes as a precursor to the long-awaited retrenchments of the bloated SAA staff.

The DA will therefore write to Les Matuson and SiviweDongwana, to request clarity on their intentions with regard to obtaining UIF funding to pay retrenched staff the payments that would be due to them from SAA.

If there is any truth to these rumours, it would mean that Matuson and Dongwana are trying to provide SAA with another bailout by stealth – because these packages fall outside of the mandate of the UIF and should be paid by SAA itself.

The UIF does have an obligation to meet the legislated unemployment payments that would become necessary should SAA members of staff be retrenched.

However, this would exclude the retrenchment benefits required in law to be paid by the employer, in this case, SAA.

These employer benefits would amount to a considerable amount of money and as SAA is under business rescue, would not be guaranteed (although section 16 of the Companies Act does provide protection for such employee claims whilst SAA is under business rescue). Employee claims would get preferential status in a liquidation of SAA.

Issued by Alf Lees, DA Member of the Standing Committee on Public Accounts, 30 January 2020