Gordhan questions SAA business rescue as unions cry foul
The minister has trashed the work of the business rescue practitioners, saying the R5.5bn spent has produced no demonstrable progress
SAA’s two biggest unions lashed out at the “absurdity” of the proposal by business rescue practitioners that workers consent to job cuts at the struggling, state-owned airline, saying it tramples on their constitutional rights.
The National Union of Metalworkers of SA (Numsa) and the SA Cabin Crew Association (Sacca) brought an urgent labour court application on Thursday to halt the retrenchment process at the airline, which was placed in business rescue in December 2019.
The unions want the court to grant an order declaring the retrenchment process the business rescue practitioners Les Matuson and Siviwe Dongwana have embarked on as “unlawful or procedurally unfair”.
Matuson and Dongwana have said that May 8 is “drop-dead day”, after which SAA will no longer run repatriation flights for stranded citizens. This comes amid a lack of air travel due to the Covid-19 lockdown. They have also given unions that day as a deadline for employees to accept a voluntary retrenchment offer.
Numsa and Sacca want the court to enforce their contractual right to be considered for placement on the training lay-off scheme instead of being retrenched.
A training lay-off scheme is a temporary suspension of work of a worker or group of workers that is used for training purposes. Employees don’t get a salary during the training period but receive a training allowance amounting to 75% of their salaries while in the programme.
In the applicants’ heads of argument, advocate Tembeka Ngcukaitobi, for Numsa and Sacca, argued that, during business rescue proceedings, “employees retain their contractual protections”.
“No one can quibble with this. It also fulfils constitutional goals,” he said in the court documents.
Ngcukaitobi also criticised the practitioners for not having produced a business rescue plan, saying that “for all we know” retrenchments could be avoided if the compact agreed with public enterprises minister Pravin Gordhan aimed at preserving SAA’s business in some form or the other is given effect.
Ngcukaitobi argued that if one of the purposes of the business rescue proceedings was to return the company to solvency, “it will be defeated by a retrenchment now, instead of waiting for the development of the plan”.
Gordhan, who briefed parliament’s joint committee on public enterprises on Wednesday evening, trashed the work of the practitioners, saying that with R5.5bn spent since December there has been no demonstrable progress.
He would not allow a firesale of SAA assets or any move towards liquidation, adding that on Tuesday he had been given what he would describe as “an outline” rather than a business rescue plan, which focused on the past and said little about the airline’s future.
Gordhan said he questioned how the R5.5bn, over which the practitioners have had “sole discretion”, was used. In particular, he questioned a R35m bill for US consultants Alvarez & Marsal, whose work he said he had never seen.
The practitioners have said there are only two options that could be pursued: the development of a plan which results in a better return for affected persons, or liquidation.
If employees accept the first option of a better return, the practitioners need them to consent “to the termination of their employment” by accepting an equivalent of a VSP, said Ngcukaitobi. He criticised the practitioners for refusing to sign the agreement entered into by unions and Gordhan, “even though its primary focus is the preservation of the business of SAA — and, by extension ,of jobs”.
In their heads of argument, advocates Andrew Redding and Victor Mndebele, representing SAA, Matuson and Dongwana, argued that the approach of the practitioners “is both rational and reasonable” as they are, in effect, offering all employees a VSP.
“This is an alternative to either a compulsory retrenchment or dismissal for operational reasons, or the consequences of liquidation,” they said in the court documents, adding that the unions’ court application “is misguided”.
The advocates said the application is aimed at preventing the practitioners from proceedings further in the hope that the “outside discussions, which resulted in the ‘compact’ between stakeholders, are fruitful”.
They dismissed the agreement between Gordhan and the unions as a “socio-political agenda”, arguing that the labour court could not make itself party to that.
Judge Andre van Niekerk reserved judgment.
Update: May 7 2020
This article has been updated with comment and information throughout.