Picture: 123RF/ RICHARD VAN DER SPUY
Picture: 123RF/ RICHARD VAN DER SPUY

When SAA went into business rescue it was generally greeted with expressions in the online aviation community along the lines of “finally, SAA and [public enterprises minister] Pravin Gordhan have come to their senses and done what should have been done years ago”. 

Everyone was apparently an expert when it came to SAA. The business-rescue practitioners (BRPs) were seen as the sort of heroes who don’t wear capes. Any questioning of their activities and whether they were following the law was greeted with a bombardment of abuse and ad-hominem attacks that so often characterise social media.

Now, more than six months after the BRPs were appointed, the process is in chaos, criticism of the BRPs has risen exponentially (even by their former supporters) and calls have been made for them to be axed. This wasn’t helped by a humiliating defeat in the Labour Court on May 8, when a judge held that the BRPs were not following correct procedure in issuing section 189 retrenchment notices to SAA employees.

The Companies Act is very sensitive to the position of employees. It provides “complete protection to employees during the business rescue proceedings”, to quote the judge. The act also makes it very clear that when a company is in business rescue, the BRPs must present a rescue plan to creditors, part of which can include retrenchment of the company’s employees.

So retrenchment of employees is not a decision of the BRPs but of the creditors, who must evaluate it as part of the rescue plan. As is well known, the SAA BRPs have yet to present a business plan. So, when they presented the retrenchment notice as a fait accompli, they were not following the clear provisions of the act. The judge was emphatic: “There is no provision in S 136 (1), or anywhere else in the Companies Act, that empowers a BRP to retrench employees in the absence of a business rescue plan.”

A plain reading of the Companies Act should have made that clear to the BRPs that they couldn’t proceed with the retrenchments before presenting their business rescue plan to the creditors. It is also worth having a look at the retrenchment notice itself. The notice has been widely circulated on social media, and on the pilots’ chat room Avcom.

When embarking on a retrenchment exercise, the employees who are selected must be identified according to fair criteria. Generally, “last in, first out” (Lifo) is used, but there are exceptions.

Paragraph 8.2 of the notice states: “SAA proposes applying Lifo, subject to skills, qualifications and experience in respect of the job categories indicated. In addition, to properly address historic imbalance connected with certain collective agreements which entrench benefits associated with seniority, the company proposes to evaluate such outcomes having regard to an employment equity override that which ensures equitable representation by black, female and disabled employees.” 

The number of proposed job cuts shows that more than half of SAA’s pilots would be retrenched, a far bigger proportion than other employees. Later news reports showed that SAA’s pilot seniority list was seen as an obstacle for the advancement of black employees. Every airline has a seniority list whereby, broadly speaking, those pilots who have been flying the longest for the airline get promoted first to the coveted captain and chief pilot positions. Abolishing the seniority list would make SAA the only airline in the world where, potentially, junior pilots with fewer hours’ experience could become captains over pilots with much more experience.

In addition to being nonsensical from an aviation perspective, it could also fall foul of labour case law, which makes it clear that no-one can use a retrenchment procedure for an ulterior motive, such as getting rid of a specific category of employees. I’m convinced using retrenchments to abolish the seniority list of SAA would fall foul of labour law. There are other ways to achieve representativity that don’t compromise experience and safety.

Meanwhile, the lack of certainty is taking an emotional toll on SAA’s employees (and that was even before the Covid-19 pandemic), but it might now be a good idea for one of the unions, or the SAA Pilots Association, to take matters into their own hands and drive the future of the airline, and the BRPs themselves. Section 157 of the Companies Act has just such mechanism, and the courts have explained in the context of winding up a company that is a public organ (such as SAA) that this section may be used “to obtain legal certainty for the proper administration of justice; an interest in ensuring that public power is exercised in accordance with constitutional and legal prescripts; and the need for the rule of law to be upheld”.

If ever there was a need for legal certainty and the rule of law to be upheld at SAA, it is now. The BRPs have now been granted leave to appeal against the labour court decision, but I’m not putting any money on their chances of success.

• Myburgh is an attorney and private pilot.