Government and unions have reached an agreement to retain an additional 1,000 employees at South African Airways (SAA) – doubling the number of workers who will not be retrenched to kickstart the new airline.
Instead of being retrenched as part of the rescue plans for the restructured airline, these workers will be placed on temporary suspension through the Department of Labour’s training lay-off scheme, otherwise known as the Temporary Employee Relief Scheme (Ters), not to be confused with the Covid-19 Ters.
It provides an alternative to retrenchments, while giving employees an opportunity to upskill and allowing a company to offload a large number of its remuneration obligations through economic recessions.
This means only 2,700 workers will be laid off if the final SAA rescue plan is accepted by creditors. They would receive voluntary severance packages which, among others, will include one week of pay for every year of completed service, one-month notice pay, accumulated leave paid out and a 13th Cheque.
Unions on board
The details of this new agreement were detailed in the revised business rescue plan by practitioners Les Matuson and Siviwe Dongwana and a statement by the Department of Public Enterprises (DPE) on Tuesday evening.
The DPE said all unions and the representatives of non-unionised managers and ground staff, with the exception of the SAA Pilot’s Association (Saapa), had accepted the packages.
This is a significant milestone because one of the conditions for the rescue plan to be passed is the buy-in from labour.
While the initial rescue plan did not place a deadline on when employees would have to accept severance packages, the amended plan states that an agreement on the revised terms would have to be in place by July 17.
Failure to reach an agreement means the paused section 189 process will be continued with or a new 189 process is initiated by July 22.
In addition to employee buy-in, the BRPs also want approval that the government will support the plan and a written commitment to fund the R10.4 billion restructure of the airline by the same deadline.
Should these conditions, among others, not be met on July 22, “the business rescue plan will be deemed unimplementable and a meeting of creditors will be convened on July 24, 2020 for creditors to consider amending the business rescue plan,” Matuson and Dongwana say.
No employee will receive a voluntary severance package (VSP) of less than R200,000. The total breakdown of the VSP packages, which will amount to a collective R2.2 billion, is unchanged from the final offer the DPE had provided to unions on June 23, where 3,700 employees were originally going to be retrenched.
The new terms come after the National Union of Metalworkers of South Africa (Numsa) and the South African Cabin Crew Association (Sacca) together with Saapa won their push to postpone the June 25 creditor’s meeting, on the basis that the final rescue plan was not only defective in law but that it also unfairly targeted employees.
The creditors will now vote to pass or reject the amended plan on July 14.
In an internal document dated July 6 and seen by Moneyweb, where Numsa and Sacca inform workers of the new arrangement to retain 1 000 employees, the unions say they will not discourage members from accepting the VSPs.
The DPE said Saapa’s position on the packages “remained unclear” as the union had not opposed the packages but indicated that it would “embark on a parallel process through which they want to consult the BRPs for SAA about the severance packages”.
Training lay-off scheme
The training-lay off scheme will run for a period of 12 months and the 1 000 employees who will form part of this programme will not receive a salary during this period.
According to the Commission for Conciliation, Mediation and Arbitration (CCMA) website workers on the scheme are entitled to a training allowance, which is calculated at a maximum of R12,478 per month as per the Unemployment Insurance Fund’s (UIF) thresholds.
Employers are expected to pay for workers’ basic security package, of which the BRPs said SAA would pay a maximum of R4,650 towards each employee’s pension, UIF and company medical aid per month.
“The company will take reasonable steps to assist such employees to secure alternative payment through UIF,” said the BRPs.
However, it’s not guaranteed that employees will be absorbed back into the airline at the end of the 12-month training period. According to the DPE, the employees will be first in line for any opportunities that emerge in the new airline so long as they have the required skills and expertise.
“If an employee does not secure a position within 12 months, the employee’s services will be terminated and such an employee will receive a severance package.
“SAA reserves the right to withdraw the training lay-off offer for the sake of retaining critical skills,” said the department.
This article first appeared on Moneyweb and was republished with permission.