Employees at SA Express face not being paid for March

While the Department of Public Enterprises has indicated that it made an application to the Unemployment Insurance Fund’s (UIF) special Covid-19 benefit scheme for assistance in paying SA Express salaries for March, this may not be possible.

Speaking to media at the National Command Council briefing on Tuesday Labour Minister Thulas Nxesi clarified that the Covid-19 Temporary Employer-Employee Relief Scheme (Ters) would not apply to salaries for the month of March.

“The relief the UIF is giving – we are talking about the relief for the month of April. People should not take advantage of the situation,” said Nxesi.

“Employers should have by now paid the March salaries minus the four days. People cannot start pressuring us for the March salaries. We are catering for the 21 days,” he added.

The Ters benefit gazetted on March 25 states that the directive will commence on the date of publication and will remain in operation for three months or until it is withdrawn by the minister.

BRPs apply for liquidation

SA Express’s business rescue practitioners (BRPs) Phahlani Mkhombo and Daniel Terblanche have made an urgent application to the Johannesburg High Court to convert the airline’s rescue process into a liquidation, stating that the airline has run dry of cash. This was compounded by the advent of the Covid-19 pandemic, ensuring that the airline had no reasonable prospects of success.

Since SA Express was placed under involuntary business rescue by the High Court in February the BRPs have faced an uphill battle in securing post-commencement funding from government and other funders but continued to incur liabilities despite operations being suspended from March 17.

In court papers and in a letter to employees, the BRPs said they would also not have any money to pay salaries for March.

SA Express employs 691 people.

In struggling to make ends meet, SA Express had not paid employee-related expenses such as provident fund, pension fund, income protection and income tax contributions, including UIF.

No ‘further fiscal comfort’ from state

Responding to the move by BRPs to discontinue the rescue proceedings in favour of a liquidation the department stated categorically that government is “not in a position to give further fiscal comfort especially in these difficult economic times and considering the competing priorities”.

It said it would study the liquidation application made by the BRPs. In the interim, considering the company’s need to pay staff while facing a cash crunch that has deteriorated under the rescue process because of the Covid-19 pandemic, the department approached the UIF.

This would ensure that “workers receive support during this time of hardship and uncertainty,” it said in a statement on Sunday.

The department said that it had asked for the application to be expedited. However, Moneyweb understands that workers whose salaries are normally paid on March 25 had still not been paid by close of business on Tuesday (March 31).

When asked whether the government was aware that the UIF Ters benefit scheme would not cover March salaries acting director-general  Kgathatso Tlhakudi said: “the government is hopeful that a solution to SA Express immediate liquidity challenges would be found to enable payment of March 2020 salaries.”

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