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Voluntary Severance Packages Offered to SAA Employees

June 26, 2020

Department of Public Enterprises

Final, fair and affordable voluntary severance packages (VSPs) supported by a social plan, which includes a skills development programme, have been offered to South African Airways (SAA) employees.

In a statement, the public enterprises department added that the “VSPs, which can be offered to employees immediately after the creditor’s vote on the Business Rescue Plan on Thursday, should creditors vote to support the BR plan, meets the requirements of Basic Conditions of Employment Act and Labour Relations Act guidelines, including one week calculated per year of completed service, one-month notice pay, accumulated leave paid out, a 13th cheque and a top-up of severance packages”.

During the creditor’s meeting today, a vote in favour of the plan by 75% of the voting interests would be required to carry the vote.

The department pointed out that a vote against the plan would result in the protracted and costly liquidation of the airline.

The department emphasised that a “new, restructured, viable airline cannot be competitive if it would be required to bear the cost of carrying the current SAA employees”.

If the business rescue process fails, the liquidation of SAA will mean that employees would receive up to a maximum amount of R32 000 per employee if funds are available.

The department holds the view that a “positive vote to finalise the business rescue process would be the most expeditious option for the national carrier to restructure its affairs, its business, debts and other liabilities, resulting in the emergence of a new viable, sustainable, competitive airline that provides integrated domestic, regional and international flight services”.

In an earlier statement, the department welcomed the judgement to strike off the roll an urgent court application by SA Airlink that sought to interdict Business Rescue Practitioners from convening the creditor’s meeting to vote on a business rescue plan for SAA.

In another statement, the department called on creditors, employees and other stakeholders of SAA to vote in support of the business rescue plan of the airline as “it would result in a better return for these parties than a liquidation of the carrier”.

“As the shareholder on behalf of government, the DPE believes the approval of the business rescue plan would help creditors and employees to be co-creators of a new airline and ensure a strong base is maintained for the growth of the local aviation industry.”