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DENEL: Bad faith bargaining



 The trade union UASA has been engaged in salary negotiations at a centralised level with Denel Management since the beginning of April 2018.

 The initial offer from Denel Management was a 4% increase, for non-scheduled employees, who constitute approximately 70% of the employees within the recognised bargaining unit within Denel.

During wage negotiations held on the 4th June 2018, UASA raised concerns received from members that the calculations presented by Management was incorrect.

Although Management initially insisted their calculations were correct, they later conceded that their calculations were indeed wrong. Denel budgeted for a 4% increase. UASA suggested that employees get 5.2% for 9 months, which would still have been within the 4% budget. Denel argued it should be 3.9% per month for the same period, which was of course wrong. Denel Management was left red-faced and a potential injustice was averted by UASA and its members. Denel Management requested to consult their mandate holders before returning to the negotiations table.

The parties met again on 15 June 2018, UASA of course expecting  a mere formality, however, it came as a shock when management presented a memorandum addressed to Labour, in which they declared that they are not willing to negotiate further and that parties have exhausted all levels of engagement with the following offer put to Labour.

  • Scheduled Employees 5.73% (MEIBC equivalent)
  • Non Scheduled Employees 4%
  • Management (First 3 reporting levels 0%)

Management furthermore indicated that the abovementioned offer will be effective from 1 July 2018, only payable when cash becomes available, with no back pay.

Denel also, disgracefully, informed the unions that the salaries of employees for the month of June were at risk of not being paid. Quote from the memo:Please note that the wages payable for the month of June could be affected as communicated at the meeting”.

The actions of Denel Management are considered to be the epitome of bad-faith negotiations, especially when one considers the immense work the new Minister of Public Enterprises, Minister Pravin Gordhan, had done thus far, to restore reputation and credibility of Denel, not only amongst employees and unions, but amongst creditors, suppliers and investors / customers.

Not only did Denel management not offer an apology for their miscalculations, but simply indicated that the Board Chairperson made the decision and that their cash flow is in serious pressure.

While we acknowledge that the company is struggling financially, and we have committed to work with the Minister to restore Denel to its former glory, we find it extremely unfair that 70% of the Denel workforce (non-scheduled employees) are to carry the burden with a much lesser increase than the rest of the employees within Denel. 

We thus express our utmost disappointment with the Denel team. Their conduct smacks of the typical irresponsible Corporate Governance and ineffective leadership that caused the average SOC to be in the state that it is, name a drain on the fiscus.

UASA therefore call upon the Minister of Public Enterprises yet again, to salvage and restore integrity of the management of Denel.


For further enquiries or to set up a personal interview, contact Willie van Eeden at 082 445 1945/Jannem Goussard at 064 382 7809