Trade union Solidarity says Denel has informed employees that their July salaries might not be paid on time.

“Not paying salaries on time is totally unacceptable and we condemn it. The implications are immense and far-reaching and Solidarity is ready for the fight,” Solidarity Defence and Aviation sector coordinator Helgard Cronjé said in a statement issued on Monday.

He added that, if employees do not receive their salaries for July, the union would be left with no other option but to urgently proceed with legal action against Denel.
 
“While management’s communication to employees is more transparent and unions appreciate management’s efforts, the realities facing our members, nevertheless, still remain, and as a union we need to do what we need to do to protect the rights of our members,” Cronjé warned.

Denel confirmed in a separate statement that it had "informed employees of the reality that the company remains at risk of not being in a position to pay salaries for the month of July on time".

It said CEO Danie du Toit had told employees that the company is in "constant engagements with the banks to secure bridging finance to support the company".

“Once again, I do apologise for the stress and anxiety caused to you and your families as a result of the current uncertainties. I thank you for remaining loyal to the company and for the personal sacrifices you are making for the company,” Du Toit told employees.

Denel added that it was confident that the company would soon be recapitalised, but warned that the "next few months will be very tough". 

It, however, assured employees and other stakeholders that the implementation of the turnaround plan at Denel was well under way.

The State-owned defence company earlier this month asked government for a R2.8-billion cash injection to help it through its current financial difficulties.

At the end of June, employees had been informed that they would only be paid 85% of their salaries for the month. However, Denel secured a last-minute loan from a commercial bank and was able to pay employees their full salaries for the month.

Earlier this month, Solidarity also reported that pension funds for employees had not been paid over to Denel's pension fund, Denret.