Employees will now have to make preferent claims in terms of the Insolvency Act.
With their employer having struggled to pay April salaries, SA Express employees have now been informed that their contracts have all been suspended in terms of the Insolvency Act. Various news outlets have reported that this was communicated via an internal letter from the airline's provisional liquidator Aviwe Ndyamara of the Tshwane Trust Company, which was circulated on Friday 15 May.
According to Business Day, this means that, in order to claim any salaries owed, employees will only qualify for a maximum preferent claim of up to R12,000 for salaries and wages and R4,000 in respect of leave pay, or any other form of paid absence and R12,000 in respect of retrenchment pay.
SA Express was placed in provisional liquidation at the end of April due to creditor debt amount to R2 billion and advice from business rescuers that argued that the state-owned regional airline had no prospect of survival.
Fin24 reports that, before the airline was placed under business rescue, government-mandated the board and management to investigate and terminate a number of irregular contracts as a way to save money and root out corruption, according to the department.
“The business rescue practitioners and the Department of Public Enterprises could, however, not agree on a business rescue plan and funding. The practitioners claimed government deliberately withheld financial support to the tune of R350 million. The DPE, on the other hand, felt the proposed business rescue plan did not set out a credible business case to allow further funding,” reads the report.
With their contracts now being suspended, SA Express employees will not be required to report to work nor with they be entitled to any remuneration nor benefits in accordance with the Basic Conditions of Employment Act.
That said, Certain employees may be re-appointed on temporary contracts to assist the liquidator in winding up the airline and preserving the business while negotiations with potential purchasers take place.