When can SA Express employees expect to be paid their outstanding monies after the airline's liquidation in 2020?

The long answer

When SAX was first placed under provisional liquidation on 28 April 2020, the Acting CEO Thuli Mpshe gave a letter to 691 workers saying that there was no clear plan to pay the outstanding salaries. The provisional liquidators applied for R691-million from the DPE in the form of a government guarantee, so that they could approach the banks for loans, but this was turned down by the DPE, which was basically taken up with the problem of SAA.  

Ray Mahlaka wrote in a May 2020 article for the Daily Maverick that the DPE applied to the UIF for emergency assistance to meet the March and April payments, but the UIF only awarded R4.6-million from the government's Temporary Employee Relief Scheme (TERS) during the hard lockdown period which was paid out to workers in April. However, SAX had a monthly salary bill of R22-million that it could not meet. Even with the UIF payment in April, the workers were still owed a large portion of their salaries and SAX, being bankrupt, could not pay it.

Mahlaka reported that, under the Insolvency Act, SAX workers would have a claim of up to R12,000 for salaries and wages, R4,000 for outstanding leave pay, and R12,000 for retrenchment pay. Workers would be paid from the remaining funds realised through the sale of SAX assets. But workers could only receive outstanding payments once all secured creditors of the airline, which could include commercial banks, have been paid money owed to them. 

In September 2022, the South Gauteng High Court handed down a final liquidation order for SAX. 

From Bowmans Law 2019: “The winding-up of insolvent companies is governed by the Insolvency Act 24 of 1936 (Insolvency Act) and the Companies Act 61 of 1973 (Old Companies Act).”

The liquidators must sell all the assets in order to pay the creditors in an agreed order of preference as set out in the Insolvency Act: First, secured creditors like a landlord or a bond. Second, preferent creditors, which include employees’ remuneration up to a prescribed amount, and SARS. Third, concurrent creditors, which are any creditors who will be paid after the preferent creditors.

This usually takes between six months and two years. 

On severance pay: An employee whose services have been terminated in this manner is entitled to claim severance benefits as if they were dismissed for operational reasons from the employer's insolvent/liquidated estate in terms of section 41 of the Basic Conditions of Employment Act. 

The Labour Appeal Court (LAC) has noted that section 41(2) of the Basic Conditions of Employment Act (BCEA) clearly provides that if employees are dismissed for operational reasons, they are entitled to severance pay equal to one week’s remuneration for each completed year of service with the same employer.

As to why all this mess has happened, ch-aviation.com wrote on 15 September 2022 that the government blamed the ending of SAX on “deep-rooted corruption, fraud, years of mismanagement and state capture, exacerbated by the impact of the Covid pandemic.” It quoted the findings of the Zondo Commission into State Capture as revealing that: 

• SAX improperly received a five-year contract from a provincial administration for certain routes (Officials from the North West government flouted a host of procurement rules in 2015 when they awarded SAX a five-year, R400-million contract to provide flights and ancillary services to Mahikeng and Pilanesberg airports.)

• Funds were paid with no services rendered

• Evidence that public funds were syphoned out of provincial coffers to various individuals.

Of course, much the same happened at SAA, and when the government was asked why it had not poured billions into rescuing SA Express as it had done with SAA, which was able to start commercial flights again in September 2021, it said it faced "fiscal constraints", which is to say that it had no money.  

It is abundantly clear that the price of mismanagement and corruption is generally paid by the less powerful, like the employees. All the employees can do in this situation is know the law and their rights, and stand together. 

As the sale of the assets and paying of the secured creditors has not yet been finished, you are still hanging on for your salaries and retrenchment pay. And while that is truly terrible, there is not much you can do about it except keep a sharp eye on what is happening with the liquidation and ask the liquidators for updates.

Wishing you the best,
Athalie