Johannesburg - Pulp and fine paper products group
Sappi [JSE:SAP] on Friday announced the intended closure of its Sappi Usutu Pulp Mill after no consensus had been reached on the critical issue of exit packages for all employees.
It comes after the company's extensive Section 40 consultations with the Union and employees which meetings were facilitated by the Commissioner of Labour, it said.
"The situation is viewed by management as very regrettable given the nature of the offer made by the company - particularly in the context of existing affordability levels and the technical insolvency that Usutu Pulp Company Limited has continued to operate under," Sappi said.
According to Archie Sayed, secretary general of Swaziland's Agriculture and Plantation Workers Union (Sapawu), Sappi's proposed exit package doesn't comply with the law.
"With respect to the employment act of Swaziland, this amount should be more in the region of 79 million Swazi Lilangeni's, (equal to R80.58m)," said Sayed responding to Sappi's offer that amounts to R61.2m.
"Anything between those two figures will be better than Sappi's current offer," said Sayed.
Sources close to the deal suggest Sappi would pay out an acceptable amount next week Friday. However if Sappi's renewed offer still falls short Sapawu will pursue the matter in court.
Not unfounded
The paper group said that for the past two years, the company had reported operating losses and therefore any expectation that exit packages would have been more than the current offer was without foundation.
"Regardless of this reality, the company has made an offer of what it considers to be a fair and reasonable offer for the payment of exit packages given the financial position the company is under," Sappi said.
"That the reality is that unless some ground is made between now and January 31 2010, both the company and the respective employee constituencies would not have reached common ground on the matter of the exit packages. It has come to management's attention that the Union is taking advice on other options with regard to this matter, which includes seeking legal redress, including the consideration of the liquidation of Usutu Pulp Company," it continued.
Sappi maintained that liquidation was not an ideal option as it would affect other critical processes such as finding a suitable investor for the remaining operations of Usutu Pulp Company.
Measures to be taken
And, in view of the closure of the Usutu Mill on January 31, Sappi said it would resolve to implement the following measures:
- All employees who received formal notice of the closure of the Usutu Mill, will be terminated on January 31.
- All employees affected by the termination, will receive exit packages on January 29.
- The Provident Fund payment as well as the exit packages will be processed and paid out, subject to the processing of tax directives.
- All payments accumulated between now and the end of the month, which includes overtime and any other outstanding payment, will be processed and paid to the concerned employees on February 19.
Sappi said it had also undertaken to allow employees to stay in the company villages until the end of May 2010. Protocol has been put into place for employees who elect to stay in the company houses beyond January 31, to apply to do so, it added.
The mill is set to be mothballed over the next couple of months, and in order to facilitate this process, some employees would be requested to enter into new short term contracts of employment from February 1, 2010 to a date that would be deemed appropriate in order to complete the necessary work required, Sappi concluded.
- I-Net Bridge