UPDATE 2-South Africa's Denel ordered to pay outstanding salaries by Friday

* State-owned Denel facing liquidity crisis

* Has struggled to pay salaries in recent months

* Not clear how it will pay after court order (Adds Denel, Solidarity comment)

By Alexander Winning

JOHANNESBURG, Aug 4 (Reuters) – South Africa’s Labour Court on Tuesday ordered state defence firm Denel to pay workers outstanding salaries for May, June and July by Friday, Aug. 7, a copy of the court judgment showed.

The case against Denel was brought by two trade unions, Solidarity and UASA, on behalf of their members after the weapons manufacturer did not pay salaries in full.

Denel, which makes equipment ranging from armoured vehicles to missiles, has struggled to pay staff salaries amid a liquidity crisis aggravated by the COVID-19 pandemic.

It is one of a number of struggling state enterprises the government has been keeping afloat with bailouts.

Denel said in a statement it was committed to meeting all its employment-related obligations.

As well as paying outstanding salaries, Denel will have to meet statutory obligations such as making payments to its employee pension fund, which it has also struggled to do recently.

It was not immediately clear how Denel would pay, given severe cashflow constraints.

“Denel and the state as shareholder have dealt recklessly with their employees,” said Helgard Cronje, Solidarity’s defence sector coordinator. “This problem has not arisen as a result of COVID-19 but is the result of years of incompetent management and corruption.” (Editing by Promit Mukherjee, David Evans and Emelia Sithole-Matarise)

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