After months of insisting bonuses would not be paid to staff, Cell C seems to have bowed to pressure from staff and agreed to a “once-off, non-performance related payment, in the form of gratuity”.
However, this non-performance related payment is a “shut up ” fee, according to insiders.
“This pittance (once-off gratuity) does not address the problems at Cell C.”
Pressure has been mounting on Cell C to pay bonuses since workers found out that the company had made huge payouts to executives and senior staff.
Cell C had insisted that it would not pay any bonuses to staff because it had not met agreed targets.
In a surprise move meant to silence possible workers ‘revolt’, Cell C chief executive, Jose Dos Santos, revealed the details of the staff once-off gratuity in a recent internal memo.
In the memo, Dos Santos states: “The financial well-being of our employees is a priority for us and, as a business, we are well aware of the financial pressures many of you are currently facing.”
The CEO, who has already received a massive windfall in success bonuses, added: “We have therefore decided to remunerate both permanent and temporary employees (grades D3 and below, excluding independent contractors and outsource service providers) with a once-off, non-performance related payment, in the form of gratuity payment equivalent to a thirteen cheque in December 2018.”
Dos Santos further wrote: “Following discussions with the Cell C board and the remuneration committee, this decision was taken in the context of South Africa’s current economic climate, which is having a direct impact on the overall cost of living for many of us.
“When our employees experience difficult circumstances at home, it has an impact on their overall morale and productivity at work and we feel this gesture will go some way towards easing the financial burdens you are currently experiencing, especially at a time of the year when there are additional or unplanned expenses.”
He added that the company anticipate that this special bonus will enable “workers to spend more quality time” with their loved ones over the festive season.
The memo did not say whether this once-off gratuity was replacing the workers’ performance-based bonus in 2018. The once-off gratuity will be paid to lower level employees.
Furthermore, Cell C doesn’t call this payment a bonus or a 13th cheque to avoid other staff demanding the same, said an insider.
“This is not a victory for workers, but a way to silence them from not demanding their special cash bonus, similar to the one paid to the executives and senior staff,” said another insider.
“The ‘missing middle’ at Cell C is not getting any gratuity or cash bonus,” said another insider. The ‘missing middle’ constitute more of the payroll than the D3 grades and below. So, the level between the D3 grades and the few executives, are getting nothing, except these phantom shares which rely on a positive listing to derive any value.”
Unconfirmed speculation suggests that Cell C workers are signing up with a union, which promises to fight for them to get what is due to them as the current union Communications Workers Union is not addressing their issues.
Dos Santos and his executive team have become a lightning rod of controversy over excessive payments in success bonus for the recapitalisation of Cell C.
In 2017, Blue Label Telecoms acquired 45% of Cell C. It is yet to benefit from an upside it saw when it entered into a recapitalisation programme for the mobile phone operator.
Instead, the market has punished Blue Label Telecoms for investing in Cell C. However, Blue Label is planning to list Cell C on the JSE in 2020.
In the 2017 financial year, Cell C’s executive directors, who served as prescribed officers, were paid R219 million four times more than the R50.9 million they were paid in 2016.
For more read: R219 Million Paid To Three Top Execs At Cell C In 2017
TechFinancials also learnt that more bonus payments “disguised as incentive schemes and not approved by the board are being paid out to the so-called top 6 and selected senior management whilst employee bonus remain unpaid.
For more read: Cell C’s Top Six Decide Their Own Hefty Remuneration
The massive bonus payout to executives has irked Cell C’s staff.
Cell C’s workers call for an investigation into why executives and senior staff were paid hefty bonuses in light of the firm’s poor performance was ignored by the mobile phone’s chairman, Kuben Pillay.
This after staff members were informed they would not be paid any bonuses this year because the mobile phone operator had not met its EBITDA 2017 targets.
Previously, Cell C worker threatened to take their concerns to government, civil society and unions if the chairman failed to provide a resolution.
They also threatened to boycott Cell C’s CEO Awards and their end of the year function, which are being held on Thursday at Gallagher Estate in Midrand.
“The workers are being coerced to attend this event and act like everything is alright after the announcement of this doggy once-off gratuity,” said an insider.
“The memo about the special bonus payment to the lower level staff is silent about the privileged few, who are still to receive further instalments of their success fees and bonuses, which amounts to millions,” a source told TechFinancials.
“The payment to the lower level staff is designed to avoid a full-blown revolt over the previous excessive payment to the executive and senior management, plus the yet to be paid success fees bonuses.”
On whether the special bonus expense will impact the business profitability, Julian Mhango, Cell C’s chief HR Officer, in a different memo to staff, said: “The decision was approved by the Cell C board and remuneration committee and has taken into account Cell C’s overall performance to ensure there will be little to no impact on the business’ financial performance.”