Daybreak Foods to cut 2,200 jobs in business rescue plan

SOUTH AFRICA – Daybreak Foods is moving ahead with plans to shed more than 2,200 jobs, representing nearly 80% of its staff, as part of a business rescue process overseen by practitioner Tebogo Maoto.

The poultry company is now limiting operations to breeder farms and hatcheries that employ around 500 workers and generate approximately 800,000 chicks weekly.

For employees at the Delmas and Sundra abattoirs, along with those in the corporate offices, the restructuring signals the end of their roles.

According to Maoto, the retrenchments form part of a downsizing strategy intended to match staffing with limited operations, since monthly revenue of about US$1.05 million cannot sustain a wage bill of nearly US$1.73 million.

He argued in a letter dated 2 September 2025 that without such drastic measures, Daybreak would not survive long enough to present its business rescue plan to creditors.

The letter also explained the controversial stipend system that currently pays R1,500 (US$79) to employees earning under R15,000 (US$789) and 10% of salaries for those above that threshold.

Workers have pushed back, claiming the stipends were introduced without their consent, leaving many unable to meet food and transport expenses.

Unions argue that changes to employment contracts during business rescue require consultation, and they are weighing action through the CCMA, Labour Court, or Companies Tribunal.

The South African Equity Workers’ Association has already warned that unilateral changes could provoke industrial action.

Tensions between management and staff have persisted for months, with earlier strikes at hatchery sites and ongoing security problems on farms contributing to instability.

Although Maoto maintains that labour relations have stabilised, the stipend dispute has reopened divisions, with workers saying consultations were superficial and gave them no real choice.

Retrenchments not yet finalised

The job cuts cannot formally proceed until creditors vote on the rescue plan, but observers expect the Public Investment Corporation (PIC), which is owed the most, to approve it.

Once adopted, retrenchment consultations will begin, with nearly 1,900 cuts expected at the Delmas and Sundra abattoirs alone.

Maoto has urged workers to remain calm and patient, insisting that the plan is the only viable way to keep the company alive and safeguard some positions.

Employees have been told that pension arrears are being settled this week, enabling them to access retirement savings, though rehiring in the future will depend on the restart of facilities or securing an equity partner.

Since 2015, the PIC has invested about US$76.5 million into Daybreak through acquisitions and credit facilities, most of which is already considered unrecoverable.

A recent US$7.9 million injection to fund stipends was the latest effort to prevent collapse, but liquidation remains a threat if the plan fails to pass.

The rescue plan relies on three elements: selling assets, attracting strategic partners, and generating income from parts of the value chain still operating.

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