Post Office directors could face criminal charges

The South African Post Office has failed to pay over workers’ pension fund, medical aid, and tax contributions despite deducting them from their salaries — which is a criminal offence in South Africa.

This is according to Koos Benadie, director at Pretoria-based law firm Barnard Inc.

Labour unions first revealed in 2020 that the SA Post Office (Sapo) had not been paying employee contributions.

Solidarity launched urgent legal action against the national mail carrier to compel it to pay its medical scheme, Medipos, R600 million in outstanding fees to avoid employees losing their benefits.

In September 2021, the Post Office revealed that it owed R543 million to the retirement fund.

Sapo asked the government for a R8.16 billion bailout to save the state-owned company.

Under a settlement agreement, Sapo was to make minimum monthly payments to Medipos.

The Post Office had only made repayments for a few months, then stopped, Solidarity’s legal affairs head Anton van der Bijl told MyBroadband.

Solidarity approached the courts again, compelling the Post Office to pay R3 million in outstanding medical aid contributions to Medipos, preventing the union’s members from losing their benefits.

Solidarity said it would return to court and fight for other Post Office employees so they would also retain their medical benefits.

However, within days the Post Office sent a circular to employees warning that Medipos may suspend their benefits in October, and that they should consider getting private medical cover.

“The SA Post Office cannot make this payment due to severe financial challenges and recommends that employees seek alternative medical cover, until the Medipos matters are resolved,” the HR department notice stated.

Sapo repealed its restriction on medical aid choices, allowing staff to choose any provider. It also said employees could consider hospital plans or medical insurance.

Koos Benadie, Barnard Inc.

Barnard Inc. director Koos Benadie has explained that deducting employee contributions and not paying them to the relevant service provider is a criminal offence.

The Financial Services Laws General Amendment Act 45 of 2013 (FSGAA), which came into effect in 2014, specifically aims to prevent employers from doing this.

With respect to pension fund contributions, Benadie also explained the effect of non-payment is that employees will not receive their retirement benefits when they withdraw from the fund, despite contributions being deducted from their salaries.

“The Act obliges retirement funds to request participating employers to notify the fund in writing of the identity of the person who will be personally liable when contributions are not made by the employer to the fund,” Benadie said.

“Should the employer fail to provide the fund with the name of such person, all the directors of a company, members of a close corporation or persons comprising the management body of the employer shall be held personally liable.”

Medical subsidies are conditions of employment, and the Medical Scheme Act does not provide ways for the registrar or scheme to intervene, Benadie explained.

Instead, workers must take up failures to pay with the employer directly.

“It is therefore my view that the employer can be held liable both in a civil and criminal capacity for non-payment of pension fund and medical aid contributions for the reason set out above,” Benadie stated.

“The criminal charges would be brought against the board of directors of the South African Post Office.”

The FSGAA stipulated that anyone found guilty faces a fine of up to R10 million and possible imprisonment for a maximum of ten years.

MyBroadband contacted the Post Office for comment, but it did not respond by the time of publication.

Now read: South Africa showing signs of a failed state

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Post Office directors could face criminal charges