Post Office can’t pay staff medical aid, but subsidises government grant payments

The South African Post Office (Sapo) was subsidising the government’s R350 Social Relief of Distress (SRD) grants even while it couldn’t afford to pay medical aid contributions for its employees, despite deducting them from salaries.

Post Office CEO Nomkhita Mona, during an interview with SABC News, explained that the Post Office subsidises half of the costs associated with paying the grants.

“I don’t know how many South Africans know this, [but] the Post Office has been subsidising the government in the delivery of the [SRD] grants,” she said.

“Our cost of delivering that service over the counter is just over R30. What we were being paid by Sassa was R15. Nobody runs a business like that.”

According to the Post Office’s annual report for 2022, it processed 15.2 million grants to beneficiaries during the 2021/22 financial year.

At R15 for each grant processed, the Post Office paid around R228 million out of its own funds during the financial year to cover the costs.

While the amount is just shy of a third of the R700 million Sapo owes Medipos, Mona explained that other factors beyond Sapo’s control have contributed to its ailing financial situation.

“There are a number of things that would have actually kept the Post Office behind, while everyone around it thrives,” Mona stated.

“One of the big albatrosses on our shoulders is the fact that we inherited billions of debt from previous people who had managed the Post Office,” she said.

“The things we find underneath the surface have actually been shackling the Post Office.”

According to Mona, Sapo has also had to subsidise the South African government concerning its universal service obligation.

She explained that the universal service obligation means Sapo has to ensure access to postal services is available all over the country.

“R940 million is what it costs us today to do that, but we got R519 million [from the National Treasury],” Mona stated.

“So the remainder has to come from somewhere. The Post Office has been footing that bill.”

She said Sapo is now looking into its government contracts to find a solution to its financial woes.

“Those contracts keep on giving to the other side, but for Sapo, they have been very detrimental in terms of the commercials — what we had signed off, what penalties we have to endure, what we have to deliver, etc.,” Mona said.

Post Office warns workers to get their own medical cover

In September 2022, MyBroadband saw an internal communique sent to Post Office employees by the company’s human resources (HR) department advising them to take out their own medical cover.

This came after Sapo repeatedly failed to pay employee medical scheme contributions to Medipos, despite deducting the amounts from its staff salaries.

Medipos informed scheme members that it would suspend their benefits should it not receive outstanding contributions from Sapo within 30 days, at the end of August.

According to the Post Office’s HR department, the state-owned mail carrier cannot make the outstanding payment.

“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,” it wrote.

The communique from Sapo HR came after numerous meetings between Sapo, Medipos, and organised labour to try and resolve the issue.

It also followed trade union Solidarity bringing an urgent court application against Sapo for failing to pay the contributions.

“Not only does the Post Office violate its statutory and contractual obligations towards its employees, but it also poses a threat to the lives of its workers through this failure,” Solidarity’s head of legal matters, Anton van der Bijl, said.

This is not the first time Sapo’s failure to pay medical aid contributions has been in the spotlight.

In September 2021, it was reported that around 15,000 Sapo workers were at risk of losing their medical aid cover.

The Post Office reportedly owed Medipos R602 million in member contributions at the time.

News that the Post Office was deducting medical aid and pension contributions from salaries without paying service providers has resulted in an outcry, with some commentators calling for the mail carrier’s board and management to face criminal charges.

Director at Pretoria-based law firm Barnard Inc., Koos Benadie, said that if the Post Office was indeed deducting contributions and not paying them over, it had violated the Financial Services Laws General Amendment Act 45 of 2013 (FSGAA).

“The employer can be held liable both in a civil and criminal capacity for non-payment of pension fund and medical aid contributions,” Benadie said.

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

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

Now read: Post Office directors could face criminal charges

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Post Office can’t pay staff medical aid, but subsidises government grant payments