South African Post Office SOC Ltd Bill: deliberations and finalisation

NCOP Public Enterprises and Communication

20 September 2011
Chairperson: Ms M Themba (ANC, Mpumalanga)
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Meeting Summary

The Committee considered and adopted the South African Post Office SOC Ltd Bill with proposed amendments. In terms of the Constitution, the NCOP could not amend a Section 75 Bill but it could propose amendments. The Committee engaged with matters pertaining to Clauses 1, 4, 11, 14, 15 and 18. Much discussion ensued on Clause 18 which dealt with the termination of office of the Chief Executive Officer, Chief Financial Officer and Chief Operating Officer from the Board of the South African Post Office (SAPO). The concern the Committee had was that such individuals were suspended from office with full pay pending the outcome of a misconduct investigation. They received full salary for the duration of both internal and external misconduct proceedings. In the end it ended up to be a very costly exercise. 

Meeting report

South African Post Office SOC Ltd Bill
The Chairperson suggested that the Committee proceed by raising issues on the Bill which needed clarity.

Clause 4: Duties of Post Office
Mr Z Mlenzana (COPE, Eastern Cape) stated that the number of post offices were to increase in order for postal services to rural and under developed areas to be accessible. On the proposed aim of having a post office for every 10 000 persons, how was the Bill to achieve this objective in rural areas. The SA Post Office (SAPO) wished to provide a wide range of affordable postal services.  What plans were in place to get internet terminals in post offices working given their huge installation cost? He also asked how SAPO intended to be more responsive to its users at grassroots level.

Mr Willie Vukela Acting Chief Director, Department of Communications, stated that Clause 4 was the cornerstone of the Bill. Clause 4(k) would ensure that internet terminals would be functioning. There must be computers in post offices where citizens could access emails, internet etc. It must be a “citizen’s post office”.
He pointed out that according to international standards of the Universal Postal Union, accessibility to a post office had to be either, one post office for every 10 000 persons or one post office within a 5km radius. The regulations of the Bill could define this. The Committee had the choice of including it in regulations or in the Bill itself.

Clause 18: Termination of employment of CEO, chief financial officer & chief operating officer
Mr M Sibande (ANC, Mpumalanga) asked how the Bill protected SAPO where a chief executive officer (CEO) was suspended. He asked if there would be internal hearings if the matter went on to the Commission for Conciliation, Mediation and Arbitration (CCMA). Would the CEO be entitled to full salary while suspended?

Mr Alf Wiltz, DoC Director: Legal Section, stated that the suspension of an executive member of the Board of SAPO would be with full pay. The Clause spoke about the Board with the concurrence of the Minister and subject to compliance with the Labour Relations Act no 66 of 1995, being able to terminate the employment of the CEO, CFO or COO. The prescripts of labour legislation must be followed. Procedural and substantive fairness must be adhered to. There could not be an unfair dismissal.

Mr Sibande asked if the process of dismissal could be avoided. In some government institutions where certain persons had been dismissed, those same persons were reinstated. The process had cost government large sums of money.

The Chairperson stated that the point was that what the Committee wished to prevent was the payment of the suspended person’s normal salary whilst he was suspended. In some instances the process took a long while to conclude and the individual in the meantime was paid full salary. She stated that the Labour Relations Act did not protect the employer in this regard.

Mr Mlenzana got the impression that there was an element of open-endedness in Clause 18. The Bill spoke to misconduct proceedings against him or her but the issue was about at what level the misconduct was. Was the processes internal or did it go beyond the organisation. In some instances internal proceedings took six months plus another one or two years for external proceedings. The concern was that whilst these proceedings were taking place, the individual was being paid his full salary.

Mr Wiltz stated that the prescripts of labour law needed to be followed. Labour laws were in place to protect employees. He suggested that if the Bill was subject to the Labour Relations Act, that laws that were adequate should be abided to. He was not sure if the Bill could be used to amend labour legislation.
The issue of lengthy suspensions with pay was indeed a practical problem. He reiterated that he did not think the Bill could be used to amend labour legislation. Suspensions were not usually longer than 90 days but sometimes it went beyond this period. There were court cases where precedent had been set that it was within the discretion of an arbitrator or presiding officer to lift a suspension. There were avenues to deal with the issue. It was within the discretion of the presiding officer. On the issue of misconduct proceedings and internal processes, the Labour Relations Act made provision for it. Processes move from internal to arbitration which was outside of the organisation. The arbitrator was an independent person. It was possible for a disciplinary hearing to move out of the internal environment.

The Chairperson suggested perhaps the use of “internal misconduct proceedings” as opposed to “misconduct proceedings”.

Mr Wiltz referring to the suggestion by the Chairperson stated that the Labour Relations Act spoke about “misconduct”. He was not sure if the Labour Relations Act spoke about “internal misconduct”. The “misconduct” referred to related to misconduct committed whilst holding the Office of the Chief Executive Officer. It meant misconduct in that context. In itself it meant internal misconduct. Misconduct in the context meant in the execution of his/her duties.

Mr Mlenzana pointed out  that perhaps there was a misunderstanding. The emphasis was rather on “proceedings” than on “misconduct”. What the Committee was trying to say was that proceedings should be confined. He proposed that the Board perhaps may suspend pending the findings of any “internal proceedings”. The issue of misconduct should be left out.

Mr Wiltz said that the discussion on the issue was becoming more difficult. If the CEO was dismissed then clarity was needed. He asked if the Committee was saying that if there was an internal disciplinary hearing then the suspended person should receive his salary, but if it went to outside processes he should not receive his salary any longer.

Mr Mlenzana suggested that for now the Committee leave the Clause as it was. One of the Committee’s departments that it oversaw was the Department of Labour and perhaps the issue the Committee was discussing did not belong to the present meeting. It would perhaps be best to discuss the issue with the Department of Labour.

Mr Tau also felt that Clause 18 should remain as it was. Whether there were internal or external procedures afterwards, the Labour Relations Act still applied. The employee still had the option of the Labour Relations Act. He asked why the words “approval” and “concurrence” were both used on separate occasions in the Clause. Why was only one or the other not used? If there was an approval, use approval; if there was concurrence, use concurrence.

Mr Tau asked why the Northern Cape Province was not consulted - it was only consulted at provincial legislature level. Traditional leaders in the Northern Cape were not consulted. Was it deliberate or was it an oversight by the Department of Communications. Public hearings and consultation could be used as a tool to educate people.

Mr Vukela stated that the Northern Cape was the first province that the Department of Communications had engaged with. The Department had good cooperation from the Northern Cape and Mpumalanga Provinces. In the Northern Cape, all types of persons were involved. Perhaps the involvement had not been captured in writing. An Advocacy Policy Workshop had also been held. He explained that it might seem that “approval” and “concurrence” said the same thing - but it did not.

Mr Wiltz conceded that he might have been under the impression that “concurrence” and “approval” meant the same thing. There were instances where the Board needed to get the approval from the Minister and there were instances of concurrence where the Board and the Minister had to take a decision together.  He explained that termination followed appointment. The Department of Communications suggested that Clause 18(1) should be reworded to be the same as Clause 16(1). Rather use ‘approval’ not ‘concurrence’. 

Clause 14: Procedures at meetings, and committees of Board
The Chairperson stated the Board may appoint one or more committees in concurrence with the Minister. What committees were being referred to?

Mr Wiltz stated that the current Memorandum and Articles of Association of SAPO made mention of various committees. The Board of SAPO should not establish too many committees as it had financial implications. The Clause made mention of specific committees which had to be established. If any other committees were to be established the Board had to obtain approval from the Minister.

Clause 22:
Subsidiaries and accountability
The Chairperson accepted that the Post Bank was a subsidiary of the SAPO. What plans were in place to have the correct facilities and staff in place for the additional services?

She asked why mention was made of the National Assembly but not of the National Council of Provinces in the Bill. There were two houses of parliament. It was a common occurrence in legislation. She stated that Members felt that the Department of Communications was merely seeking a rubber stamp of approval from the Committee. The Committee felt it to be wrong. She stated that in terms of the Constitution the NCOP could not amend this type of Bill but it could propose amendments.

Mr Mlenzana asked what would have been the problem to have used “Parliament” instead of “National Assembly”.

Mr Vukela responded that it had never been the Minister of Communication’s intention to use “National Assembly”. The clauses which mention “National Assembly” were clauses proposed by the Portfolio Committee on Communications. The Department of Communications was not really in favour of those changes to the clauses. There was nothing wrong with replacing “National Assembly” with “Parliament”. The amendment could be done. Clauses 22(3)(c); 25(5)(b) and 29(3)(b) in the Bill referred to the “National Assembly”.

He noted that the intention of the Post Bank was to make banking accessible to the people. There were 2 600 post offices throughout SA. No other bank had such a strong footprint in numbers. SAPO had already implemented the Post Bank. The Post Bank had a dedicated counter in the post office. It could have its own brand as well. The Post Bank had to compete with banks and hence just like any other bank it had to be regulated. The banking sector was highly regulated. Post Bank employees had to meet FICA requirements. Normal post office staff could not be used. On the staffing and facilities of Post Banks, he stated that much was happening at present. There were dedicated Post Bank services on offer. 

Clause 11: Appointment of non-executive members of Board
The Clause made provision for the Minister to invite trade unions to submit the names of possible candidates to sit on the Board.

Mr M Jacobs (ANC, Free State) stated that two seats were available for unions. He asked what if there was a third union. What if the status changed? Could the Department of Communications put something in place to cover this?

Mr Wiltz felt that the existing wording of the Clause would cover any number of trade unions. The Minister invited trade unions to submit candidates in terms of Clause 11(1)(b). Say, for example, three trade unions submitted eight candidates in total. The Minister could only appoint two from the eight in terms of Clause 11(7)(a). It was thus irrelevant how many trade unions submitted names; the Minister could only fill two seats on the Board.

Mr Jacobs pointed out that sometimes trade unions were antagonistic towards each other. Would the decision by the Minister to choose candidates from one union over the other not further antagonise unions?

Mr Tau stated that Mr Jacobs raised a valid point. Where unions were concerned, there were issues of minority and majority membership.

Mr Jacobs stated that there must be consistency with the Labour Relations Act. Two members from the majority union had to be chosen.

Mr Mlenzana suggested that the Clause be left unchanged. When the Department of Communications drafted regulations to the Bill, Mr Jacobs’ concern could be taken into consideration.

Mr Vukela, responding to Mr Jacobs’ concern, stated that in terms of a policy document dating back to 1998, there were only two seats on boards for recognised trade unions. There were only two seats available even if there were ten unions.

Mr Jacobs stated that the issue was about how those two seats would be allocated.

Ms L Mabija (ANC, Limpopo) understood the Department of Communications to mean that candidates from the top two majority unions should be encouraged.

Mr Vukela stated that union seats would not exceed two.

The Chairperson said perhaps the policy could be re-looked at.

Mr Vukela responded that legislation could not provide something different to policy.

Clause 14: Procedures at meetings, and committees of Board; Clause 15: Delegation and assignment of functions by the Board
Mr Sibande asked why a distinction was made in Clause 14 which required the Board to have a 70% quorum of members to make a decision whilst in Clause 15, 75% of its members were required to pass a resolution for the delegation of the powers and duties of the Board. Why were there different percentages? Why was it not either 70% or 75%? What was the definition of a quorum? A quorum of members allowed decisions to be made. A quorum was a threshold. The Committee needed to agree on either 70% or 75% to be used, loopholes should not be created.

Mr Jacobs agreed. The Committee needed to choose between 70% or 75%.

Mr Vukela asked the Committee’s guidance on the 70% and 75% issue. The Committee had to decide. The Department of Communications would make the required amendment.

Mr Wiltz stated that the 75% was for serious matters such as passing a resolution for the delegation of the powers and duties of the Board. The 70% requirement for a quorum was for decisions to be taken at a meeting. The two percentages were close to each other. They differed by a small margin. Perhaps the 70% quorum requirement could be lowered to 50% plus 1. However, he agreed with the Portfolio Committee that 75% was necessary for serious matters such as resolutions for the delegation of Board powers.

Mr Tau asked if the powers of the Board were clearly defined. He said that if it was, then no problem.  What about ordinary decisions?

Mr Wiltz stated that the 70% spoke to a quorum being required for the Board to perform its fiduciary duties. The 75% was for serious matters where resolutions for the delegation of duties were required. As he had previously stated, he had no problem if the Committee wished to lower the 70% quorum requirement to 50% plus 1 or even 60%.

Mr Tau understood why the distinction was made between the two percentages. The 70% quorum was for ordinary decisions like the adoption of reports or minutes whereas the 75% was required for serious matters such as a resolution to be taken to delegate Board powers and duties.

Mr Jacobs asked if persons would understand the logic between the use of the two different percentages.

Mr Vukela stated that the Department had used the same percentages in the Post Bank law previously. It had kept the Board accountable. Hence its use in the present Bill.

Mr Wiltz stated that it was an interpretation of company law. The issue was that Board members should be aware of their fiduciary duties. For example on granting of tenders a 70% quorum was needed to make a decision. On the delegation of duties from the Board to a committee, 75% of members were needed to take a resolution.

The Chairperson stated that the Committee was satisfied that its concerns over certain issues in the Bill had been addressed and suggested that the Committee consider the Bill clause by clause.

Mr Herman Smuts, Principal State Law Adviser, asked if he could be given the opportunity to present to the Committee the formulations that the legal drafters, including himself, were required to draft.

Mr Tau suggested that if the Committee adopted the Bill it should be explicitly stated that the Bill was adopted with proposed amendments.

The Chairperson asked if she could take the Committee through the Bill clause by clause. The clauses would be amended according to the Committee’s wishes.
Mr Jacobs felt it a cumbersome exercise to go through the Bill clause by clause. He was satisfied with the legal drafters making the necessary amendments where appropriate.

Mr Mlenzana suggested that if Mr Smuts wished to present the amendments to the Committee he should be allowed to do so. He also agreed with the sentiments expressed by Mr Jacobs.

Mr Smuts responded that there seemed to be only four amendments.

Mr Tau interjected and stated that the Committee was deviating from procedure. He stated that the Chairperson should read out the motion of desirability of the Committee first.

The Committee Secretary stated that the requirement for a motion of desirability had been done away with.

Mr Tau stated that Chairperson should read the Committee Report on the Bill. What the Committee would take to the House would reflect the amendments as well.

The Chairperson asked by when the Committee would be given the amended version of the Bill.

Mr Smuts responded that there would not be a new version of the Bill [as it was a Section 75 Bill]. Since these were then proposed amendments, only the proposed amendments would be reflected in the ATC.

The Chairperson commenced reading out the Report of the Committee on the Bill.

The Committee adopted the Bill with the proposed amendments.

Committee Minutes
The Committee adopted minutes dated 31 August 2011 without amendments.

The meeting was adjourned.


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