Taxpayers may foot the bill for Post Office turnaround

The South African Post Office’s (SAPO) business rescue practitioners (BRPs) have applied for a government program that would pay two-thirds of its laid-off employees’ salaries.

On 24 April, the Post Office’s BRPs announced their final attempt to receive relief funding from the Temporary Employer/Employees Relief Scheme (TERS).

The BRPs, acting on behalf of the Post Office, entered into a collective agreement with the joinder union – SAPWU and DEPACU – and the CWU.

This agreement was reached after consultations were finalised on 22 March 2024.

“Despite the finalisation and the fact that retrenchment notices had been issued to relevant employees, the negotiating parties continued exploring alternatives to limit the effects and/or the number of employees affected by the retrenchments,” the BRPs said.

“In an attempt to limit the number of employees affected by the retrenchments, the negotiating parties approached the Department of Labour’s Single Adjudication Committee in a final attempt to pursue its application for the TERS.” 

The BRPs pursued this application when they were appointed, and this application is now a final attempt to gain access to the relief funding.

If their application for TERS relief is successful, the bargaining unit employees will have 75% of their salaries paid by TERS relief through the Post Office.

The Post Office will still be responsible for paying 25% of their salaries for the time that TERS agrees, but no longer than 12 months. 

However, the funds can only be applied to employees who are currently employed and not those who have received retrenchment notices. 

Employees serving their notice period at home have been requested to remain at home until further notice. 

Another bailout

At the end of last year, Minister of Communications Mondli Gungubele said SAPO cannot continue its operations without a R3.8 billion bailout, which is yet to be approved by the Cabinet. 

He said the Post Office would need billions of rands to execute its business rescue plan. The business rescue plan by joint BRPs Rooplal and Juanito Damons was approved by most creditors in December 2023. 

It laid out significant cost-cutting measures, particularly a reduction in the size of the Post Office’s branch network to only 600 branches and a reduction of employees to 5,000. 

Cutting its staff complement by around 7,000 would reduce its wage bill by an estimated R1.3 billion. 

The Post Office has run at a loss every year since 2013 and has failed to compete with private couriers. It has since recorded over R19 billion in losses. 

Gungubele said the Post Office cannot continue operating as it is and needs to implement its radical business rescue plan to save the company. 

“We are going on a net loss of R2 billion plus, and we are projecting a R1.7 billion loss next year,” he said. 

SAPO stated in its business rescue application that it needs R3.8 billion of funding in addition to the R2.4 billion it received from the National Treasury in the 2023 Budget. 

It said that additional funding is needed to execute its turnaround strategy, with the Cabinet having already agreed to more funding for SAPO. 

This is despite the state-owned enterprise having already been given over R10 billion in bailouts since 2014. 

The Cabinet has stated that any additional funding would be provided only if the Post Office goes into business rescue and is not liquidated. 

Additional funding will be used to pay off the Post Office’s debts, fund its cash-flow deficit, turnaround strategy, and staff reduction plan.