Circular on central register on dismissals and resignations - 31 May 2023

National Treasury's Circular on a Central Register for Dismissals and Resignations, issued on 31 May 2023, marks a significant step towards enhancing accountability and combating corruption within South Africa's public sector. The circular mandates accounting authorities of public entities listed under Schedules 2 and 3 of the Public Finance Management Act (PFMA) to submit comprehensive data on employees who have been dismissed or resigned to avoid disciplinary action. This initiative directly addresses a key recommendation from the Judicial Commission of Inquiry into State Capture, aiming to create a centralised database to prevent the 'revolving door' phenomenon and bolster vetting processes for public servants. The directive underscores a renewed commitment to transparency and sound financial management, requiring immediate compliance from affected entities.

The South African public sector is undergoing a concerted effort to strengthen governance and combat corruption, a drive significantly influenced by the findings and recommendations of the Judicial Commission of Inquiry into Allegations of State Capture, Corruption and Fraud. In this context, the National Treasury issued a critical directive on 31 May 2023: the Circular on a Central Register on Dismissals and Resignations. This circular, aimed at public entities governed by the Public Finance Management Act, 1999 (Act No. 1 of 1999) (PFMA), mandates the submission of detailed information regarding employees who have either been dismissed or have resigned prematurely to evade disciplinary proceedings.

This development is not merely an administrative update; it represents a foundational shift in how public sector accountability is managed. The absence of a comprehensive, centralised register has long been identified as a loophole, allowing individuals implicated in misconduct to move between state organs without their past actions being adequately scrutinised. The circular's implementation is poised to close this gap, fostering greater transparency and enabling more robust vetting mechanisms across national and provincial government entities and state-owned enterprises (SOEs). For legal practitioners advising public sector clients, understanding the nuances and implications of this circular is paramount to ensuring compliance and mitigating risks.

The legal framework governing financial management and accountability in the South African public sector is primarily anchored in the Public Finance Management Act, 1999 (PFMA). The PFMA sets out the responsibilities of accounting officers and accounting authorities, aiming to ensure efficient and effective management of revenue, expenditure, assets, and liabilities within national and provincial governments and their entities. Treasury Regulations, issued under the PFMA, provide further detailed instructions and requirements for financial management.

Prior to this circular, while Treasury Regulation 33.3.1 required accounting authorities to submit annual schedules of disciplinary outcomes and criminal charges, this reporting did not adequately capture instances where employees resigned specifically to pre-empt or avoid the finalisation of investigations or disciplinary processes. The Judicial Commission of Inquiry into State Capture highlighted this deficiency, noting the lack of a single, comprehensive register covering all spheres of government and SOEs. This gap allowed a 'revolving door' phenomenon, where individuals facing serious allegations could simply move to another public entity, perpetuating a cycle of impunity and undermining efforts to combat corruption. The President's response to the Commission's recommendations specifically directed departments to collaborate on designing and implementing solutions to address this challenge, directly leading to the issuance of this circular.

The National Treasury Circular on a Central Register on Dismissals and Resignations specifically targets accounting authorities of public entities listed in Schedules 2 and 3 to the PFMA. These schedules encompass a wide array of national and provincial public entities, including major state-owned companies and various boards and agencies. The circular's core requirement is the submission of information on employees who have been dismissed or who resigned prior to the finalisation of investigations or disciplinary processes. This distinction is crucial, as it aims to capture those who strategically exit to avoid formal findings of misconduct.

The information requested under 'Phase 1' of the circular includes details on dismissals and resignations that occurred under these specific circumstances. The initial deadline for this submission was 15 June 2023, indicating the urgency with which National Treasury views this initiative. The overarching objective of establishing this central register is to enhance the administrative capacity for vetting both new and existing employees within the public service. By providing a consolidated database of individuals with a history of misconduct or suspicious exits, the register is intended to serve as a critical detective and preventative mechanism against future malfeasance.

While the circular is clear on its immediate requirements, the 'Phase 2' implementation, focusing on regular and future collection of information, is yet to be fully communicated. This phased approach suggests an evolving framework that will likely become more integrated into ongoing HR and compliance reporting. Legal practitioners should note that the circular complements, rather than replaces, existing reporting obligations under Treasury Regulations, such as the annual submission of disciplinary outcomes. The emphasis here is on capturing the specific category of resignations designed to circumvent accountability. The implementation of this register may also intersect with labour law principles, particularly concerning employee privacy and the handling of personal data, which will require careful navigation by public entities.

The National Treasury's Circular on a Central Register on Dismissals and Resignations represents a pivotal moment in South Africa's fight against public sector corruption and mismanagement. For legal practitioners, this circular necessitates a proactive approach to advising public entity clients. Attorneys must ensure that accounting authorities understand their obligations under the PFMA and this new directive, particularly regarding the accurate and timely submission of employee data. This includes reviewing existing HR policies and data management systems to ensure they can effectively capture and report the required information, especially concerning resignations that occur during disciplinary processes.

Practitioners should also anticipate potential legal challenges related to data privacy and employee rights as this central register becomes operational. It is crucial to monitor the development of 'Phase 2' of the circular, which will outline ongoing reporting requirements and likely introduce more detailed guidelines for data submission and access. The success of this initiative hinges on consistent compliance and robust enforcement, making it imperative for legal professionals to guide their clients in embedding these new accountability measures into their operational frameworks. This circular is a clear signal that the era of impunity for public sector misconduct is drawing to a close, demanding heightened vigilance and adherence to good governance principles.