The dispute centres around NMU providing notice via e-mail on 27 November of its intention to terminate the 2012 Conditions of Service and Benefits Agreement (CoS).
The collective agreement, among other things, provides a formula used at the university during annual wage negotiations.
The CoS agreement saw staff previously receiving an annual increase of between 8% and 12%.
The decision to terminate the CoS followed eight months of unresolved salary negotiations and NMU then took the decision to terminate "as the terms of the agreement have proved to be no longer sustainable", NMU spokeswoman Zandile Mbabela said.
"It [termination of CoS] is based on the need to be financially prudent at a time when the university has a budget deficit of R68-million and, like all other institutions in the sector, is facing an uncertain future."
Mbabela said the sector had changed dramatically since the agreement was drawn up, at a time when the university was growing, with its coffers on a similar trajectory.
In May, the issue spiralled all the way to the office of the NMU ombudsman Max Boqwana, who made an advisory ruling that a 6.4% increase on inflation-based cost of living adjustment (Cola) - one of the three pillars of the CoS agreement - should be implemented.
It stated the other two pillars - cost of living enhancement (Cole) based on performance, and a market-related adjustment - should be discussed further.
In the notice, the university stated staff would receive an additional once-off R4,000 bonus, which unions rejected.
Only about a third of the 1,500 staff members who said they would be in attendance at the annual banquet - where the institution also bade farewell to outgoing vice-chancellor Professor Derrick Swartz - pitched up for the event on 7 December.
This followed a call by the NMU's two recognised trade unions - National Tertiary Education Union (NTEU) and National Education, Health and Allied Workers' Union (Nehawu) - for its members to boycott the event and instead sit in their offices for its duration.
NTEU marketing manager Lynette Roodt said: "The staff feel as if management has abandoned them. And there is a very anxious feeling of uncertainty pertaining to what will happen in January. Should the CoS agreement be terminated by December 31 as NMU stated, there will be nothing protecting the staff and their salaries next year.
"While we are well aware of the current challenges facing the tertiary education sector, our concern is that annually there are negotiations regarding the agreement and we find a compromise. Yet now they took the unilateral decision to terminate the agreement."
In an e-mail sent jointly by NTEU and Nehawu to all staff regarding the boycott, they referred to the event as an attempt to create the image of a benevolent university.
"For management to have invited staff to attend such a lavish event, straight after informing them that austerity measures require the termination of their CoS agreement, is shameless."
Nehawu branch secretary Kayode Adesemowo said: "We don't have the actual numbers but we know more than a thousand staff were invited, and from a head- count done through photos of the event we estimate no more than 300 people in attendance."
Mbabela said the event was the annual year-end function which coincided with Swartz's last year at the helm of NMU.
"While it is unfortunate that some staff chose to heed the call to boycott the event, we are mindful of their right to express themselves," Mbabela said.
"The budget came to R250,000. From the RSVPs received, about 1,500 staff members were expected at the event and more than 500 actually attended."
The decision to terminate the CoS has prompted the unions to take NMU to the Port Elizabeth Labour Court to prevent the implementation of its notice.
The matter was before court on Friday, but Adesemowo said judgment had been reserved.
"Employees are unsure, angry and demoralised as a result of these wage negotiations.
"The unions and management returned to the ombudsman last week to discuss the issue of Cole. The university is giving 0% and not willing to budge hence we need the intervention of the ombudsman and we are now awaiting his feedback."
Mbabela said: "The intended termination of the CoS does not affect the university policies that regulate employees' terms and benefits of employment.
"The last two years have seen the university undertake a massive reintegration project where nearly 900 service level employees of previously outsourced service functions in the cleaning, gardening, catering and protection services are being absorbed into the university as permanent employees.
"This, and other challenges facing the higher education sector, place strain on the university's financial resources and require re-imagination of resource utilisation."
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