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The government does not have to pay raises to public sector workers, after the Labor Appeal Court awarded it a major victory by declaring the implementation of a disputed agreement illegal.
In early December, the Labor Appeal Court heard arguments in the case in which public sector unions sought to have the final tranche of a multi-year wage settlement implemented.
The court case came after the state refused to implement the final year of the agreement, as it does not have the money to do so. The state had planned huge cuts in the public sector wage bill in February and a refusal to pay the raises, putting the government on the path of war with the unions.
The general secretary of the South African Democratic Teachers Union (Sadtu), Mugwena Maluleke, who speaks on behalf of the unions of the Cosatu union federation, was quoted in Financial Mail as saying that the unions are studying the ruling and have already pointed out constitutional problems in the ruling, they have left members. “Shocked and angry.”
The government also argued that the agreement was illegal as the state never had the money to implement it, which the court has now agreed to.
In the ruling, delivered electronically, the court held that there was no valid agreement signed with the unions in 2018, for not complying with the provisions of the constitution, as well as with the public service regulations.
One of the main problems in the case was that the National Treasury had said from the beginning that the agreement did not fall within the compensation envelope provided and budgeted for it. Parliament had budgeted and provided R110bn in the Revenue Division Law, but the agreement exceeded it by R30.2bn at the time.
It would cost the government R37.8 billion if it were to implement the deal this year.
The Treasury said in court that it had not agreed to deliver the funds and, because it was outside the compensation envelope, did not approve them, assuring that two public service standards were not met.
The unions argued that it did not matter that the Treasury did not approve the funds, since the Finance Minister was part of the cabinet, which did approve the agreement.
The court held that the Treasury has a particular status under the constitution and that it is one of the barriers to ensuring that the executive respects the appropriate standard of constitutional governance.
The court said that if regulation 79 of the public service regulations had not been complied with, it did not matter whether the cabinet had accepted it, or what the finance minister had said at the cabinet meeting, it would still amount to a breach of the regulations.
Regulation 79 deals with collective bargaining and establishes that the Treasury has to commit funds if the department of administration and public service does not have enough in its budget, or approve it to move it from other budgets. None of that happened in this case.
With Natasha Marrian
To update: December 15, 2020
This article has been updated with new information and comments throughout.
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