The court dispute has a significant impact on South Africa`s economic recovery and its efforts to reform public finances. JOHANNESBURG – Finance Minister Tito Mboweni said Covid-19 had cancelled the three-year collective agreement with public sector unions and made it unenforceable given the dramatic changing circumstances. The legal proceedings took place after the state refused to implement the last year of the agreement because it does not have the money. In February, the state made massive cuts to the public sector wage bill and refused to pay the increases, putting the government on the path to war with the unions. Advocate Ngwako Maenetje, Advocate Ngwako Maenetje, the South African Democratic Teachers Union (Sadtu), the Police and Prisons Civil Rights Union (Popcru) and the Democratic Nursing Organisation of South Africa (Denosa) argued that the government could not be allowed to withdraw from the agreement because it had not acted in time when it realized that the collective agreement did not comply with the law. Public service employees` unions have taken the government to court after breaking the multi-year collective agreement and declared it to be reached without the necessary provisions 78 and 79, which require the agreement of the cabinet. The government took the decision as part of a plan to cut the state`s labour costs by R160 billion over the next three years. The implementation of this year`s collective bargaining agreement would require the government to gnaw some R37 billion to pay civil servants. “It is apparent from the documents that the costs of the collective agreement could not be covered solely by the budget of the seventh defendant (the Civil Service and Administration Division). But the unions argued that the employer`s challenge was that they were negotiating savings to raise the money for wage increases, and now that the government hadn`t done so, it wanted workers to take on most of their challenge. “The National Ministry of Finance has not committed in writing to release additional funds and, in addition, no written agreement has been granted by any other department or agency and the approval of the National Ministry of Finance has been obtained to finance the deficit from other budgets,” the judgment reads. The court reviewed provisions 78 and 79 of the Civil Service Rules under the Civil Servants Act and together established certain requirements for the conclusion of a collective agreement by the State. On the one hand, the costs of the collective agreement must be borne by the competent State service.
Other requirements are that there is a written obligation of the national ministry of finance to allocate additional funds, or that the agreement should be financed from the budgets of other departments or agencies, with their written agreement and that of the ministry of finance, the ruling said. In its opposition documents, the government said the agreement was invalid because it was not approved by cabinet, among other anomalies. READ ALSO: The Ministry of Finance defends the decision to freeze increases for the public sector However, the unions have filed a request for the application of a clause in the agreement by which the government would fulfill the last year of the wage agreement. Finance Minister Tito Mboweni then filed a counter-request that the application of the clause be declared “illegal, invalid and unenforceable,” he said. Regulation 79 deals with collective bargaining and provides that the Ministry of Finance must commit funds if the Ministry of Public Service and Administration does not have enough funds in its budget or must cancel it to carry it forward to other budgets. None of this happened in this case. The Department of Finance told the court that it had not accepted the provision of the funds and, because they were outside the compensation framework, had not approved them to ensure that two regulations for the public service were not being followed. .