South African Municipal Workers Union v Maluti-A-Phofung Municipality and Another (C 488/2023) [2023] ZALCCT 60; (2024) 45 ILJ 173 (LC) (23 October 2023)

THE LABOUR COURT OF SOUTH AFRICA,

HELD AT CAPE TOWN

Case No: C 488/2023

Of interest to other judges

In the matter between:

SOUTH AFRICA MUNICIPAL WORKERS UNION Applicant And MALUTI-A-PHOFUNG MUNICIPALITY First Respondent MUNICIPAL MANAGER: MALUTI-A-PHOFUNG MUNICIPALITY Second Respondent

Date of Set Down: 18 October 2023

Date of Judgment: This judgment was handed down electronically by circulation to the parties’ legal representatives by email, publication on the Labour Court website and release to SAFLII. The date and time for handing down judgment is deemed to be 10h00 on 23 October 2023.

Summary: (Urgent application to interdict reversal of staff promotions – Staff promotions determined by former acting municipal manager shortly before term ended – Current acting municipal manager revoking promotions )

JUDGMENT

LAGRANGE J

Introduction

[1] This is an urgent opposed review application brought by the union SAMWU on behalf of 183 members (‘the employees’) to review a decision by the current acting municipal manager, Mr A Goliath (‘Goliath’) to set aside or reverse promotions and associated salary increases, which his predecessor, Mr S Makhubu (‘Makhubu’), had implemented on 22 August 2023, the day before the normal salary payment date. The increases had been backdated to 1 August 2023.

[2] This application was filed on 29 September and enrolled for hearing on 12 October. On that occasion it was postponed by agreement to 18 October 2023. Although the respondent municipality (‘the municipality’) contended that the application was not urgent, as both parties sought finality on the application, it waived this objection. Accordingly, by agreement and with the court’s assent it was dealt with on an urgent basis.

Background

[3] The material facts are largely not in dispute.

[4] Goliath’s appointment as acting municipal manager took effect on 24 August 2023. On 6 September 2023 he instructed the chief financial officer (CFO), amongst other things, to reverse all adjustments sanctioned by Makhubu and to recover all the excess amounts paid to them in August, in the September payroll. He also instructed the human resources division to notify all affected staff of the nullification of the adjustments.

[5] The applicants claim that Makhube’s decision was lawful and derived from a collective agreement concluded in the Local Labour Forum (‘LLF’) on 14 June 2022, though it must be said it is not clear how the 183 promotions were directly based on the agreement. In terms of that agreement, amongst other things, certain security officers and traffic officers were to be moved to higher post levels and firefighters were to obtain a notch increase. The agreement also stated that:

“6. Employees working against post will be placed in terms of the placement policy.

7. Contractual to hold should be addressed by job evaluation.

8. Parties will withdraw all litigations relating to post levels and placement of employees after the implementation of this agreement.”

[6] The applicants claim that the adjustments implemented in August effectively amended their contracts of employment, and Goliath’s reversal of the adjustments amounted to a clear breach of their altered conditions of employment.

[7] By contrast, in an explanatory memorandum for his decision submitted to the MEC of the Department of Cooperative Governance and Traditional Affairs on 3 September 2023, Goliath claims that he reversed the decision of his predecessor because the decision had been taken without following a legitimate process. More particularly, he gave the following explanation:

7.1 Wage agreements can only be concluded at the national bargaining forum in terms of the main collective agreement governing the municipal sector.

7.2 The decision violated clause 1.1(c)(ii) which provides that no position may be filmed unless and until adequate provision had been made in the budget for that appointment.

7.3 The only way in which an existing post could be adjusted to place an employee on a new salary level would be if the post was graded according to the TASK job evaluation system (‘TASK JE’), or if the post was advertised and an employee was successful in being employed in that higher position.

7.4 In terms of S 66(3) read with s 66(4) of the Local Government: Municipal Systems Act 32 of 2000 (‘the MSA’), no person may be employed in the municipality unless the relevant post was provided for in the staff establishment of the municipality, and any decision to employ somebody in contravention of this requirement is null and void[1].

7.5 The decision, which necessitated an additional monthly increase in the municipal salary bill of approximately R 1,65 million, was also in breach of various provisions of the Municipal Finance Management Act 56 of 2003 (‘the MFMA’).

7.6 The additional expenditure was not authorised in the municipal budget.

The main dispute

[8] The real underlying dispute between the parties concerns the lawfulness of the the original decision to award the promotions and the subsequent decision to reverse them. Before that dispute can be considered, the first issue which must be dealt with is whether the court can deal with it in these proceedings.

[9] The crux of the argument during the hearing of the application concerned whether or not this court is in a position to determine the lawfulness of Makhube’s decision. The applicants argue that, for the purposes of the urgent application, the court must accept that Makhube took a decision which stands until it is properly set aside. They argue that the municipality cannot legally resort to self-help to reverse his decision, simply by means of a decision by the new municipal manager to revoke it, irrespective of whether it was lawful or not. The only way it can be set aside by the municipality is by means of a court order nullifying it, following a successful application to review it. In the absence of such a review application before the court, the court cannot pronounce on the lawfulness of the decision to implement the adjustments. The municipality disputes the necessity of launching review proceedings and argues that is entitled to challenge the lawfulness of Makhube’s decision as a collateral defence to the relief sought by the applicants. Obviously, if the municipality had launched a counter-application to review Makhube’s decision, there would have been no difficulty, in principle, for the court to have dealt with it.

Evaluation

The legal principles

In Khumalo & another v Member of the Executive Council for Education: KwaZulu-Natal (2014) 35 ILJ 613 (CC), the Constitutional Court reaffirmed the right of the state to establish the unlawfulness of its own institutions’

actions, whatever the reason they are considered unlawful. Moreover, having regard to s 1(c) and sections 195(1)(a), (f) and (g)[2] of the Constitution, public functionaries are obliged to redress irregularities in public administration, including employment related matters[3].

[10] In Merafong City v Anglogold Ashanti Ltd 2017 (2) SA 211 (CC), the Constitutional Court found that collateral or reactive challenges which seek to set aside a state decision which a party seeks to enforce, can be brought by state institutions and not only by private individuals defending themselves against state action[4]. That case concerned a municipality which chose to ignore a Minister’s ruling reducing a water surcharge it was levying on a mining company. It was only when the mining company sought to compel the municipality to comply with the ruling that it reactively challenged the lawfulness of the Minister’s decision. It was only some three months after the mining company sought to enforce the Minister’s decision that the municipality filed its counter-application to set aside the minister’s decision some three months’ afterwards, in circumstances where the minister’s decision had already stood for six years. Nonetheless, the municipality was given an opportunity to have a review application heard in the high court subject to being able to justify its delay[5].

[11] The court minority in Merafong held that the state should be able to reactively resist enforcement of a legally invalid decision, without having to bring a counter-application to set the aside the decision. The minority regarded such approach as an unduly narrow and technical one, which placed substance over form[6]. As stated above, the majority of the court, accepted that a reactive challenge by the state was possible, but it could not simply defy the decision because it considered it invalid and take unilateral action contrary to it[7]. In Merafong the municipality had formally sought an order declaring that the Minister’s ruling was ultra vires[8].

[12] Importantly, the majority stressed principles established in the earlier decisions of Oudekraal Estates (Pty) Ltd v City of Cape Town and Others 2004 (6) SA 222 (SCA) and MEC for Health, Eastern Cape and Another v Kirland Investments (Pty) Ltd t/a Eye & Lazer Institute 2014 (3) SA 481 (CC):

“[41] The import of Oudekraal and Kirland was that government cannot simply ignore an apparently binding ruling or decision on the basis that it is invalid. The validity of the decision has to be tested in appropriate proceedings. And the sole power to pronounce that the decision is defective, and therefore invalid, lies with the courts. Government itself has no authority to invalidate or ignore the decision. It remains legally effective until properly set aside.

[42] The underlying principles are that the courts' role in determining legality is pre-eminent and exclusive; government officials, or anyone else for that matter, may not usurp that role by themselves pronouncing on whether decisions are unlawful, and then ignoring them; and, unless set aside, a decision erroneously taken may well continue to have lawful consequences.

(emphasis added)

[13] The majority stressed why it was important for parties not to act on their own views of what was lawful or not:

“[54] If we were to sustain Merafong's argument that it was entitled to ignore the Minister's decision until it was sought to be enforced, this must extend to all cases of patent invalidity. This would suggest that an official may ignore a decision, taken under statutory power (intra vires ), that is tainted by patently improper influence or corruption. But that is precisely what happened in Kirland — and the self-help argument was not countenanced. What is more, not only would what is or is not 'patently unlawful' be decided outside the courts, but there would be no rules on who gets to decide and how. If failure to review a disputed decision is defensible on the basis that the decision was considered patently unlawful, the rule of law immediately suffers. So the argument is not tenable.”

[14] While I have real doubts about the legality of Makhube’s decision, I do not believe that I can decide that in the absence of at least a counter-application by the municipality. For that reason, I cannot entertain its defence in light of the prevailing authority and prevent the applicants from enforcing that decision at least for the time being.

[15] However, the applicants have not confined the relief they seek to a mere declaration that Goliath had no authority to reverse the decision and his decision should be set aside, coupled with restoration of remuneration and reimbursement of deductions to accord with Makhube’s decision. They also seek enforcement of the LLF agreement of 14 June 2022 and ordering the municipality to comply with an arbitration award relating to promotions and the settlement agreement. A factual basis for enforcement of the award and settlement agreement is not properly made out in the founding affidavit and enforcement of the LLF agreement concerns the application of a collective agreement which must be enforced using the dispute resolution process applicable to those disputes. In so far as the applicants seek relief that would imbue Makhube’s decision with legal validity, the court cannot do that except in proceedings where the legal validity of the decision and not merely the fact of its existence is before the court for determination. In Merafong, the court noted that in Oudekraal :

“[40] The City Council could not simply treat the Administrator's act as though it did not exist. Until it was properly set aside by a court of law, the approval engendered legal consequences. The court however refused Oudekraal the declaratory relief it sought. This was because the approval was vulnerable to being set aside in proceedings properly brought for judicial review, and that had to be done first.”

In this matter too, it would be wrong to make any pronouncement on the legality of the Makhube’s decision, as it is still open to the municipality to institute timeous review proceedings in which that issue would be determined.

[16] The parties both want finality in the dispute. The only way that can be done, following the majority approach in Merafong, is if the legality of Makhube’s decision can be determined, which requires the municipality to launch a review application

expeditiously. Without that, the court is unable to properly decide the merits of the dispute.

Costs

[17] The parties were agreed that costs should follow the result. However, as the applicants only obtained partial success, and the municipality’s defence for reversing the decision might prove to have been based on a correct appraisal of the legal status of that decision, I do not think a cost award is appropriate considering the principles of law and fairness.

Order

[1] The urgent application to review and set aside the decision by the second respondent to revoke the promotions and associated salary increases of the applicant’s members is postponed, pending the finalization of an application by the first respondent to review and set aside the decision taken by the erstwhile municipal manager, Mr S Makhubu, to approve the promotions and salary increases concerned.

[2] The first respondent is to file the review application contemplated in paragraph 1 within six weeks of the date of this order, failing which the applicant is granted leave to re- enroll the present application for hearing on an expedited basis.

[3] There is no order as to costs.

Lagrange J

Judge of the Labour Court of South Africa

Representatives For the Applicant A Oosthuizen SC and T Du Preez Instructed by Kramer Weihann Inc. For the First Respondent And Second Respondents FW Botes SC and E Van AS Instructed by Niemann Grobbelaar Attorneys

[1] The full provision reads: 66. Staff establishments.—(1) A municipal manager, within a policy framework determined by the municipal council and subject to any applicable legislation, must— (a) develop a staff establishment for the municipality, and submit the staff establishment to the municipal council for approval; (b) provide a job description for each post on the staff establishment; (c) attach to those posts the remuneration and other conditions of service as may be determined in accordance with any applicable labour legislation; and (d) establish a process or mechanism to regularly evaluate the staff establishment and, if necessary, review the staff establishment and the remuneration and conditions of service. (2) Subsection (1) (c) and (d) do not apply to remuneration and conditions of service regulated by employment contracts referred to in section 57. (3) No person may be employed in a municipality unless the post to which he or she is appointed, is provided for in the staff establishment of that municipality. (4) A decision to employ a person in a municipality, and any contract concluded between the municipality and that person in consequence of the decision, is null and void if the appointment was made in contravention of subsection (3). (5) Any person who takes a decision contemplated in subsection (4), knowing that the decision is in contravention of subsection (3), may be held personally liable for any irregular or fruitless and wasteful expenditure that the municipality may incur as a result of the invalid decision.

[1] The full provision reads:

66. Staff establishments.—(1) A municipal manager, within a policy framework determined by the municipal council and subject to any applicable legislation, must—

(a) develop a staff establishment for the municipality, and submit the staff establishment to the municipal council for approval;

(b) provide a job description for each post on the staff establishment;

(c) attach to those posts the remuneration and other conditions of service as may be determined in

accordance with any applicable labour legislation; and

(d) establish a process or mechanism to regularly evaluate the staff establishment and, if necessary, review the staff establishment and the remuneration and conditions of service.

(2) Subsection (1) (c) and (d) do not apply to remuneration and conditions of service regulated by employment contracts referred to in section 57.

(3) No person may be employed in a municipality unless the post to which he or she is appointed, is provided for in the staff establishment of that municipality.

(4) A decision to employ a person in a municipality, and any contract concluded between the municipality and that person in consequence of the decision, is null and void if the appointment was made in contravention of subsection (3).

(5) Any person who takes a decision contemplated in subsection (4), knowing that the decision is in contravention of subsection (3), may be held personally liable for any irregular or fruitless and wasteful expenditure that the municipality may incur as a result of the invalid decision.

[2] Sections 1(c),195(1) and (2) of the Constitution state: 1 Republic of South Africa The Republic of South Africa is one, sovereign, democratic state founded on the following values: … (c) Supremacy of the constitution and the rule of law. 195 Basic values and principles governing public administration (1) Public administration must be governed by the democratic values and principles enshrined in the Constitution, including the following principles: (a) A high standard of professional ethics must be promoted and maintained. (b) Efficient, economic and effective use of resources must be promoted. (c) Public administration must be development-oriented. (d) Services must be provided impartially, fairly, equitably and without bias. (e) People's needs must be responded to, and the public must be encouraged to participate in policy-making. (f) Public administration must be accountable. (g) Transparency must be fostered by providing the public with timely, accessible and accurate information. (h) Good human-resource management and career-development practices, to maximise human potential, must be cultivated. (i) Public administration must be broadly representative of the South African people, with employment and personnel management practices based on ability, objectivity, fairness, and the need to redress the imbalances of the past to achieve broad representation. (2) The above principles apply to- (a) administration in every sphere of government; (b) organs of state; and (c) public enterprises.

[2] Sections 1(c),195(1) and (2) of the Constitution state:

1 Republic of South Africa

The Republic of South Africa is one, sovereign, democratic state founded on the following values:

…

(c) Supremacy of the constitution and the rule of law.

195 Basic values and principles governing public administration

(1) Public administration must be governed by the democratic values and principles enshrined in the Constitution, including the following principles:

(a) A high standard of professional ethics must be promoted and maintained.

(b) Efficient, economic and effective use of resources must be promoted.

(c) Public administration must be development-oriented.

(d) Services must be provided impartially, fairly, equitably and without bias.

(e) People's needs must be responded to, and the public must be encouraged to participate in policy-making.

(f) Public administration must be accountable.

(g) Transparency must be fostered by providing the public with timely, accessible and accurate information.

(h) Good human-resource management and career-development practices, to maximise human potential, must be cultivated.

(i) Public administration must be broadly representative of the South African people, with employment and personnel management practices based on ability, objectivity, fairness, and the need to redress the imbalances of the past to achieve broad representation.

(2) The above principles apply to-

(a) administration in every sphere of government;

(b) organs of state; and

(c) public enterprises.

[3] At paragraphs [34] and [35].

[4] At paragraph [55].

[5] See paragraphs [67] to [81].

[6] At paragraphs [102] to [104].

[7] At paragraph [63].

[8] At paragraph [66].