The government does not have to pay out increases to public sector workers, after the Labour Appeal Court handed it a huge win by declaring the implementation of a disputed agreement unlawful, BusinessLIVE reports. 

Earlier in December, the Labour Appeal Court heard arguments in the matter in which public sector unions sought to have the final leg of a multi-year wage agreement implemented. 

The court case came about 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 penciled in huge cuts to the public sector wage bill in February, and a refusal to pay the increases, putting the government on the war path with unions. 

SA Democratic Teachers Union (Sadtu) general secretary Mugwena Maluleke — who speaks on behalf of union federation Cosatu unions — was quoted in the Financial Mail as saying the unions are studying the judgment and have already noted constitutional problems in the ruling, which have left members “shocked and angry”.

The government also argued that the agreement was unlawful as the state never had the money to implement it, which the court has now agreed with. 

In the judgment, handed down electronically, the court held that there was no valid agreement signed with unions in 2018, as it did not comply with provisions in the constitution, as well as public service regulations.

One of the main issues in the case was that the National Treasury had said from the get-go that the agreement did not fall within the compensation envelope provided and budgeted for it. R110bn had been budgeted and provided by parliament in the Division of Revenue Act, but the agreement exceeded it by R30.2bn at the time. 

It would cost the government R37.8bn if it had to implement the agreement this year.

The Treasury said in court that it had not agreed to providing the funds, and, because they were outside the compensation envelope, did not approve them, ensuring that two public service regulations were not complied with. 

Unions argued that it did not matter that the Treasury did not approve the funds, as the finance minister formed part of the cabinet, which did approve the agreement. 

The court held that the Treasury holds a particular status under the constitution and that it is one of the guardrails to ensure that the appropriate standard of constitutional governance is adhered to by the executive. 

The court said if regulation 79 of the public service regulations had not been adhered to, it did not matter whether the cabinet had agreed to it, or what the finance minister had said in the cabinet meeting — it would still amount to non-compliance with the regulations. 

Regulation 79 deals with collective bargaining and provides that the Treasury has to commit funds if the department of public service and administration does not have enough in its budget, or sign off to move it from other budgets. None of that happened in this case.  

Additional reporting by Natasha Marrian

Update: December 15 2020
This article has been updated with new information and comment throughout.