Labour Appeal Court Rules Against Minister of Higher Education and Training in Skills Levy Case 2

The Labour Appeal Court has ruled against the Minister of Higher Education and Training in a matter brought by business grouping BUSA regarding regulations enacted by the Minister in 2012.

The Minister, at the time Dr Blade Nzimande, wanted to reduce the amount of money that would be refunded to companies that were paying Skills Development Levy. Companies who complied with the rules and trained their staff had been entitled to 50% of their Skills Levy back at the end of the year.

The new regulations gazetted by the Minister reduced this to only a 20% refund. He also introduced a ‘sweeping’ mechanism whereby any unused or unallocated funds at a Seta at the end of the financial year would be paid over to the National Skills Fund.

The Setas are controlled by boards who included representatives from both organised business and organised labour in their sectors. The National Skill Fund is controlled more directly by the Minister.

The regulations that the Minister enacted in 2012 were challenged in court by Busa, Business Unity South Africa, who were unhappy that such a small amount would be returning to the levy-paying companies.

Busa argued that the Minister had failed to ‘consult’ with the National Skills Authority, which he is required to do in the Skills Development Act. The Minister responded that he had consulted with certain individuals who were members of the NSA and had also consulted with the parties at Nedlac.

The Labour Appeal Court ruled against the Minister and rejected his lawyer’s explanations for the lack of official consultation. They ruled that discussing the matter at Nedlac was not sufficient and did not meet the requirements of the law.

As such the regulations are set aside but this does not mean that the previous regime of 50% skills levy refunds are in force – because the Minister subsequently re-gazetted the Regulation in January 2016.
The Minister and the National Skills Authority were ordered to pay costs.


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2 thoughts on “Labour Appeal Court Rules Against Minister of Higher Education and Training in Skills Levy Case

  • Stephanie Stylianou

    Yee Yah ! They can hide but not run ! Not this time nah nah…

    There is training budget again without fear or favour 🙂 The Pivotal Grant was, and is, NOTHING more than the Discretionary Grant and I said it ALL ALONG – ( solely awarded on SETA’s discretion)

    It’s been a long haul since 2013.

  • Sylvia F. Hammond

    Just to clarify further – in effect the LAC upheld what the LC had ruled. So the LC judgment is what stands.
    That is that:
    the Minister failed to consult the NSA as required, and
    that the sweeping provision was not reasonable, especially since it was known that the SETAs were not able to adequately deal with the funds received, and that would result in a substantial amount of unspent funds.
    The LC also found that the sweeping mechanism was not compliant with the SDA., and that any changes to how the levies should be disbursed would have to come from parliament.
    So the LC set aside the 2012 regulations, suspended until 31 March 2016 for the Minister to correct the regulations.
    The Minister then did issue revised Regulations, which also state 20% levy refund, but without the sweeping mechanism.
    So the questions are:
    First, what is the status of those Regulations? Was the consultation prior to those regulations sufficient and compliant?
    Secondly, in the Report SDF edition 4/2016 by Global Business Solutions it is reported that BUSA again launched proceedings “in the Labour Court on 1 July 2016 to review and set aside Regulation 4(4) as well as the Minister’s decision to re-promulgate it”.

    Now where is that case up to – and why is it so difficult to find out what is going on?