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.