DHET loses appeal against grant regulations

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This topic contains 9 replies, has 8 voices, and was last updated by  Menet Hamel 1 year, 11 months ago.

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  • #64329

    sylvia hammond

    In 2012 the DHET Minister published grant regulations that reduced the skills development levy refund from 50% to 20%. BUSA on behalf of employers took the DHET to court to challenge the change. The Labour Court found for BUSA. But the DHET took the matter on appeal.

    The Labour Appeal Court has upheld the judgement of the Labour Court, fiinding that the DHET did not meet the consultation requirements set out in the Skills Development Act.

    The grant regulations have been set aside.
    Please see attached file with the LAC judgement.

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  • #64331

    Suzanne Hattingh

    This is really great news! What it does confirm is that organisations that are subjected to decisions made by DHET, QCTO, SETAs, etc. should vocalise our opposition, where warranted and support initiatives such as BUSA’s legal actions. Too often in briefings by SETAs, QCTO, DHET there is not enough critical engagement on the changes that were decided in their offices – often without consultation or an understanding of the impact in organisations. It concerns me that participants in such briefings are only focused on noting the new changes without challenging their feasibility or desirability. Other issues we should be fighting with vigour are the use of the OFO for WSPs and for occupational qualifications, the replacement of legacy qualifications by occupational qualifications, which are NOT going to solve the skills crises – especially not for the disadvantaged in small towns and rural areas where the QCTO model is not workable. A luta continua!!

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  • #64334

    Nigel Shipston

    Agree Suzanne, possibly the most telling factor in all our issues with authorities over the last 20 years comes down to the same problem – decisions being made for industries and sectors by people with minimal practical knowledge of those industries and sectors. The participative and consultative element has long disappeared in favour of uninformed and unjustified dictatorial edicts. “Participation” and “consultation” is reserved for sycophants with some interest in various issues, but certainly not representative of majorities, nor conversant enough with the reality of the situation.

    But we have allowed this situation to evolve. Blind obedience and fear of retaliation have let us down. So now we must deal with the fall out. With the right support we can do this, if we believe in what we do and our value to the present and future of our people. A vitória é certa!

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  • #64336

    Nadia Smit

    So, in essence, am I correct in saying that SDF’s will be able to backdate and claim for the 30% for the 2016/2017 year?

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    • #64349

      sylvia hammond

      No – do not rely on that – you will recall that the LC gave the Minister until march 2016 to fix the problem – and he re-issued the Regulations – saying that he had now consulted with the NSA.
      Please see the reading room article by Alan and my response.
      So now the question is – did BUSA challenge that one?

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  • #64338

    Cobus Cato

    I agree with Suzanne and Nigel however, the SETA’s have committees and forums where industry can participate and actually voice their concerns. The only fallback in this regard is that there are very limited seating available on these forums, thus making it difficult for industry to be represented adequately. It may not be a bad idea to establish “informal” forums outside of these SETA regulated forums with someone who is actually sitting on one of these forums. Concerns and issues voiced at these “informal” forums can then be tabled at the SETA forums and they have to listen. the SETA’s in fact have the duty and responsibility to serve us, the industry, as we are the levy payers who ensure an income for the SETA’s as such
    Nadia, I would imagine there must be some sort of government gazette publication where the current practice of the grant payment should be reversed and this may now be the responsibility of the new minister.

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  • #64343

    Nigel Shipston

    Yes Cobus, it is unfortunate that the forum doesn’t allow proper participation, but the SETA’s seem so complacent about the forum attendance being sufficient! If a decision is made, they all sit back and say everything is fine and carry on, worse, these decisions are treated like they are cast in stone and cannot be amended to suit reality! Their perception of participation/consultation is somewhat blinkered and suits their comfort zone.

    Perhaps they should take a leaf out of our former Ministers book, who, when confronted with the reality of the situation, was not only willing but had amendments made to the DHET Registration criteria and requirements.

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  • #64344

    Lynel Farrell

    It is fantastic news. When we get involved and support one another, there will be a positive outcome. Nigel, I couldn’t have said it better! You are correct. We voiced our concerns in the correct manner, submitted the case to the Minister, and it was welcomed. All providers were taken into account. There is so much that we can do in order to pull the industry together again. It takes a lot of hard work, long hours, research, getting all the facts, but oh, it is so worth it! And so we continue to support the industry.

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  • #64346

    Des Squire

    Great news Sylvia and thanks for sharing. so if my understanding is right we revert to the 2012 Grant Regulations, in particular, the mandatory grant of 50%. Where then does this leave us in relation to Pivotal Grants and so on which were introduced with effect of 2013 which should also have been agreed to in terms of the legislation referred to in the judgement?

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  • #64435

    Menet Hamel

    Hallo colleagues,

    Some of my previous summaries have been cited in recent discussions regarding the judgment of the LAC against the Minister of the DHET and I would like to take this opportunity to provide clarity.


    This week the DHET communicated to SETAs to abide by the Labour Appeal Court (LAC) decision in relation to removal of the sweeping mechanism and informed all SETAs that the mandatory grants payable to employers remain unchanged as the dispute around Regulation 4(4) is still pending before the Labour Court.

    There have been many communications recently around the judgement of the SETA Grant Regulations and we at Global Business Solutions would like to provide clarity regarding the matter given that we have the benefit of having our CEO, Mr. Jonathan Goldberg being a BUSA (Business Unity South Africa) representative at NEDLAC who brought the litigation against the then Minister. Blade Nzimande.

    To truly understand this case, we must first look at what the issues were with the proposed 2012 Grant Regulations.

    In terms of the 2005 Grant Regulations regarding monies received by a SETA, an employer who paid skills development levies could claim 50% of those levies back in the form of a mandatory grant if it complied with the eligibility criteria.

    However, the 2005 Grant Regulations were repealed by the 2012 Grant Regulations and it is the 2012 Grant Regulations and the way in which it was promulgated that formed the subject matter of the review application before the Labour Court.

    Regulation 4(4)
    Regulation 4(4) of the 2012 Grant Regulations reduced the mandatory grant that an employer could claim back from 50% to 20% of the total levies paid by the employer.

    Regulation 3(12)
    The 2012 Grant Regulations also introduced “the sweeping mechanism” which is that if a SETA has not spent at least 95 % of its discretionary funds, the surplus will be “swept” into the National Skills Fund on 01 October of each year. This sweeping mechanism was a completely new concept which was not contained in the 2005 Grant Regulations.

    The crux of this appeal was whether in making and promulgating the 2012 Grant Regulations the Minister complied with his obligation to consult the Authority as contemplated in s36 of the Skills Development Act (SDA).

    The second issue was whether the sweeping mechanism, Regulation 3(12) was rationally connected to the purpose for which it was taken or to the information before the Minister.

    August 2015 Labour Court Judgement
    Judgement was handed down by the Labour Court in August 2015 in the litigation brought by BUSA and the Court declared Regulations 3(12) and 4(4) of the 2012 Grant Regulations to be invalid, and it set them aside.

    However, it suspended the effect of that order until 31 March 2016 to give the Minister an opportunity to rectify the position by introducing a valid replacement of the invalid regulation.
    The Minister initially took steps to appeal against the Labour Court judgement and order, however the Minister instead re-promulgated the invalid regulation in identical terms, prior to the order coming into effect.

    July 2016 BUSA Labour Court Review
    BUSA then launched renewed review 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.

    The Minister was then required to make the record available to BUSA, and from the record it was evident that the Minister adopted the approach that Regulation 4(4) had previously been set aside by the Labour Court only due to a procedural irregularity for the failure to consult. Having since consulted with the National Skills Authority, the Minister was advised to simply re-promulgated Regulation 4(4), on the basis that the defect would have been cured. This approach was fundamentally wrong as the judgment of the Labour Court was clear, in that Regulation 4(4) was set aside not only due to the procedural irregularity, but also on the basis that it was irrational and unreasonable in substance.

    Shortly after BUSA launched the renewed review proceedings in July 2016, the Minister applied for the appeal to be reinstated against the Labour Court Judgement of August 2015.

    May 2017 Labour Court Appeal
    The appeal hearing was held on 31 May 2017 in the LAC and the Court delivered a judgment on the matter and set aside Regulation 3(12). The Minister is expected to issue a notice in the Government Gazette to repeal this specific Regulation from the SETA Grant Regulations of 2012.

    It is important to understand that Regulation 4(4) is not affected by the recent decision of the LAC and is still in force as BUSA’s review against the Minister’s subsequent attempt to re-promulgate regulations 4(4) is still outstanding and the matter has only been set down for late March 2018.

    October 2017 New Minister Higher Education appointed
    It may be worth, considering the change of Ministers recently, for BUSA to explore the possibility of engaging the new Minister, Henie Mkhize to see if the DHET might be willing to discuss reverting to the pre-existing regulations to get out of the current legal quagmire.

    December 2017 Current status
    In the meantime, this week the DHET communicated to SETAs to abide by the LAC decision in relation to removal of the sweeping mechanism and informed all SETAs that the mandatory grants payable to employers remain unchanged as the dispute around Regulation 4(4) is still pending before the Labour Court. This is foreshadowed to be heard in March 2018.

    As always, we will be sure to keep you informed.

    Kind Regards

    Menet Hamel
    Global Business Solutions
    07 December 2017

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