Reinstatement of the accounting authority for the wholesale & retail SETA by order of the Constitutional Court

  • On 28 September 2016, the Minister of Higher Education and Training instructed the Director-General of Higher Education and Training to suspend the Accounting Authority for the Wholesale and Retail Sectoral Training Authority (W&RSETA) and to appoint an administrator to exercise oversight and control of the W&RSETA. The Minister purported to rely on section 15(1) of the Skills Development Act to place the W&RSETA under administration and he appointed Mathealira Pascalis Mokupo, the Chairperson of the W&RSETA Audit Committee, as the administrator of the W&RSETA.

 

  • During the course of October 2016, concerned stakeholders in the wholesale and retail sector, representing members of the Accounting Authority, Organised Labour and Organised Business, banded together and launched urgent proceedings in the Labour Court to review and set aside the Minister’s decision. The applicants in the court proceedings instituted against the Minister represented virtually all stakeholders in the sector and demonstrated their unanimous opposition to the Minister’s decision.

 

  • On 23 December 2016, the Labour Court set aside the Minister’s decision, reinstated the Accounting Authority, and awarded costs against the Minister. The Labour Court noted that the Accounting Authority “at the relevant time demonstrated its capacity to address any administrative shortcomings, and none of them, either singly or collectively, constituted grounds that met the threshold requirements imposed by s 15 for the exercise of his powers under that section.”  The Labour Court held that “the minister acted outside of the scope of s 15 when he placed the W&RSETA under administration” and that “the minister’s decision was procedurally unfair in that the W&RSETA was not afforded a proper opportunity to consult prior to the decision being taken.

 

  • During the course of January 2017, the Minister and Director-General briefed a private firm of attorneys to appeal the Labour Court’s decision to the Labour Appeal Court. On 16 May 2017, the Labour Appeal Court unanimously upheld the decision of the Labour Court and awarded costs against the Minister. The Labour Appeal Court confirmed that the Minister “acted outside of the powers conferred upon him in terms of s15 of [the] SDA. He failed to show that the necessary preconditions set out in s15(1) existed in order to place [the W&RSETA] under administration. Accordingly, having acted outside the powers conferred upon him in terms of s15 of the SDA, he acted contrary to the principle of legality and his decision stands to be set aside.”
  • During the course of May 2017, the Minister and Director-General sought to appeal the Labour Appeal Court’s decision to both the Supreme Court of Appeal and the Constitutional Court. During the course of June 2017, the Supreme Court of Appeal dismissed the Minister’s application, and on 16 August 2017, eight judges of the Constitutional Court dismissed the Minister’s application with costs on the basis that “it does not engage the Court’s jurisdiction and lacks prospects of success.”

 

  • The Constitutional Court’s order is the culmination of legal proceedings spanning almost a year wherein the courts have consistently confirmed that the Minister unlawfully exercised his powers in terms of section 15 of the Skills Development Act to suspend the Accounting Authority and to place the W&RSETA under administration. The order reinforces and entrenches the rule of law, and it delivers the final relief sought by parties who have been subjected to the exercise of public power that was found to be unlawful as early as 23 December 2016.

 

  • This case highlights the critical importance of the oversight function that should be exercised by stakeholders in any sector. It also serves as a positive example of business and labour working together in order to achieve the common goal of protecting and securing the sector’s best interests. The sectoral training authorities play an integral role in the institutional and financial framework of their relevant sectors, as well as national progress and development on a broader scale. The proper functioning of the sectoral training authorities is at risk of being undermined by any exercise of power that does not fall within the prescripts of the governing legislation. As such, stakeholders in the wholesale and retail sector welcome and commend the findings of the judiciary in this matter.