Durban: The King Cetshwayo District Municipality (KCDM) in Zululand has been ordered by a Labour Court judgment to employ more than 600 workers that it “inherited” from a service provider.
The municipality recently lost an appeal at the Labour Appeal Court, where it had sought to nullify a judgment handed down by the Labour Court that found that the workers should be absorbed by the municipality.
KCDM said yesterday that it plans to appeal the dismissal of its appeal by the Labour Appeal Court.
At the centre of the dispute is whether the employees who have been working for a service provider, Water and Sanitation Services SA, should be absorbed into the municipality.
It was argued by a labour union that because these workers were employed expressly to provide a service to the municipality, they fell under Section 197 of the Labour Relations Act, meaning they should not be affected should the municipality terminate the agreement with the service provider.
In its initial application, Water and Sanitation Services SA argued that its workers had been transferred to the municipality after its contract with the municipality ended.
The background to the matter shows that in 2003, the municipality awarded the service provider a contract for the management, operation, and maintenance of water and wastewater treatment facilities, along with associated distribution infrastructure services. This initial contract lasted from July 1, 2003 until 30 June 30, 2008, after which it was extended to June 30, 2012.
When the contract expired, a new tender was issued, commencing on July 1, 2013 and terminating on June 30, 2015. This tender was awarded to the service provider, and a new Service Level Agreement (SLA) was concluded. In November 2019, the municipal manager advised the service provider that the agreement would expire on January 31, 2020 and would not be extended.
On December 4, 2019, a meeting was convened to discuss the termination of the agreement. Several practical arrangements were discussed, including the application of Section 197 of the Labour Relations Act.
Water and Sanitation Services SA then argued that when it transferred the work and assets back to the municipality after its contract expired, the staff it had employed were also legally transferred to the municipality.
The company went to the Labour Court and sought a declaratory order stating that the termination of the Service Level Agreement, constituted a transfer in terms of Section 197 of the Labour Relations Act. However, the municipality objected to this and instead accused the company of not wanting the financial burden of retrenching its own workers.
In his 2020 judgment, Judge André van Niekerk of the Labour Court ruled in favour of the service provider, asserting that after its contract with the municipality expired, it transferred assets back to the municipality. This asset transfer included the staff who had been working for the company, the court found.
The municipality objected to this finding and appealed to the Labour Appeal Court. The matter was heard on March 5 last year, and the court handed down its judgment earlier this month.
The municipality has steadfastly denied that there was a Section 197 transfer, arguing that the service provider was attempting to avoid its financial obligations by transferring the employees.
However its appeal against the Labour Court decision was dismissed by the Labour Appeal Court.
Approached for comment this week on the way forward, the municipality said in a statement that it plans to appeal the judgment.
“On 16 January 2025, the King Cetshwayo District Council deliberated on the implications of the court judgment and resolved to appeal the Labour Court's decision. The effect of an appeal will suspend the immediate implementation of the judgment,” it said.
Leader of the labour union Municipal and Allied Trade Union of South Africa (Matusa), Thulani Ngwenya, said the previous appeal by KCDM was a waste of taxpayers' money.
“Even if they take the matter to the Constitutional Court, the outcome would be the same. They went to the Labour Court, they lost, and went to the Labour Appeal Court and lost. In fact, the Labour Court warned that the chances of success, even if they take the matter to the Constitutional Court, are minimal.”