All Man Labour Services CC v Service Sector Education & Training Authority (JA12/2007) [2008] ZALAC 14; (2009) 30 ILJ 1052 (LAC) (7 November 2008)

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[2008] ZALAC 14
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All Man Labour Services CC v Service Sector Education & Training Authority (JA12/2007) [2008] ZALAC 14; (2009) 30 ILJ 1052 (LAC) (7 November 2008)

IN THE LABOUR APPEAL
COURT OF SOUTH AFRICA
(HELD AT
JOHANNESBURG)
Case No.: JA 12/2007
ALL
MAN LABOUR SERVICES CC Appellant
and
THE SERVICES SECTOR
EDUCATION &
TRAINING
AUTHORITY Respondent
JUDGMENT:
DAVIS
JA:
Introduction
[1] Appellant approached the court
a quo
for an order to
compel respondent to pay monies to it in respect of skills training
on the basis, it alleged, that it was entitled
to a grant.
[2] Respondent had paid the appellant certain monies but declined to
pay the full amount which had been claimed by appellant. Essentially

there were two reasons why the respondent refused, namely:
(i) the amount claimed by appellant did not represent the amount
actually spent by it on training during the year ending 31
March
2003.
the amount claimed by appellant was in respect of training provided
by trainers who were neither accredited nor in the process
of being
accredited by appellant or the South African Qualifications
Authorities.
[3] Appellant’s claim was dismissed by the Labour Court. With the
leave of that Court
,
appellant has approached this court on
appeal.
The Factual Background
[4] Applicant conducted its business in the form of outsourcing of
maintenance services. It is registered in the services sector
as an
employer with the respondent, a so called SETA, established in terms
of section 9 of the Skills Development Act 97 of 1998
(“The Act”).
Appellant is obliged to pay a skills development levy to respondent
in terms of the Act. The levies are payable
in terms of the Skills
Development Levies Act 9 of 1998 and are paid annually to the South
African Revenue Services.
[5] Respondent allocates grants to employers which qualify for such
grants in terms of the Act and Regulations. Respondent introduced
a
quality assurance policy together with certain further criteria which
established the requirements to qualify for such a grant.
These
requirements are neither contained in the Act nor in the Regulations.
[6] In an answering affidavit deposed to by Ms Prelini Kana, the
company secretary of respondent, the reasons for the introduction
of
quality assurance criteria which had to be met before an employer is
entitled to receive a grant, as envisaged in the Act read
with
regulation 6(1) (b) and 6(2) (b), are set out thus:
“In terms of Respondent’s quality assurance criteria, before an
employer
can become entitled to receive the grant envisaged by the SDA and
regulation 6(1)(b) and 6(2)(b) of the Regulations (“
the
implementation grant
”), in addition to the requirements set out
in the aforesaid Regulations, Respondent requires that each
application for an implementation
grant be subjected to the following
criteria and procedure:
STEP 1
An assessment of whether Respondent has jurisdiction to consider a
particular employer’s application for an implementation grant.

This is done upon receipt of the application by determining whether
the applicant concerned is an employer member of Respondent.
STEP 2
An assessment of whether Respondent has received payment of the
skills levy from the employer concerned. This is a three part

process consisting of confirming:-
firstly; whether the skills levy has been paid to SARS;
secondly; whether SARS had transferred this money to the DOL; and
thirdly; whether the DOL has transferred the money to Respondent.
STEP 3
Checking if all the documents required have been duly completed and
attached to the application and have been signed by the relevant

parties.
STEP 4
Determining whether a WSP has been submitted to Respondent and
whether such WSP is approved and in effect at the workplace
concerned.
An employer has one year in which to submit its ATR after submission
and approval of its WSP.
STEP 5
Once Respondent receives an employer’s ATR, Respondent compares
that ATR with the WSP previously received from the employer.
This
process is to ensure that the substantive content of the ATR
reconciles with the substantive of the WSP.
STEP 6
Confirming that the training that an employer provides to its
employees is preformed either by an accredited training provided
or
that the training provider was in the process of obtaining
accreditation at the time of the training. Recognized accreditation

is in terms of any ETQA in turn accredited by SAQA. Accreditation
by Respondent itself, whilst sufficient, is not a prerequisite.
Respondent is audited annually by SAQA. This audit
inter alia
vets Respondent’s quality assurance criteria and particularly the
issue of accreditation of training.
STEP 7
Determining by Respondent of proof of training expenditure.
Where training is purchased by an employer from an external training
provider (as in Applicant’s case) Respondent restricts payment
of
the implementation grant to the lesser of the amount actually spent
by the employer on training or 45% of the total skills levy
paid by
the employer over the relevant period. Accordingly Respondent pays
employers Rand for Rand the moneys spent on training,
subject to a
maximum of 45% of the levy paid by an employer.
Where training is conducted by the employer itself and that employer
is accredited (or in the process of accreditation) in line
with Step
6 above, the employer may ascribe a real monetary value to the cost
of the training conducted and will be entitled to
receive a grant
accordingly.
As a public institution Respondent must also comply with the duties
placed upon it by the PFMA.
[7] Regulation 6(2) (b) requires a body, such as respondent, to pay
to a qualifying employee an amount equal to 45% of the total
levies
paid by such employer in terms of the Skills Development Levy’s
Act. In essence, appellant’s case is that the respondent
has
refused to pay the full amount of the 45% grant to which it was
entitled in terms of the Regulation for the year ending 31
March
2003, the amount being R45 004, 14, which amount was claimed in
terms of an amended notice of motion of 8 April 2005.
[8] The nature of the dispute is framed in two letters, one generated
by appellant’s attorney of 15 March 2004 and a reply thereto
by
respondent of 24 March 2004. On 15 March 2004 appellant’s
attorney wrote claiming the amount of R50 180, 46 (later amended
to
R45 004,14 as I have set out). The letter then continues. “We are
of the opinion that our client complied with all the requirements
in
terms of legislation to be paid in respect of the 45% compulsory
grant. You are hereby notified to pay the shortfall… within
seven
days of this letter failing which our instructions are to seek relief
from the Labour Court in this matter”.
[9] In the reply of 24 March 2004 respondent wrote:
“The policy of the Levies and Grants Division of the Services SETA
with regard to the payment of grants to our member companies
states
that we require proof of accreditation of the training providers used
by our member companies, and further, that the implementation
grant
is limited to 45% of the levies that are paid to SARS.
Disbursement of the implementation grant is calculated on a “rand
for rand” basis, meaning that a member company is reimbursed
for
expenses actually incurred as per proof of expenditure for training,
and implementation of the Workplace Skills Plan. The
expenses
incurred may therefore not be the equivalent of the 45% of the levies
that are paid.
The Services Seta places a strong emphasis on quality assuring the
Workplace Skills Plans and Annual Training Reports that are
submitted
by our members, and we do not advocate the reimbursement of grants on
submission of the documents.”
[10] In addition the letter contained an annexure setting out the
respondent’s policy as at 24 March 2004. In this annexure,
the
following appears:
“You are entitled to a return of 45% of your contribution to
compensate you for money spent when implementing your workplace

skills plan and for staff training you have funded. The
disbursement is limited to the lesser amount of the money spent on
training
or the 45% of skills levies paid to SARS.
The training
providers utilized to do the training should be in the process of
obtaining accreditation and if the skills development
function is
done in-house the training centre must also be in the process of
obtaining accreditation.”
Appellant’s Case
[11] In essence, appellant’s case turns on the question of the
legality of the quality assurance criteria employed by respondent
in
refusing to pay applicant the amount so claimed. Mr Brassey who
appeared on behalf of the appellant, accepted that respondent
can
adopt policies and practices to achieve its objectives but submitted
that such policies and practices had to be compatible
with the
enabling legislation. In his submission, the approach adopted by
respondent in its letter of 24 March 2004 was matter
neither
authorized by the Act nor by the Regulations and, indeed, manifestly
incompatible with this enabling legislation.
[12] In order to understand the import of Mr Brassey’s submissions,
it is necessary to examine certain key provisions of the
Act and the
Regulations.
[13] The purpose of the Act is set out in the long title thereto as
follows:
“To provide an institutional framework to devise and implement
national, sector and work-place strategies
to develop and improve
the skills of the South African workforce
; to integrate those
strategies within the National Qualifications Framework contemplated
in the
South African Qualifications Authority Act, 1995
;
to
provide for learnerships that lead to recognised occupational
qualifications, to provide for the financing of skills development
by
means of a levy-financing scheme and a National Skills Fund
; to
provide for and regulate employment services; and to provide for
matters connected therewith.”
[14] Section 2 of the Act then amplifies on the long title by
setting out the express purpose of the Act:
“Purpose of the Act
The purposes of this Act are –
to develop the skills of the South African workforce –
to improve the quality of life of workers, their prospects of work
and labour mobility;
to improve productivity in the work-place and the competitiveness of
employers;
to increase the levels of investment in education and training
in the labour market and to improve the return on that investment;
to encourage employers –
to use the workplace as an active learning environment;
to provide employees with the opportunities to acquire new
skills;
to provide opportunities for new entrants to the labour market to
gain work experience; and
to employ persons who find it difficult to be employed.
to encourage workers to participate in learnership and other
training programmes;
to improve the employment prospects of persons previously
disadvantaged by unfair discrimination and to redress those
disadvantages
through training and education;
to ensure the quality of education and training in and for the
work place
. …” (my emphasis)
[15] Section 7 of the Act provides for the functions of the body
such as respondent:
“Functions of SETA
A SETA must, in accordance with any requirements that may be
prescribed –
develop a sector skills plan
within the framework of the
national skills development strategy;
implement its sector skills plan by-
…
approving work-place skills plans;
allocating grants in the prescribed manner to employers, education
and training providers and workers; and
monitoring education and training in the sector.
liaise with the National Skills Authority on-
the National Skills Development policy;
the National Skills Development strategy; and
its sector skills plan;
report to the Director –General on –
(i) its income and expenditure and
(ii) the implementation of its sector skills plan;
(k) perform any other duties imposed by this Act or the Skills
Development Levies Act or
consistent with the purposes of
this Act.
A SETA has
–
all such powers are necessary to enable it to perform its duties
referred to in sub-section (1);
and
the other powers conferred on the SETA by this Act or the Skills
Development Levies Act.
A SETA must perform its functions in accordance with this Act, the
Skills Development Levies Act and its constitution. (my emphasis)
[16] Section 36 of the Act permits the Minister of Labour, after
consultation with the National Schools Authority, to make regulations

relating,
inter alia,
to any matter which may or must be
prescribed under this Act. Of particular relevance to the present
application is Regulation
6 which deals with the allocation of grants
by a body such as respondent in the following terms:
“
Allocation of grants by SETA
A SETA must allocate a mandatory grant to an employer if-
the employer has submitted an application for a grant in the form
prescribed in annexure A to the regulations; or
the employer has submitted an application for a grant in the form
prescribed in annexure B to these regulations.
The mandatory grants to be paid by the SETA in terms of
sub-regulation (1)(a) must be equivalent to 15% of the total levies
paid by the employer in terms of section 3(1) of the Skills

Development Levies Act during each financial year; and
sub-regulation (1)(b), must be equivalent to 50% for the 2001/2
financial year and 45% for the 2002/3 and 2003/4 financial
years of
the total levies paid by the employer in terms of section 3(1) of
the Skills Development Levies Act.”
[17] The Regulations include a section entitled “
Skills
Development Regulations
Guidelines”
of which paragraphs 6 and 7 provide:
“The first two grants – for the submission of a work-place skills
plan, and for a subsequent implementation report on the training

provided – must be paid by the relevant SETA as long as an employer
submits the application correctly on time, as assessed by
the
appropriate SETA. The regulations refer to these as mandatory
grants.”
[18] The present dispute concerns the application of Regulation 6(2)
(b). Mr Brassey contrasted this provision with Regulation
6 (3)
which provides:
“A SETA may of any surplus moneys determine and allocate
discretionary
grants to –
(a) an employer if the employer has submitted an application for a
discretionary grant in the form prescribed in Annexure C to
these
Regulations; and
(b) education and training providers and workers if the education and
training providers and workers concerned have submitted an

application for a discretionary grant in the form prescribed in
Annexure D to these Regulations.”
[19] Mr Brassey noted that a body such as respondent was given a
discretion in regard to grants to be paid, but only in terms of

grants made in terms of Regulation 6 (3). By contrast, the grants
which are to be paid in terms of Regulation (6) (2)(b) are
mandatory
grants. In this case, respondent had no discretion to refuse an
award once the criteria set out in the applicable regulation
had been
met.
[20] In short, Mr Brassey submitted that the attempt by respondent to
introduce further requirements in terms of its quality assurance

criteria before a payment could be made out, was
ultra vires
the regulations. He submitted that the Regulations had drawn a
distinction between a mandatory grant and a discretionary grant.

Only in
terms of latter grant, submitted Mr Brassey, could respondent impose
further requirements before making a payment. In this connection,
Mr
Brassey referred to previous Regulations which had been published by
the Minister of Labour in consultation with the National
Skills and
Authority regarding the skills levies to be disbursed by bodies such
as respondent Government Gazette 6729: 7 February
2000. In his
submission, an examination of this set of Regulations, read with the
Regulations which applied to the present dispute,
shows that it had
been the intention of the Minister to ensure that the levy would be
paid out to employers on a mandatory basis
without any further
requirements being imposed by the relevant authority such as
respondent. Thus, so went the argument intention
of the present
Regulations was to provide for mandatory grants which had to be paid
by respondent upon submission of the application
form by a party such
as applicant.
Respondent’s case
[22] In his written heads of argument Mr Marcus, who appeared on
behalf of the respondent, referred to the purpose of the quality

assurance criteria as set out in the answering affidavit, none of
which had been disputed by appellant. The relevant part of the

answering affidavit reads:
“The purpose of these criteria is
inter alia
to:
ensure that the purpose of the SDA, that is, to develop the skills
of the South African workforce, is achieved;
ensure the quality of education and training in and for the
work-place;
prevent fruitless and wasteful expenditure and expenditure not
complying with the operational policies of the SETA;
prevent abuse of and fraud in respect of the skills development
levy/grant system;
monitor education and training in the service sector.”
[23] In Mr Marcus’s submission, if an employer was entitled to
claim implementation grants, irrespective of how much they have
spent
on educational training for their workforce and without any proof of,
or, control in respect of, the quality of the educational
training,
the very purpose of the Act as set out in section 2 of the Act would
have been undermined. Furthermore, submitted Mr
Marcus, a body such
as the respondent would not be able to fulfill its reporting
functions and duties properly nor would it be
able adequately to
develop and implement its sector skills development plan. (Sections
2 and 7 of the Act). Mr Marcus submitted
further that the appellant
had not taken issue with the manner in which the quality assurance
criteria had been formulated or published.
There was no attack on
the contents of the policy which appellant had conceded to be
reasonable. Thus, the appellant had confined
its attacks solely to
the question of the legality of the policy; that is the power of
respondent to impose these criteria. In
his submission, these
criteria were necessary for respondent to implement its statutory
duties.
Evaluation
[24] The policy implemented by respondent must be viewed within the
scope of the
dictum
of the House of Lords in
British Oxygen
v Ministry of Technology
[1970] UKHL 4
;
[1971] AC 610
(HL) which was recently
affirmed by the Supreme Court of Appeal in
Kemp NO v Van Wyk
2005 (6) SA 519
at para 10:
“What the authority must not do is to refuse to listen at all.
But a Ministry of a large authority may have had to deal already
with
a multitude of similar applications and then they will almost
certainly have evolved a policy so precise that it could well
be
called a rule. There can be no objection to that, provided the
authority is always willing to listen to anyone with something
new to
say – of course I did not mean to say that there need be an oral
hearing.”
[25] Nugent JA adds an important gloss in
Kemp
at para
1:”[G]enerally there can be no objection to an official exercising
a discretion in accordance with an existing policy
if he or she is
independently satisfied that the policy is appropriate to the
circumstances of the particular case.”
[26] Respondent was required to process a multitude of similar
applications. It was entitled to develop a policy to deal with

these applications which policy was reduced to a set of quality
assurance criteria. This policy fulfills the very purposes
articulated
in
Kemp’s
case,
supra
.
[27] The fallacy in Mr Brassey’s submission and the concomitant
necessity for the kind of policy which was confirmed by the Supreme

Court of Appeal in
Kemp
supra
is illustrated in an
examination of the application form for the mandatory grant as set
out in Government Gazette 22398 of 22
June 2001. In the
questionnaire provided in the Gazette, a party, such as applicant, is
asked questions such as, name of skills
development facilitator, list
education and training programmes provided, report on training
provided to beneficiaries. Assuming
that an applicant answered that
there was no trainer nor was any training given at all, the question
would arise as to whether
the respondent would be obliged to pay the
mandatory grant to the applicant. Mr Brassey answered in the
affirmative. He submitted
that these questions were designed simply
to gain information on behalf of the respondent so that it could
assess the broad progress
of training under its jurisdiction. There
is no support for this submission in any of the papers placed before
this court.
In addition, this explanation fails to deal with the
problem of a prospective applicant seeking to perpetuate fraud on the
respondent.
Whatever the answers to the questionnaire, on
appellant’s appraoch, respondent would have no power to refuse to
pay the grant.
[28] The preferable answer to the present dispute is to accept that
respondent was entitled to develop a policy to ensure that
grants
administered by it were given to genuine,
bona fide
parties
which complied with a minimum set of requirements in order to be
awarded the mandatory grant. For example, if the application
of a
discretionary grant to an employer is examined it is clear that a
broader discretion is given to the respondent to award such
grants.
In the case of a mandatory grant, however, respondent had to satisfy
itself that training had taken place and that the
training had been
conducted by a recognized trainer. Once these questions had been
adequately answered, there was no scope for
any further discretion on
behalf of the respondent in the award of the necessary grant. This
conclusion finds clear support in
the long standing
dictum
of
Wessels CJ in
City of Cape Town v Claremont Union College
1934
AD 414
at 420-421.
“Now I take it as settled law, as stated by my brother Stratford
in
Johannesburg Municipality v Davies
(1925 AD at p 402), that
what is
reasonably incidental to the proper carrying out of an authorised act
must
be considered as impliedly authorized. …. Courts of law must
consider
the matter from the point of view of reasonableness; they must not
hold
that an act of a Corporation is
ultra vires
upon a narrow
interpretation of
the powers conferred on the Corporation by the statute. They must
look
at all the circumstances, and especially to the consequences of
holding the
act to be
ultra vires
…..
If it is found that in practice a municipality cannot carry out its
functions
in a reasonable manner unless it has a power to decide effectively a
certain matter, then the Court must hold that the Legislature
intended it to
have that power of decision, and the consequences will be that what
it
decides will be
intra vires
and will bind the Council or the
municipality.”
[29] In my view, the criteria developed by respondent represented the
implementation of the kind of policy that was reasonably
incidental
to respondent properly carrying out its statutory functions in terms
of s10 of the Act. It follows from this conclusion
that the
quality assurance criteria enabled respondent to fulfill its
functions under the Act and to ensure that the purposes of
the Act
were properly implemented. Thus, there is no justification for
appellant’s case, that these criteria were
ultra vires
the
Act and Regulations.
[30] For these reasons therefore, the appeal is dismissed with costs.
____________
DAVIS
JA
I
agree
____________
ZONDO
JP
I
agree
____________
LEEUW
JA
Appearances
For
the appellant Advocate M Brassey SC
For
the respondent Advocate G Marcus SC
Date
of Judgement 7 November 2008