BUSA’s various attempts to persuade the Minister against these measures and to avoid litigation were unsuccessful, and BUSA ultimately resorted to court proceedings to review and set aside both of the offending regulations. In its judgement the Labour Court declared both regulations to be invalid, and it set them aside with effect from 31 March 2016.
The court found that the Minister of Higher Education had failed to consult the National Skills Authority as required. The court also found that the Minister had acted irrationally by reducing the mandatory grant to employers since this would not assist in achieving the training and education objectives set out in the Skills Development Act. In relation to the sweeping mechanism, the court held that the Minister had exceeded his powers by prescribing that surplus SETA funds be moved to the National Skills Fund. The Skills Development Act did not give the Minister any authority to prescribe that these funds be disposed of in this way.
The order of invalidity has been suspended until 31 March 2016, and the Minister was ordered to pay BUSA’s costs in the application.
This means that SETAs now have a period of approximately six months to prepare for the return to the previous skills funding regime that will be in place when the offending regulations are invalidated.
SEIFSA will communicate further about the precise implications of the judgement on the SETA grant funding regime, so that members can participate actively in the further steps that will be necessary to give effect to the judgment.
The Minister of Higher Education and Training appealed the outcome on 28 August 2015. SEIFSA will keep its members updated with any further developments in the matter.