THE South African Revenue Service (Sars) has abandoned its appeal of the Gauteng High Court, Pretoria judgment ordering the taxman to honour the agreement it entered into with unions, representing its employees to increase their salaries.
This as Sars has failed to honour the three-year wage deal it signed with the Public Servants Association (PSA) and the National Education, Health and Allied Workers' Union (Nehawu) from 2019.
However, the revenue collection entity refused to honour the 2021/22 leg of the agreement despite effecting the increases in 2019/20 and 2020/21, a decision that angered both the PSA and Nehawu.
Sars employees were due to receive salary increases of consumer price index (CPI) plus 2% in April 2021 when CPI was 4.4%.
In July 2021, the PSA approached the high court in a bid to have the agreement declared binding on Sars and its commissioner Edward Kieswetter, and that failure to implement it was in breach of its employees’ contracts. It also breached the ordering for the taxman to implement the 2021/22 salary increases.
In addition, the union, which represents 5 200 of Sars’ nearly 12 500 employees, wanted then finance minister Tito Mboweni to be directed to make the necessary allocation of funds to the taxman to enable it to honour the wage agreement.
In November, Judge Elizabeth Kubushi ruled in the PSA’s favour and declared the implementation of the pay hikes valid and binding and in breach of Sars employees’ contracts, and ordered that the salary increases be implemented.
Sars and Kieswetter’s lawyers, Savage Jooste and Adams Attorneys, later launched their application for leave to appeal Judge Kubushi’s ruling but on December 14 filed a notice of withdrawal of the application for leave to appeal.
”The PSA has already agreed to start constructive engagements early in January 2024 to ensure that payment to members can be effected as quickly as possible,” the union stated, adding that Sars “had made a sober decision when it withdrew its application for leave to appeal.“
In court, Sars blamed Covid-19 for being allocated a limited budget, but Judge Kubushi found that this could not be regarded as a vis major or casus fortuitus (unforeseen and extraordinary accident or circumstances) as its financial woes preceded the pandemic.
”In its own words, Sars states that Covid-19 further exacerbated the precariousness of the public finances, which had already reached an unsustainable position even before the pandemic,” she said in her judgment.
Kieswetter informed the PSA and Nehawu in March 2021 that Sars would not have funds to implement salary increases for the final year of the agreement although this was not yet a final decision, as it still needed to be discussed in its executive committee.
He told the unions at a strategic session that Sars had about R290 million available to fund leave encashment, bursaries, bonus payments and any salary increases.
In April 2021, Sars announced to its staff that it had informed their union representatives about “the unfortunate reality” that it is unable to pay salary increases for 2021/22 due to not receiving the required budget allocation from the National Treasury.