14 April 2019

South Africa: Minister Zweli Mkhize On Implications of Constitutional Court Judgement Declaring Declaring Local Government - Municipal Systems Amendment Act, 2011 Invalid

press release

Circular from COGTA Minister Dr Zweli Mkhize on the implications of the Constitutional Court judgement declaring the Local Government: Municipal Systems Amendment Act, 2011 (Act no. 07 of 2011) invalid

1. Pupose of the circular

The purpose is to:

1.1 inform municipalities and provincial departments responsible for local government about the status of the Local Government: Municipal Systems Amendment Act, 2011 (Act No. 7 of 2011) ("hereinafter referred to as the Amendment Act") and implications of the Constitutional Court order in the matter between the South African Municipal Workers' Union v Minister of Co-operative Governance and Traditional Affairs (CCT54/16) [2017] ZACC 7; 2017 (5) BCLR 641 (CC), declaring the Amendment Act unconstitutional and invalid;

1.2 provide progress on measures taken towards correcting the tagging defect as ordered by the Constitutional Court; and

1.3 provide transitional measures to be applied by municipalities until the Local Government: Municipal Systems Amendment Bill, 2019 ("the Amendment Bill") is approved by Parliament and assented to by the President.

2. Background

2.1 The Local Government: Municipal Systems Amendment Act, 2011 (Act No. 7 of 2011) was assented to by the President on 5 July 2011 (the Amendment Act). The South African Municipal Workers' Union (SAMWU) challenged the validity of the Amendment Act in the High Court. Firstly, it contended that the Amendment Act was incorrectly tagged as an ordinary bill not affecting the provinces (section 75 bill), rather than an ordinary bill affecting the provinces (section 76 bill) (procedural challenge). Secondly, SAMWU submitted that section 56A, when read together with the definition of "political office" in section 1, is inconsistent with the Constitution as it amounts to an unjustifiable limitation of a number of rights, including the right to make free political choices as enshrined in section 19(1) of the Constitution (substantive challenge).

2.2 Regarding the procedural challenge, the High Court declared that the Amendment Act is unconstitutional and invalid as it failed to comply with the procedures set out in section 76 of the Constitution. The High Court decided not to make a ruling on the substantive challenge. The matter was referred to the Constitutional Court ("Concourt") for confirmation of the decision of the High Court.

2.3 The Amendment Act was accordingly found to be unconstitutional for want of compliance with section 76 of the Constitution. Having found the Amendment Act to be unconstitutional in its entirety, the Concourt decided not to make a ruling on the substantive challenge, as the success of the procedural challenge was dispositive of the entire matter. The Concourt held that in order to avoid disruption, the declaration of invalidity should operate prospectively, and should be suspended for 24 months to allow the Legislature an opportunity to remedy the defect.

3. Progress toards correcting the taggind defects

3.1 Cabinet approved the reintroduction of the draft Local Government Municipal Systems Amendment Bill ("the Amendment Bill") to Parliament on 5 December 2018. The Amendment Bill and the explanatory memorandum to the Bill were introduced to Parliament on 6 February 2019 in terms of the rules 159(8)(1) (a) and (b) of the Joint Rules of Parliament. The Amendment Bill was referred to the Portfolio Committee for Co-operative Governance and Traditional Affairs of the National Assembly, as well as to the Joint Tagging Mechanism (JTM) for classification in terms of Joint Rule 160. In terms of Joint Rule 154, written views on the classification of the Amendment Bill were submitted to the JTM and the Amendment Bill has been properly tagged as a section 76 Bill.

3.2 Upon receipt of the Amendment Bill, Parliament embarked on stakeholder engagement processes. The engagements referred to above have been suspended due to the upcoming National and Provincial General Elections scheduled to take place on 8 May 2019 and the fact that Parliament would have to be dissolved prior to the elections as the Parliamentary Timetable may not accommodate the speedy passing of the Amendment Bill.

3.3 The Minister filed papers with the Concourt requesting the Concourt to extend the 24-months period with an additional 12 months. The application was heard on 20 March 2019 and was dismissed by the Concourt.

4. Status of the provisions/amendments introduced by the Amendment Act, 2011

4.1 As of 9 March 2019, the Amendment Act has been declared unconstitutional and invalid and that means the Amendment Act, 2011 has become inoperative and cannot be enforced.

4.2 The invalidation of the Amendment Act does not apply to the Local Government: Municipal Systems Act 32 of 2000, including all amendments made prior to 2011 (hereinafter referred to as the principal Act). This means that the principal Act and all amendments made before 2011 remain operative and enforceable.

5. Applicable legislative prescripts considering the invalidity of the Amendment Act, 2011

5.1 In order to determine the legislative prescripts that remain in force after the declaration of unconstitutionality of the Amendment Act, the Department of Cooperative Governance (DCoG) in collaboration with provincial departments responsible for local government, undertook an analysis of the provisions of the Municipal Systems Act and its Regulations that have been affected by the Concourt Judgment and the provisions that remain operative.

5.2 Attached to this Circular as Annexure "A" is a table that reflects the implication of the ConCourt Order on the provisions of the Municipal Systems Act and its Regulations, that were introduced/ amended by the Amendment Act, 2011, as of 9 March 2019.

6. Status of regulations made in terms of Section 72 and 120 of the Municipal Systems Act affecting municipal managers and managers directly accountable to municipal managers

6.1 Regulation 4(6-8), 17, 18 and 20, promulgated in terms of section 72 and 120 of the Systems Act are invalid with effect from 9 March 2019 and therefore may not be enforced by municipalities.

6.2 Sections 72(1)(c), (g), (h), (i) and (j) of the Municipal Systems Act that are not affected by the declaration of unconstitutionality, accordingly authorise the Minister to make regulations or issue guidelines in accordance with section 120 of the Systems Act to regulate or provide for:

(a) the setting of uniform standards for any matter concerning municipal personnel administration;

(b) municipal staff systems and procedures and the matters that must be dealt with in such systems and procedures;

(c) the regulation of remuneration and other conditions of service of staff members of municipalities, including the municipal manager and managers directly accountable to municipal managers;

(d) the development of remuneration grading and incentive frameworks for staff members of municipalities, including the municipal manager and managers directly accountable to municipal managers;

(e) the measuring and evaluation of staff performance, including that of the municipal manager and managers directly accountable to municipal managers; and

(f) a disciplinary code and procedures for municipal managers and managers directly accountable to the municipal managers.

NOTE: The regulations promulgated in terms of the above enabling provisions of the Municipal Systems Act are valid and enforceable by municipalities.

6.3 Local Government: Regulations of Appointment and Conditions of Employment of Senior Managers, 2014

(a) Some provisions of the Local Government: Regulations on Appointment and Conditions of Employment of Senior Managers ("the Appointment Regulations") setting uniform standards for matters concerning municipal personnel administration, systems and procedures including the conditions of employment of municipal managers and managers directly accountable to municipal managers, as envisioned in sections 72(1)(c), (g) and (i) of the Municipal Systems Act. These sections of the Appointment Regulations accordingly remain valid and enforceable and municipalities are legally required to comply therewith after 9 March 2019.

(b) Notwithstanding paragraph (a) above and not unless municipal councils have developed and adopted appropriate policies and procedures contemplated in section 67 of the Municipal Systems Act that are consistent with the uniform standards that were set by the Minister in terms of section 72, municipal councils may as of 9 March 2019 comply with individual regulations or sub-regulations contained in the Appointment Regulations, where such individual regulations or sub-regulations:

(i) refer to any specific section of the Systems Act which was introduced or amended by the Amendment Act, 2011 and which, as of 9 March 2019 have become invalid;

(ii) provide for municipal managers to submit the staff establishment and an accompanying report to the municipal council and/ or provide for the municipal council to approve the staff establishment;

(iii) require municipal councils to report to the MEC for local government on the appointment process and outcome of senior appointments unless directed to do so by the MEC for local government in the relevant province in terms of section 105(2) of the Municipal Systems Act read in conjunction with section 155(6) and (7) of the Constitution of the Republic of South Africa, 1996 ("the Constitution");

(iv) provide for secondments in terms of section 54A(6) of the Systems Act to an extent that this provision is not inconsistent with section 154 of the Constitution; and/ or

(v) re-employment of dismissed persons.

6.4 Upper Limits of Total Remuneration Packages Payable to Municipal Managers and Managers Directly Accountable to Municipal Managers

The Upper Limits of Total Remuneration Packages Payable to Municipal Managers and Managers Directly Accountable to Municipal Managers ("the Upper Limits Notice") deals with the upper limits of total remuneration packages payable to municipal managers and managers directly accountable to municipal managers, as envisioned in sections 72(1)(g) and (i) of the Systems Act. The Upper Limits Notice accordingly remain valid and enforceable and municipalities are required to comply therewith after 9 March 2019.

6.5 Local Government: Municipal Performance Regulations for Municipal Managers and Managers Directly Accountable to Municipal Managers, 2006

The Local Government: Municipal Performance Regulations for Municipal Managers and Managers Directly Accountable to Municipal Managers, 2006 ("the Performance Regulations"), as amended, deals with the measuring and evaluation of the performance of municipal managers and managers directly accountable to municipal managers, as envisioned in section 72(1)(h) of the Municipal Systems Act. The Performance Regulations accordingly remain valid and enforceable and municipalities are required to comply therewith after 9 March 2019.

6.6 Local Government: Disciplinary Regulations for Senior Managers, 2011

The Local Government: Disciplinary Regulations for Senior Managers ("the Disciplinary Regulations") deals with disciplinary measures and the conduct of municipal managers and managers directly accountable to municipal managers, as envisioned in section 72(1)(j) of the Municipal Systems Act. The Disciplinary Regulations accordingly remain valid and enforceable and municipalities are required to comply therewith after 9 March 2019.

6.7 Municipal Regulations on Minimum Competency Levels as amended in 2018, made in terms of the MFMA

The Municipal Regulations on Minimum Competency Levels made in terms of section 168 of the Local Government: Municipal Finance Management Act, 56 of 2003, are unaffected by the invalidity of the Amendment Act, 2011 and remain valid and enforceable. Municipalities are required to comply therewith after 9 March 2019.

7. Transitional Measures

7.1 The implementation of the Amendment Act, 2011 and the Appointment Regulations, 2014, have brought the much vaunted legal certainty and stability in municipalities laying a foundation for basic principles and standards for appointment of senior managers. It is against this backdrop municipal councils are urged to adopt and continue to implement the principles and standards until such time that the Amendment Bill has been approved by Parliament and assented to by the President.

7.2 Recruitment and selection processes to fill vacant senior manager posts which commenced prior to 9 March 2019 must be finalised in compliance with the prevailing legislative provisions at the time that the recruitment process was initiated.

7.3 The Amendment Act, 2011 is invalid from 9 March 2019. However, municipalities must still implement Local Government: Regulations on Appointment and Conditions of Employment of Senior Managers, 2014, except Regulation 4(6-8), 17, 18 and 20, promulgated in terms of section 72 and 120 of the Systems Act.

7.4 Municipalities are encouraged in the spirit of co-operative governance to continue submitting reports on the outcomes of the appointment processes of senior managers for the purpose of monitoring and support by the MEC responsible for Local Government and the Minister of Cooperative Governance and Traditional Affairs.

Issued by: Department of Cooperative Governance

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