National Education Health and Allied Workers Union v Minister of Public Service and Administration and Others; South African Democratic Teachers Union and Others v Department of Public Service and Administration and Others; Public Servants Association and Others v Minister of Public Service and Administration and Others; National Union of Public Service and Allied Workers Union v Minister of Public Service and Administration and Others

Four consolidated applications by public sector trade unions seeking leave to appeal against a Labour Appeal Court judgment that declared clause 3.3 of a 2018 collective wage agreement invalid and unlawful. The collective agreement was concluded between the State and various trade unions through the Public Service Co-ordinating Bargaining Council (PSCBC), providing for salary adjustments over three years (2018-2021). The State implemented increases for the first two years (2018/19 and 2019/20) but refused to implement the final year increase (2020/21) provided in clause 3.3, claiming: (1) the agreement was concluded in violation of regulations 78 and 79 of the Public Service Regulations, which require realistic cost calculations, Treasury approval or written commitment for additional funds, and budget coverage; (2) the agreement conflicted with sections 213, 215, and 216 of the Constitution; and (3) South Africa's deteriorating economic situation and the Covid-19 pandemic made implementation impossible and unaffordable. The unions argued the agreement was valid as Cabinet approved it on 25 April 2018, including the Minister of Finance as a member, and that the State's delay in challenging the agreement (only after performing for two years) precluded it from raising invalidity. The agreement would have cost approximately R30.2 billion more than budgeted, with clause 3.3 accounting for R13.2 billion of that excess.

• Whether the collective agreement was validly concluded despite non-compliance with regulations 78 and 79 of the Public Service Regulations
• Whether Cabinet approval constituted sufficient compliance with the fiscal requirements in regulations 78 and 79
• Whether sections 213, 215 and 216 of the Constitution were breached by concluding the agreement
• Whether the doctrine of estoppel prevents the State from relying on its own non-compliance with regulations
• Whether the State's delay in challenging the collective agreement after two years of performance should preclude it from raising invalidity
• Whether the matter is moot given that the agreement period expired on 31 March 2021
• Whether section 23(5) of the Constitution (right to collective bargaining) requires enforcement of the collective agreement despite procedural invalidity
• What constitutes a just and equitable remedy under section 172(1)(b) of the Constitution in circumstances of invalid collective agreements
• Whether specific performance is an appropriate remedy for an invalid collective agreement

1. Leave to appeal is granted. 2. The appeal is dismissed. 3. There is no order as to costs.

The binding legal principles established are: (1) Collective agreements concluded by the State must comply with mandatory fiscal requirements in regulations 78 and 79 of the Public Service Regulations, read with sections 213, 215, and 216 of the Constitution; (2) These regulatory requirements are jurisdictional prerequisites (conditions precedent) to the Minister's power to conclude collective agreements with financial implications; (3) Cabinet approval of a collective agreement does not constitute compliance with regulations 78 and 79, as Cabinet lacks power to grant approvals required under these regulations - such power is vested specifically in the Minister of Public Service and Administration and National Treasury; (4) Section 92(2) of the Constitution establishes collective political accountability to Parliament but does not bind individual Ministers to Cabinet decisions when exercising their own separate statutory powers and duties; (5) Non-compliance with jurisdictional prerequisites renders a collective agreement invalid and unlawful ab initio (void from the beginning); (6) The doctrine of estoppel cannot be invoked where the party seeking to rely on it had knowledge of the non-compliance with statutory requirements from the outset; (7) Estoppel cannot operate to validate conduct prohibited by law or to circumvent statutory requirements imposed in the public interest; (8) Courts have discretion to condone inordinate delay in challenging the legality of administrative action or agreements where: (a) the prejudice of refusing to adjudicate outweighs prejudice from delay; (b) substantial public funds are at stake; (c) the dispute has polycentric consequences affecting vulnerable populations; (d) refusing to adjudicate would abandon the court's constitutional duty under section 172(1)(a) to declare unconstitutional conduct invalid; (9) Where a collective agreement is void ab initio due to non-compliance with mandatory statutory requirements, it gives rise to no legal obligations and specific performance is not available as a remedy; (10) Under section 172(1)(b), a just and equitable remedy must balance all affected interests, including the State's constitutional obligations to protect vulnerable populations and manage public finances responsibly, not merely the interests of parties to the invalid agreement; (11) National Treasury serves a constitutional function as a "guardrail" ensuring appropriate standards of constitutional governance in financial matters, which cannot be circumvented by other approval mechanisms; (12) The purpose of regulations 78 and 79 is to prevent public funds from being committed through collective agreements without sufficient budgetary provision, and enforcing agreements concluded in violation of these regulations would defeat their purpose.

The Court made several non-binding observations: (1) It was unnecessary to decide whether the State's challenge was a "collateral challenge" exempt from ordinary delay rules or required a review application, as the Court found the delay should be condoned in any event; (2) The Court noted it was unnecessary to decide the broader question of whether public policy prohibits estoppel when its application would produce a result not permitted by law, as estoppel failed on other grounds (knowledge of non-compliance); (3) The Court observed that international law and foreign jurisdictions recognize that public sector wage agreements are subject to fiscal constraints, parliamentary approval, and emergency measures that may freeze increases, though this was not essential to the decision; (4) The Court commented that the distinction between whether legislation is "mandatory" or "directory" is no longer determinative of whether non-compliance results in nullity - the modern approach requires purposive interpretation linking compliance questions to legislative purpose; (5) The Court noted that the applicants' proposal for phased implementation or renegotiation had been "overtaken by events" as new wage negotiations were already underway and the State had opened doors to renegotiation which unions did not pursue; (6) The Court observed that public servants received above-inflation salary increases outperforming the private sector even as others suffered cuts during Covid-19, suggesting disproportionate benefit to a relatively small cohort; (7) The Court commented that enforcing the agreement would amount to the unions being "unjustifiably enriched" having already benefitted from two years of implementation under an invalid agreement; (8) The Court noted that the incorrect figure (R37.8 billion vs R13.2-29 billion) used by the Labour Appeal Court did not materially affect the decision given that any amount in this range would have significant prejudicial budgetary implications; (9) The Court observed that allowing the State to escape obligations could be seen as undermining collective bargaining, but noted this concern was specific to the unusual circumstances of this case involving non-compliance with jurisdictional prerequisites; (10) The Court commented on the "polycentric" nature of the dispute, distinguishing it from bilateral contract disputes like Gijima, noting the far-reaching consequences for public finance, service delivery, and vulnerable populations.

This case is significant for establishing important principles regarding: (1) The binding nature of fiscal compliance requirements in public sector collective bargaining - regulations 78 and 79 create mandatory jurisdictional prerequisites that cannot be circumvented by Cabinet approval or good faith negotiations; (2) The proper interpretation of "mandatory" vs "directory" statutory requirements, moving away from rigid formalism toward purposive interpretation that links compliance to legislative purpose; (3) The limited scope of estoppel against the State when statutory non-compliance is designed to protect the public interest in fiscal management; (4) The balance between workers' section 23 rights to collective bargaining and constitutional imperatives of financial management and accountability under sections 213, 215, and 216; (5) The exercise of judicial discretion to condone delay in legality challenges, particularly where substantial public funds and polycentric consequences are involved; (6) The doctrine that section 92(2) collective Cabinet responsibility does not override individual Ministers' statutory obligations; (7) The principle that courts should not validate conduct that legislation seeks to prevent, even where this causes hardship to innocent parties; (8) The application of section 172(1)(b) just and equitable remedies in the context of invalid public sector agreements, particularly the rejection of specific performance where enforcement would undermine broader constitutional obligations to vulnerable populations; (9) The constitutional framework governing public expenditure and the role of National Treasury as a "guardrail" ensuring constitutional governance; (10) The interpretation that rights accrued under agreements remain enforceable beyond the agreement's termination, addressing mootness concerns. The judgment reinforces the primacy of rule of law and fiscal discipline in public sector labour relations, while acknowledging the tension between honouring collective agreements and protecting the broader public interest in sound financial management, particularly during economic crises.