Newcastle Municipality brought a review application against three respondents (Reverance Sibonele Nzimande, Muzi Obed Shozi, and Bhekani Errol Mswane) following an arbitration proceeding. The matter concerned fixed term employment contracts that were extended. The issue arose as to whether these contract extensions were lawful and whether the arbitrator had properly considered the legality of the extensions. The municipality sought to review the arbitrator's decision on the basis that the extensions were illegal.
The review application was upheld. The court found that the fixed term contracts were illegally extended and set aside the arbitrator's award.
The binding legal principles established are: (1) An arbitrator is not empowered to determine questions of legality - such matters fall outside their jurisdiction; (2) Municipalities and municipal managers are required to develop and adopt appropriate systems and procedures consistent with section 72(1)(c) of the Municipal Systems Act; (3) Fixed term employment contracts in the municipal context cannot be validly extended without compliance with the required statutory systems and procedures - failure to comply renders such extensions illegal; (4) In legality-based reviews, the record to be filed differs from the arbitrator's record and the timing for filing is determined by the facts of each particular matter.
The court made observations regarding the procedural distinctions between legality-based reviews and other types of reviews in labour matters, particularly concerning the nature and timing of the record to be filed. The court noted that these procedural requirements must be understood in the context of the specific grounds of review being pursued.
This case is significant in South African labour and administrative law as it clarifies: (1) the limits of arbitrators' jurisdiction in determining questions of legality; (2) the obligations of municipalities and municipal managers under section 72(1)(c) of the Municipal Systems Act to develop proper systems and procedures for employment matters; (3) the requirements for fixed term contract extensions in the municipal context; and (4) procedural requirements for filing records in legality-based reviews in the Labour Court.