Cash-Strapped Eastern Cape Municipality Wins Breathing Room in Labour Dispute

Labour Court allows Ngqushwa Local Municipality to delay payment as it appeals employee reinstatement

In a small but significant legal victory, Ngqushwa Local Municipality in the Eastern Cape has avoided a potentially devastating R700,000 payout, at least for now.

On Tuesday, the Labour Court in Gqeberha ruled in favour of the financially struggling municipality, granting it permission to delay payment of R700,152 to former employee B Mangesi while it continues its court battle to overturn an arbitration award ordering his reinstatement and backpay.

Inside the Dispute: A Battle Over Reinstatement and Backpay

At the heart of the matter is a May 2025 arbitration award that reinstated Mangesi—represented by the South African Municipal Workers’ Union (Samwu) and ordered the municipality to pay him over R700,000 in backpay. The award took effect on 26 May, and the payout deadline was set for 23 May.

Rather than comply immediately, the municipality filed a timely review application on 20 May, also indicating it would request a stay of enforcement and permission to offer reduced security, a move Judge Coen De Kock would later praise for its foresight.

A Race Against Time and Rising Pressure

The situation escalated when the municipality was formally served with the certified arbitration award on 18 June. By 19 June, it had put forward R150,000 as security, far below the standard 24 months’ salary, citing financial strain. Its lawyers also asked Mangesi’s legal team to hold off on enforcement.

But the clock ticked past the seven-day response window with silence. Then came the curt reply: the municipality could take its chances in court.

Facing the real threat of asset seizure or auctioning below market value, the municipality rushed back to court, arguing that the enforcement could cripple its service delivery obligations.

Labour Court: Urgency Was Real, Not Self-Made

Judge De Kock agreed. In a sharply reasoned judgment, he emphasised that the municipality’s urgency was genuine, not self-created.

“This court commends the applicant’s actions in anticipating the need for a stay and security exemption,” De Kock stated, underlining that the municipality had been methodical, not reckless.

He also accepted the reduced security amount of R150,000, citing section 145(7) of the Labour Relations Act, which allows flexibility in what financially distressed applicants must provide. The judge acknowledged the municipality’s detailed financial analysis and its constitutional duty under section 152(1)(b) to deliver basic services.

Balancing Workers’ Rights with Public Impact

While the court acknowledged the importance of protecting workers’ rights and arbitration rulings, it drew a line when enforcement risked gutting essential local services. If the municipality were forced to pay now, it could face asset seizures that would disrupt everything from waste collection to community safety.

Judge De Kock’s ruling carries no order as to costs, a quiet nod to the understanding that both parties are operating under financial and institutional strain.

Local Reaction: Sympathy, Skepticism, and Service Delivery Woes

The ruling has stirred a mixed reaction on social media and in local circles.

Some community members voiced sympathy with the municipality’s financial position. “How are they supposed to pay this and still fix our roads or collect garbage?” one user asked on Facebook.

Others, particularly from labour and union-linked circles, saw the decision as yet another delay tactic. “When municipalities can just stall and lowball on backpay, it weakens the entire arbitration process,” tweeted one Samwu affiliate.

Bigger Picture: A Warning Bell for Local Governance

Ngqushwa is one of many small municipalities in South Africa wrestling with financial strain, service delivery protests, and labour tensions. This case underscores just how fine the line is between legal compliance and operational collapse in these local governments.

The final outcome of the review application remains to be seen. If the Labour Court ultimately upholds the arbitration award, Ngqushwa will need to find the full R700k or face enforcement after all.

For now, the municipality can breathe. But the clock is still ticking.

{Source: The Citizen}

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