“Discontented with the arbitrator’s award, the unions took it on review to the Labour Court shortly thereafter.  Last week, the Labour Court upheld the arbitrator’s award in favour of Eskom, and dismissed the unions’ application for review.

Had Eskom acceded to these demands, it would have been required to acquire and pay an additional total cost of employment increase of R5.031 billion, R5.7 billion and R2.586 billion respectively.

As Eskom is a regulated entity, any increase in manpower costs can affect its tariff calculation.  Going forward Eskom and its recognised trade unions are required to ensure that the offers they put forward are reasonable and fair for the benefit of employees and the country as a whole”.

Labour Court confirms Eskom’s position for 2013/2014 wage offer: Eskom – 24/12/2016

For a discussion of the judgment see: Interest arbitration in essential services

Further excerpts

The Labour Court has confirmed Eskom’s 2013/14 final offer of 5.6% by upholding the arbitrator’s award to Eskom and dismissing the unions’ application for review.

During the negotiations, Eskom made its final offer across the board, and a range of related increases and benefits to the employees in the bargaining unit for the financial years 2013 and 2014.

A resolution could not be reached as the unions stuck to their average demands – the National Union of Mineworker or NUM (39%), the National Union of Metalworkers of South Africa or NUMSA (44.3%) and Solidarity (20.1%).

Consequently, a deadlock ensued and the matter was referred to the Commission for Conciliation, Mediation and Arbitration (CCMA) for interest arbitration.  The arbitrator in turn ruled that Eskom’s offer was fair and reasonable.  He made a specific mention of the fact that Eskom is funded through regulated revenue.

He took into consideration the fact that acceding to the unions’ demands would have adversely affected Eskom’s revenue stream and potential risk exposure.  Recognising that the fact that the MYPD3 tariff has resulted in a revenue reduction of R225 billion for Eskom over the five-year control period through a combination of costs and disallowances for operating and capital expenditure, as well as the granting of lower return on assets, he accepted that Eskom must control its costs responsibly when faced with certain funding deficits.