Business Day
BU S I N E S S DAY.CO. Z A
Friday 31 July 2026
Business Law & Tax Review
Sexual harassment law protects men too Court makes it clear that male employees are equally entitled to the protection of their dignity in the workplace establish ongoing prejudice beyond the immediate indignity suffered.
By AUDREY JOHNSON ENS
The labour court has delivered a notable judgment in Easybranch (Pty) Ltd v Sibiya, which is fairly novel insofar as it involves a male employee successfully bringing a claim of sexual harassment against a female superior. In the overwhelming majority of reported harassment cases, it is a female employee who is the complainant and a male colleague or manager who is the alleged perpetrator. This judgment demonstrates, in no uncertain terms, that the protections against sexual harassment in the Employment Equity Act No 55 of 1998 (EEA) are entirely gender-neutral — male employees are equally and fully protected against harassment perpetrated by female colleagues. The judgment also reinforces the obligation on employers to treat complaints of sexual harassment with the gravity they deserve and not to resort to informal resolution mechanisms that are insufficient in the circumstances. On July 10 2024, Angela Evertse-Brown, the employer’s warehouse manager, made a joke comparing the size of fingerettes (small rubber finger covers) to the size of her male subordinate’s penis, in the presence of several female colleagues. The employees present, including Evertse-Brown, laughed. The male employee (the complainant) expressed his dissatisfaction directly to EvertseBrown on the same day for which she immediately and unreservedly apologised. Consequently, the complainant remained absent from work the following day. The employer convened a grievance meeting presided over by an independent chairperson to attempt to resolve the matter. During the meeting, Evertse-Brown apologised again, acknowledged that she had overstepped the mark and undertook not to repeat her conduct. The chairperson made three recommendations, including that the company send a general message to all employees regarding appropriate office behaviour and that it establishes an unbiased forum for grievance submissions. Critically, the complainant was not satisfied with this outcome. He had wanted the employer to take disciplinary action against Evertse-Brown. Less than two weeks after the grievance meeting, he referred an unfair discrimination claim to the CCMA. The CCMA found that the complainant had been unfairly discriminated against as a result of the harassment and ordered the employer to pay him compensation in the amount of R100,000. The court upheld the CCMA arbitrator’s finding that the complainant had been sexually harassed and was therefore subjected to unfair discrimination in terms of section 6(3) of the EEA. In reaching this conclusion, the court applied the definition of sexual harassment as set out in the Code of Good Practice on the Prevention and Elimination of Harassment in the Workplace: The conduct was unwanted — the employer correctly conceded this element. The complainant’s immediate reaction, expressing dissatisfaction, absenting himself from work, and pursuing the matter, demonstrated unequivocally
Key takeaways for employers
123RF — SEREZNIY
that the conduct was unwelcome. The conduct was of a sexual nature — the court rejected the employer’s argument that the joke was not sexual in nature. The remark related directly to the complainant’s genitalia and fell squarely within clause 5.2.5.6 of the code, which provides that verbal conduct in the form of
The court further held that a single incident could constitute sexual harassment if it is sufficiently serious sex-related jokes or insults may constitute sexual harassment. The court held that a reference to a male employee’s private parts is “inherently sexual in nature regardless of the context in which it was uttered or the intention with which it was made”. The conduct impaired the complainant’s dignity — the joke was made by a superior in the presence of multiple female colleagues who laughed, compounding the indignity. The court found that this reduced the complainant’s dignity as an adult male employee and subjected him to ridicule before his peers. Importantly, the court held that a hostile working environment needs not be created “in perpetuity”, it suffices that the conduct impaired the employee’s dignity. The court further held that a single incident could constitute sexual harassment if it is sufficiently serious. The context of this incident met that threshold.
Vicarious liability upheld: the inadequacy of informal resolution Of particular significance to employers is the court’s finding that the employer’s response to the
complaint was inadequate, rendering it vicariously liable in terms of section 60 of the EEA. The court accepted that the employer did take certain steps, it convened a grievance meeting before an independent chairperson, EvertseBrown apologised and recommendations were made. However, the court held that these steps were not sufficient to discharge the employer’s obligations under section 60(2) of the EEA. The court’s reasoning was as follows: The employer treated the matter as a mere interpersonal grievance rather than as a complaint of sexual harassment requiring a response commensurate with the seriousness of such a complaint. The complainant’s expressed desire for disciplinary action was not reflected in the chairperson’s recommendations, and the employer failed to genuinely address his dissatisfaction. Relying on the authority of Motsamai v Everite Building Products (Pty) Ltd (2011) 2 BLLR 144 (LAC), the court held that unless the victim agrees to another form of resolution, the employer should hold a disciplinary hearing against the perpetrator in instances of serious harassment. The employer had not, prior to the incident, taken proactive steps such as implementing a sexual harassment policy, providing training on sexual harassment or creating adequate reporting mechanisms — and accordingly could not rely on the section 60(4) defence. The court did, however, reduce the compensation awarded from R100,000 (about 18 months’ salary) to R25,000 (about four-and-a-half months’ salary), finding the original award to be grossly excessive. In reaching this determination, the court took into account the single and isolated nature of the incident; the immediate and sincere apology offered by Evertse-Brown; that the employer did take some remedial steps even if insufficient; and that the complainant did not
● Male employees are equally protected, even where the perpetrator is female. This judgment confirms that the EEA’s protections are entirely gender neutral. There is nothing in the legislation or the code that limits harassment claims by reference to the gender of either the complainant or the perpetrator. Employers must treat complaints from male employees with the same seriousness and urgency as any other harassment complaint, and guard against any assumption that such claims are inherently less credible or less likely to succeed. ● Informal grievance procedures may not suffice for sexual harassment complaints. Convening a grievance meeting, even one chaired independently, might not discharge an employer’s obligations under section 60. Where the complaint amounts to serious sexual harassment, a formal disciplinary process against the perpetrator is required unless the victim expressly agrees to an alternative resolution. ● Proactive prevention is a prerequisite for the section 60(4) defence. Employers who have not implemented a sexual harassment policy, provided regular training and established accessible reporting mechanisms before an incident occurs will be unable to rely on the statutory defence under section 60(4). These measures must be in place proactively, they cannot be adopted after the fact. ● The complainant’s expressed wishes cannot be ignored. Section 60(2) requires genuine consultation. Where a complainant expressly requests formal disciplinary action and the employer opts for a lesser response without the complainant’s agreement, this will weigh heavily against the employer in any subsequent claim. Easybranch v Sibiya is a clear illustration that sexual harassment protections in our law are not contingent on the gender of the complainant. Male employees are equally entitled to the protection of their dignity in the workplace. Employers must appreciate that where an allegation of sexual harassment arises, regardless of whether it involves a male or female complainant, an informal, conciliatory approach may fall short of the statutory standard. A measured, formal and victim-centred response is required, failing which vicarious liability may follow. Organisations may wish to revisit their workplace harassment frameworks to ensure complaints are addressed promptly, fairly and in accordance with applicable legal requirements.
Employers must treat complaints from male employees with the same seriousness and urgency as any other harassment complaint
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BusinessLaw&Tax
Friday 31 July 2026
Structured self-insurance: a win for Sars, but questions remain Meiring Citrus judgment leaves several questions open, particularly on prescription and causation By ANDRIES MYBURGH, SIMON WEBER & EMILE SWANEPOEL ENS
Recently, the Western Cape High Court in C:Sars v Meiring Citrus (Pty) Ltd (A161/2015) [2026] ZAWCHC, handed down on June 26 2026, overturned an earlier Tax Court decision and disallowed a citrus farmer’s R9.6m income tax deduction for what had been described as an insurance premium. The appeal succeeded and the additional assessment, together with a 10% penalty, was reinstated. Respectfully, the high court’s judgment raises a number of questions that taxpayers and their advisers will want to keep in mind. Meiring Citrus, a citrus farming company, paid R10m (excluding VAT) to Santam under a product marketed as “structured self-insurance” crop cover for a six-month period, with an indemnity limit of R12m. Of this, R400,000 was an underwriting charge; the balance of R9.6m was credited to an “experience account” held in the company’s name. Claims were paid from that account. The account earned interest, could be pledged as security, and the balance was refundable with interest on 30 days’ notice. When the company cancelled in 2021, it received back R11.3m — more than it had paid in. The company claimed the full R10m as a tax deduction in its 2017 return. The SA Revenue Service (Sars) later allowed the R400,000 underwriting charge, leaving only the R9.6m in dispute. Two broad questions arose: first, whether the payment was a deductible expense; and second, whether Sars was entitled to reopen the 2017 assessment after the three-year prescription period had passed.
123RF — REILA1
What the high court decided The high court held that the arrangement was not insurance in the true sense: genuine insurance transfers risk from the insured to the insurer, spread across many policyholders. Here, claims were met out of the company’s own money in the experience account, which came back to it with interest. In substance, the court found, this was closer to an investment or savings arrangement than a transfer of risk. On that basis the R9.6m was not “expenditure actually incurred” for purposes of section 11(a) of the Income Tax Act No. 58 of 1962 (ITA) — the company had merely changed the form in which it held its own money — and, in the alternative, was capital in nature. The court also found that Sars could reopen the assessment despite the three-year period. The core reasoning in relation to section 11(a) is orthodox. Other aspects, however, merit closer attention. The judgment raises three questions: ● (1) Was this a “sham”, or not? Sars expressly confirmed in the Tax Court that it was not, arguing the contract was a sham or “simulated” transaction. Its case was the narrower one that the contract, properly interpreted, did not meet the legal requirements of insurance. The high court’s language, however, moved between two positions: accepting the contract was “not a sham” and the parties intended to operate as written, while also describing the arrangement as “disguised”, “simulated” and “deliberately misleading”. These are difficult to reconcile. A simulation case turns on the parties not intending the contract to operate as written — a factual case that
must be pleaded and proved. It was neither pleaded nor advanced here. The narrower “this is not insurance in law” route did not require the simulation language, and a further court may wish to consider whether that was necessary. ● (2) Prescription and causation
Arrangements under which the bulk of the ‘premium’ is recoverable, earns interest and can be pledged are vulnerable to challenge on deductibility Under section 99(2)(a) of the Tax Administration Act, to reopen a prescribed assessment Sars had to prove not only that the taxpayer made a “misrepresentation” or failed to disclose “material facts”, but that this conduct actually caused Sars’ failure to assess correctly within the three-year window. The burden of proof rested squarely on Sars. Sars closed its case without calling a single witness on this point. In an earlier Supreme Court of Appeal case, Sars discharged a similar burden by leading detailed evidence about how its systems flag returns for audit. Here there was none. The causation finding rested largely on a proposition put to the taxpayer’s accountant, Mr
van Zyl, in cross-examination: that had Sars been given the full contract, it “would have been able to scrutinise” it. There are two difficulties. First, Van Zyl is the taxpayer’s agent, not a Sars official; he was not in a position to say what Sars would have done. When the proposition was put to him, he answered “I do not know”, and the taxpayer’s counsel objected that the question was speculative. Second, the ability to examine a document is not proof that an assessment would in fact have followed within the three-year period. Whether causation was established on this record is likely to be a central issue on any further appeal. ● (3) Does a very small omission matter? The company had also failed to declare R1,197 of notional interest — about 0.02% of its pre-tax profit. The Tax Court, applying the established principle that the law does not concern itself with trifles, held this was not a “material” nondisclosure. The high court disagreed, holding that materiality attaches to the fact omitted rather than the amount, because the interest revealed that the “premium” was earning a return. There is, however, a more fundamental concern. The Tax Court had warned that a taxpayer who simply “gets it wrong” by claiming a deduction that turns out not to be allowable in law does not for that reason alone lose the protection of prescription. If merely claiming an impermissible deduction were enough to reopen an assessment, almost every disallowed deduction could then be recast as a “misrepresentation”. For that reason, the Tax Court distinguished
between a misrepresentation of fact and the expression of a legal opinion, which is what a claim that an amount is deductible really is. The high court, by treating the deduction claim as resting on undisclosed features of the contract, arguably arrives at the very outcome the Tax Court had cautioned against. Whether that can be reconciled with the finality the time limit is designed to provide is likely to be a significant question on further appeal. There is one further dimension that deserves emphasis. On appeal, Sars abandoned its alternative objection based on section 23L(2) of the ITA. Because the appeal succeeded on the more basic point that nothing had truly been “spent”, the high court had no need to consider section 23L(2). On this issue, therefore, it is the Tax Court’s analysis that provides the guidance. Section 23L(2) is a separate hurdle. The Tax Court held that even where an insurance premium clears the usual requirements for deductibility, section 23L(2) denies the deduction to the extent that the premium is not recognised as an expense for accounting purposes under the International Financial Reporting Standards (IFRS). In short, the tax treatment follows the correct accounting treatment. Two features of the Tax Court’s approach are important. First, what matters is the correct accounting treatment, not how the taxpayer recorded the item. Whether the premium is properly an “expense” rather than an “asset” under IFRS is a question of fact, to be established by expert accounting evidence. Second, the burden of proving that the amount qualifies as an expense under IFRS rests on the taxpayer. That burden proved decisive. Neither side led expert accounting evidence, and the Tax Court held that it could not determine the correct IFRS treatment of this unusual arrangement on its own. Because the taxpayer bore the onus and had not discharged it, the Tax Court held that, had Sars been entitled to reopen the assessment, the deduction would in any event have failed on the section 23L(2) ground.
What this means Arrangements under which the bulk of the “premium” is recoverable, earns interest and can be pledged are vulnerable to challenge on deductibility. As the section 23L(2) discussion shows, they may also be vulnerable on a separate accounting-based ground. At the same time, the judgment leaves several questions open, particularly on prescription and causation, where the reasoning departs from the more cautious approach of the Tax Court. Taxpayers currently in dispute over comparable products should watch closely for any further appeal, as the higher courts may yet have the final word on how these principles apply.
The arrangement was not insurance in the true sense: genuine insurance transfers risk from the insured to the insurer, spread across many policyholders
IN YOUR COURT
SCA clarifies Paja’s 180-day review period
I
n a recent unanimous judgment [VAN DER VYVER TRANSPORT (PTY) LTD v MINISTER OF LABOUR & OTHERS [2026] 2 ALL SA 535 (SCA)] handed down by Kganyago AJA, the provisions of Section 7(1) of the Promotion of Administrative Justice Act, 3 of 2000, (Paja) were considered. The matter before the court dealt with the imposition of a higher tariff on the appellant by the third respondent, the Director-General of the labour department, in terms of the Compensation for Occupational Industries and Diseases Act, 1994 (Coida). The appellant engaged over a number of years with the department in an attempt to reduce or remove the loading on the assessment tariff rate. Such attempts were fruitless. The appellant then engaged with the Public Protector, also to no avail. These efforts took place over a period between 2010 and 2019. In November 2020 the appellant brought a review application which application was met with the defence, inter alia, that the application was brought outside the 180-day period required by Section 7(1) of Paja. Section 7(1) of Paja states the following: (1) Any proceedings for judicial review in terms of Section 6(1) must be instituted without unreasonable delay
and not later than 180 days after the date — (a) ..., on which any proceedings instituted in terms of internal remedies as contemplated in sub-section (2)(a) have been concluded; or (b) where no such remedies exist, on which the person concerned was informed of the administrative action, became aware of the action and the reasons for it or might reasonably have been expected to have become aware of the action and the reasons. During the extended period of negotiation and/or submissions to the department, in March 2015 the appellant lodged a complaint with the Public Protector concerning the department’s failure to reconsider the impugned assessment rate. Three years later, after no assistance from the Public Protector, the appellant found itself in an unchanged position. It was advised by a consultant employed by the appellant that it should consider legal action against the department as it was clear that a dead-end had been reached in its efforts to engage the department on the assessed rates. Notwithstanding this advice (given in September 2018), the appellant only brought its review application in May 2020. The appellant submitted that, because it seeks to review a failure to take a decision, it is unclear when the
PETER BLANCKENBERG COLUMNIST
The appellant engaged over a number of years with the department in an attempt to reduce or remove the loading on the assessment tariff rate 180-day period in terms of Section 7(1) of Paja would commence. The court conceded that although there was some force in this submission it cannot be a licence for the appellant to remain supine; that there must be a point at which its inaction should attract the 180-day period. Kganyago AJA found that in the circumstances, the 180-day period
commenced effectively from October 2018 and terminated on or about March 31 2019. That being so, when the review application was brought in May 2020, it should have included an application for an extension of the 180-day period in terms of Section 9 of Paja. In effect, in this regard the Supreme Court of Appeal was considering the import of the words “or might reasonably have been expected to become aware of the action and the reasons”, which appear at the end of Section 7(1)(b) quoted above. Regarding the meaning of those words, it deemed the appellant to have been aware that the 180-day period had commenced effective October 2018 at latest. That being so, the commencement of the review proceedings in November 2020 was considerably later than the prescribed 180-day period, and accordingly required, in terms of Section 9 of Paja, an application for extension of that period. Kganyago AJA set out the requirements of an extension application in terms of Section 9 of Paja. She held that essentially such applications are treated as condonation applications and that the principles relating to condonation applications are trite. In Van Wyk v Unitas Hospital and another [2002] ZACC 24, the principles were restated by the Constitutional
Court as follows: The standard for considering such application is the interests of justice. The interests of justice enquiry encompasses: (1) the nature of the relief sought; (2) the extent and cause of the delay; (3) the effect of the delay on the administration of justice and other litigants; (4) the reasonableness of the explanation for the delay; (5) the importance of the issue to be raised in the intended appeal; and (6) the prospects of success. Further, an application for condonation must provide a full explanation for the delay, covering the entire period of delay and being reasonable. The Supreme Court of Appeal held that the appellant had utterly failed to comply with Section 9 of Paja. In so doing, it had failed to deal with all of the issues raised above, and for that reason alone, the appeal should fail. It referred again to the Constitutional Court case Van Wyk, where it was observed that despite (in that case) there being an important constitutional right of access to information arising, this in itself was no reason to come to the assistance of a litigant who had been dilatory in the conduct of litigation. -Peter Blanckenberg is a Director at Blanckenberg & Associates Inc
BusinessLaw&Tax
Friday 31 July 2026
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King V is not the challenge — board courage to implement it is It’s an opportunity for organisations to assess whether their governance structures support better decision-making By NONHLANHLA SITHOLE PKF Octagon South Africa
South African boards have long had access to world-class governance guidance through the King Codes. The evolution from King IV to King V further strengthens this position by placing greater emphasis on governance outcomes rather than on mechanical compliance. Approving a governance framework is, in many respects, the easy part. The far more difficult question is whether boards have the courage to implement it when it matters most. King V arrives at a time when the governance landscape is evolving, and compliance expectations are expanding rapidly. Organisations face increasingly complex operating environments shaped by geopolitical instability, cyber threats, corruption, artificial intelligence, regulatory scrutiny, climate-related risks and heightened stakeholder expectations. In this environment, governance cannot be merely a compliance exercise conducted around scheduled board meetings. It must become an active leadership discipline. The revised Code reinforces a modern understanding of corporate governance as the exercise of ethical and effective leadership to achieve four interconnected outcomes: an ethical culture, good performance, effective control and organisational legitimacy. Importantly, these outcomes cannot exist in isolation. An ethical culture supports sustainable performance. Effective control strengthens accountability and risk oversight. Organisational legitimacy is earned when stakeholders observe consistent, transparent and responsible leadership. Together, these outcomes build resilience, a
quality increasingly distinguishing organisations that successfully navigate disruption from those that struggle. King V also continues the important shift towards an outcomes-based approach through its “apply and explain” philosophy as opposed to its predecessor “comply or explain”. Governance is no longer measured by whether organisations have adopted identical structures, but by whether their governance arrangements demonstrably deliver appropriate outcomes.
Good governance is not a template The governance model suitable for a multinational listed company will differ significantly from that of a family-owned business, a public entity or a nonprofit organisation. Boards retain flexibility to tailor governance practices to their circumstances, provided they can clearly explain how those practices deliver effective governance outcomes. That flexibility, however, should never be an excuse for inaction. Boards often receive unprecedented volumes of
reports, dashboards, risk assessments and compliance updates. Yet the sheer availability of information can create a false sense of security. Governance becomes focused on monitoring rather than on intervening. The most effective boards will ask whether management is escalating issues early enough. They challenge assumptions before risks materialise. They will examine emerging trends rather than waiting for historical performance indicators. They will encourage constructive dissent and ensure uncomfortable conversations occur in the boardroom rather than after a crisis unfolds in the media or before regulators. The Companies Act already imposes significant fiduciary duties on directors under Section 76, requiring them to act in good faith, for a proper purpose, in the best interests of the company and with the necessary care, skill and diligence. King V strengthens these statutory duties by embedding them within a broader framework of ethical leadership and stakeholder accountability. Legal compliance, therefore, is only the starting point, as true governance requires directors to exercise judgement in uncertain conditions. It may mean making difficult decisions before they become popular, or addressing cultural issues that cannot be measured by financial statements. Asking whether organisational incentives unintentionally encourage unethical behaviour is another attribute needed, as is recognising when short-term commercial success may be masking longer-term governance weaknesses. Perhaps the greatest lesson from recent corporate failures is that governance crises rarely erupt overnight. Warning signs often appear months or even years in advance. Internal audit findings remain unaddressed. Employee concerns are ignored. Risk committees repeatedly escalate
Your employees’ traffic fines just became your problem By JONATHAN GOLDBERG & JOHN BOTHA Global Business Solutions
As of July 1 2026, road traffic offences are no longer just a personal matter between a driver and the Road Traffic Infringement Agency (RTIA). Phase 2 of the Administrative Adjudication of Road Traffic Offences (Aarto) Act has commenced in 60 to 62 municipalities nationwide including Johannesburg, Tshwane, Ekurhuleni, eThekwini, Buffalo City, Nelson Mandela Bay and Mangaung. Only the Western Cape sits outside this rollout, for now.
Why HR should care about traffic law Aarto has the potential to affect your workplace in several respects. The act requires that all vehicle owners keep a record of who was driving their vehicle at the time of an infringement. That means any business with company vehicles, pool cars or staff who drive for work now needs a reliable way to identify the driver and assign liability correctly. Left unmanaged, this exposes employers to fleet disruption, unassigned liability for fines and disciplinary disputes with staff who feel unfairly blamed — or unfairly protected.
The points system: not yet, but coming The good news is that Section 24 of the act, which governs demerit points and licence suspension, has not yet commenced. The points-based penalty regime and full national rollout are earmarked for 2027. What is live now is the administrative infringement and enforcement process itself — notices, nominations and adjudication. That makes this a window and not a deadline crisis. Employers who act now will be ready when the points regime — and the licence suspensions that come with 12 accumulated points — take effect.
Five things to do ● Identify employees who drive for work and the vehicles covered by the policy, including owned, leased, pooled and reimbursed vehicles. ● Appoint an accountable Aarto owner and set up a central register for notices and deadlines. ● Put driver-identification and record-retention systems in place so the right person is nominated, on time. ● Update vehicle, travel and disciplinary policies to require lawful driving and prompt disclosure of infringements. ● Brief managers and drivers now before the first notice arrives.
The bottom line Ultimately, there is risk and liability for businesses under Aarto. A proper understanding of the act — and the policies to back it up — is what protects employers from operational disruption and protects employees from unfair disciplinary outcomes. Organisations that update their policies and build monitoring systems now will face 2027’s national rollout from a position of control. Those that wait will be doing this reactively, one infringement notice at a time.
WHAT CHANGES IS THE WORLD. WHAT REMAINS IS
HER STRENGTH. For generations, women have adapted, led, supported and persevered. This Women’s Month, we recognise the enduring strength that continues to drive progress across every sphere of life.
the same issues. Board papers grow increasingly optimistic despite deteriorating operating conditions. External stakeholders begin to question transparency. None of these events, on its own, constitutes a crisis. Collectively, however, they often reveal organisations that are gradually losing governance discipline. King V challenges boards to rethink these warning signs. Rather than viewing governance as periodic oversight, boards should continuously assess whether their decisions advance the four governance outcomes the Code seeks to achieve. This also requires investment in board capability. Directors must increasingly understand emerging technologies, cyber resilience, ESG considerations, stakeholder expectations, data governance and rapidly evolving regulatory landscapes. Governance expertise is no longer confined to finance and legal disciplines. Modern boards require diverse perspectives to understand interconnected risks across increasingly complex ecosystems. Transitioning from King IV to King V should therefore not be treated as another compliance project or disclosure exercise. Instead, it presents an opportunity for organisations to critically assess whether their governance structures genuinely support better decision-making, stronger accountability and greater resilience. The organisations that will benefit most from King V will not necessarily be those with the longest governance reports or the most comprehensive committee structures. They will be those whose boards consistently demonstrate a willingness to act early, to challenge constructively and to make difficult decisions in pursuit of long-term value creation.
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BusinessLaw&Tax
Friday 31 July 2026
Application ConCourt rules on of EE targets Copyright Amendment Bill in promotion Judgment a decisive step, though skirmishing over terms of implementation remains By JANINE THOMAS ENS
The Constitutional Court’s judgment in ex parte President of the Republic of South Africa: In re Constitutionality of the Copyright Amendment Bill and the Performers’ Protection Amendment Bill (CCT 306/24) [2026] ZACC 26 marks a significant moment in South Africa’s long-running copyright reform process. The Copyright Amendment Bill (CAB) and Performers’ Protection Amendment Bill (PPAB) have been the subject of extensive debate since their introduction into parliament in 2017. The President had declined to accent to them initially in 2019, referred them back to parliament, but despite amendments to the CAB in an attempt to address those concerns, the President remained unconvinced that some of the constitutional reservations had been fully accommodated. Accordingly, the President referred the matter to the Constitutional Court for a decision on their constitutionality under section 79(4)(b) and 84(2)(c) of the constitution of the Republic of South Africa, which judgment was handed down on June 26 2026. The controversy surrounding the bills has always been twofold. On the one hand, supporters of the reform have argued that South Africa’s copyright regime is outdated and that the bills would balance the interests of creators with broader constitutional rights such as education, equality and freedom of expression. On the other hand, opponents have raised concerns that some of the proposed limitations and exceptions, particularly the fair use provisions, weakened copyright protection and created legal uncertainty in South Africa’s creative industry. The President’s referral on the substantive points sought, inter alia, the Constitutional Court’s determination on the constitutionality of Sections 6A, 7A, 8A and 12A-D, 19B and 19C of CAB (and consequently the PPAB’s parallel provisions).
12A-D, 19B and 19C — fair use and exceptions framework The President raised various concerns in respect of the proposed “fair use” and other exceptions to copyright infringement under these sections, including that the provisions might amount to an arbitrary deprivation of property, are in some instances incompatible with international treaties, create uncertainty, exploit the vulnerability of authors and sometimes go further than is necessary. Section 12A, arguably one of the most contentious features of the CAB, moves South African law closer to an open-ended, factor-based fair use model, rather than a closed list for fair dealing purposes, to be applied on a case-by-case basis. S12B and C introduce specific copyright exceptions targeting public interest, such as freedom of expression. The Constitutional Court held that section 12A is constitutional, not vague, can be reasonably applied and developed by the courts and is not arbitrary. Likewise, it found that S12B and C contained internal safeguards to protect against overbroad application, are limited in scope of potential deprivation and, therefore, adequately justified. S12D, which concerns the reproduction of copyright works for educational and academic purposes, limited to noncommercial practices, was found to be unconstitutional insofar as subsections 12D(1)-(5) are concerned on the basis that they constitute an arbitrary deprivation of property under S 25(1). The Constitutional Court held that these subsections go further than is necessary to vindicate the right to education, fail to specify which institutions are proper beneficiaries, lack clear parameters for the exercise of the exception, and disregard the legitimate interests and market of copyright owners. However, the Constitutional Court found subsections 12D(6)-(9) to be constitutional.
decisions
By TALITA LAUBSCHER & NIKITA SOLANKI Bowmans
123RF — NIROWORLD
Section 19B provides general exceptions regarding the protection of computer programs. It permits a person with a right to use a copy of a computer program to observe, study or test the functioning of the program to determine the ideas and principles underlying it, provided this occurs while performing acts the user is already entitled to perform (loading, displaying, executing, transmitting or storing). The Constitutional Court found this provision is not an arbitrary deprivation of property since the copyrighted material is not permitted to be used commercially, but only to promote software interoperability.
South African courts have virtually no domestic precedent on the concept. They will be building a jurisprudence from scratch, guided by section 12A(b) factors S19C provides exceptions relating to education, research and the preservation of cultural heritage by libraries, archives and similar institutions. The Constitutional Court held this section is not vague and it does not constitute an arbitrary deprivation of property, as the limitation it imposes on copyright owners is neither capricious nor unjustified, is rationally connected to the objective of realising the rights to education, research and preservation of cultural heritage, and are clear and specific so that users and copyright owners will know when copyright protections apply.
Sections 6A, 7A and 8A — equitable remuneration/royalty-sharing These sections share a common purpose, namely that where an author has assigned copyright in a work to another person or authorised that person to exploit the work, the assignee or licensee is required to pay the author equitable remuneration or a fair share of the royalty received from exploitation of the work. The remuneration is to be determined by written agreement between the parties or their collecting societies, failing which the matter may be referred to the Intellectual Property Tribunal. The President’s concerns, in principle, were that the amendments could amount to retrospective and arbitrary deprivation of property
as they apply to copyright works assigned prior to the new sections coming into force, reducing what copyright owners were previously entitled to receive from the fruits of their property. The Constitutional Court held that the referral of sections 6A, 7A and 8A as a whole was incompetent on the basis that the initial concerns raised by the President to parliament narrowly related to 6A(7), 7A(7) and 8A(5), and were subsequently addressed by parliament. Therefore, the broader argument that subsection 6A(2) itself operates retrospectively was raised for the first time, which meant that the requirements of section 79 of the constitution were not met. The Constitutional Court declined to entertain the referral of these provisions.
Where to from here? In summary, save for the exception to infringement introduced by the use of copyright materials for educational and academic purposes (which is likely to be remedied by appropriate parliamentary amendments), the court found the remaining provisions to be constitutional, overall favouring the “fair use” approach. While the judgment is a decisive step in the legislative journey of the CAB and PPAB, having cleared South Africa’s copyright reform for enactment, the skirmishing over the terms of implementation remains. Fair use is, by design, a standard rather than a rule, so it demands case-by-case adjudication. South African courts have virtually no domestic precedent on the concept. They will be building a
Opponents have raised concerns that some of the proposed limitations and exceptions, particularly the fair use provisions, weakened copyright protection jurisprudence from scratch, guided by the section 12A(b) factors but without the decades of accumulated case law that gives the US fair use doctrine its predictability. The road ahead remains to be determined, with prospects of prolonged periods of uncertainty in terms of further challenges to the bills as a whole, and in how we shape the doctrine’s contours.
In Solidarity obo Benjamin v Department of Correctional Services and Others, the labour court reviewed and set aside an arbitration award dismissing an employee’s unfair labour practice claim. The dispute concerned circumstances where the department’s selection panel had strongly recommended Benjamin, a person classified as a “coloured female”, for promotion, but the department declined to appoint her on the basis that the appointment would not align with its employment equity (EE) targets. The arbitrator accepted the department’s explanation that its employment equity plan (EEP) focused on national targets (where coloured females were overrepresented at the relevant occupational level). On that basis, the arbitrator concluded that the decision not to appoint Benjamin complied with the department’s EEP and, as such, the failure to appoint Benjamin did not constitute an unfair labour practice. On review, the labour court found that this conclusion was untenable. The court held that Benjamin had established a compelling prima facie case. In particular, she met the requirements of the post, had acted in the post and was still performing the functions associated with the post, was assessed by the selection panel as the best candidate and was strongly recommended for appointment. Further, an authorising official at the department had advised that the employee could be promoted on merit “as there were not suitable candidates found by the panel from the groups lagging behind”. Under cross examination, an HR professional employed at the department agreed that the department’s EEP provides for regional targets in which coloured females were underrepresented at that occupational level. The court concluded that the decision not to promote the employee was irrational, capricious and unfair. In arriving at this decision, the court noted that the department had failed to establish that the person ultimately responsible for the decision considered the strong recommendation of the selection panel and the advice from another authorising official that Benjamin could be appointed. Rather, the evidence suggested that the decision was based solely on numerical EE targets and, moreover, on the application of national targets, despite the fact that the department’s EEP provided for both regional and national EE targets. Significantly, the department also failed to show that, when deciding to re-advertise the post, the department had considered whether there was any realistic prospect of identifying a suitable candidate from an underrepresented group. In the circumstances, the court held that common sense and fairness dictated that numerical targets should have been treated as a neutral factor, with merit becoming the decisive consideration. The court set aside the arbitration award and awarded Benjamin 12 months’ compensation.
Key takeaway This decision is an important lesson for employers when making decisions in line with the objectives of their EEPs. Under the Employment Equity Regulations, 2025 and the sectoral numerical targets, employers are required to include the numerical goals in their EEP to achieve the equitable representation of suitably qualified people from designated groups within each occupational level of the workforce. However, the achievement of these goals cannot be implemented mechanically. Our law requires that decision makers act fairly and rationally. This requires that employers, in making decisions in accordance with their EEPs, consider the full context, including merit, operational realities, recommendations of selection panels and whether EE goals can realistically be achieved through the particular appointment process.
CONSUMER BILLS
Who is a more persuadable judge?
T
here is nothing like professional people for asserting that no artifical intelligence (AI) can do better than they do, usually more driven by ego than outcome. Lawyers are no exception. A recent test by Irish academics is reported as having “revealed” that AI judges would be too open to powers of persuasion, to the extent that they could be talked into a verdict by skilled AI advocates. The researchers conclude that a judge should be open to persuasion but not be too persuadable and that this raises worries about the reliability and fairness of an AI judge. This conclusion would be banal but for the suggestion that human judges will be better. From Roman times the practice of law has recognised the power of advocacy. Universally, writers on access to justice will point out that
the more money you have and the better advocates you can employ, the better your chances in court. The Constitutional Court, when dealing in 1999 with a recusal challenge to their judges for alleged bias, recognised that absolute neutrality on the part of a judicial officer cannot be achieved. Forces that the judges themselves do not recognise and cannot name, tug at them — inherited instincts, traditional beliefs, acquired convictions. The result is a subjective outlook on life and an acquired conception of social needs. Judges may try to see things as objectively as we would like them to, but judges can never see things with any eyes except their own. Likes and dislikes, predilections and prejudices, complex instincts and emotions, and habits and convictions make up the judge, like everybody else. In this country, as in many other
PATRICK BRACHER COLUMNIST
The more money you have and the better advocates you can employ, the better your chances in court places, the judiciary is facing the problem of shortfalls in funding (as our
Chief Justice recently point out), and a lack of judges. This leads to more and more acting judges being appointed, often without any particular qualification for the task, sadly reflected in the judgments. Because of the innate biases we all carry and our own limitations, there is no doubt many judges will be open to persuasion by quality advocacy, which may be bought for a larger sum of money than the other side may afford. The other challenge is that, as AI develops, it can examine the complex history and biases of an individual judge and find out instantly what arguments are most likely to influence them. This is already done in jury selection in the US. A realistic approach is not to rely on the suggestion that an AI judge is more persuadable than a natural person. The solution to massive court backlogs and irreconcilable judgments resulting from
different personal biases is to train AI judges to apply more coherence and direction to thought and action that is more likely to result in a fair outcome. There are ways of training AI judges to eliminate inherited instincts in the way that cannot be done with a human judge. It will be some time before we replace our judges and arbitrators with AI, but there is a lot that can be done at consumer level to create AI-powered dispute resolution methods that can give access to justice from the bottom up at a price that is not unaffordable to ordinary consumers. Like every other question regarding the role of AI as a replacement for human intelligence, a constructive approach recognising the merits of achieving more efficient outcomes must be the aim. -Patrick Bracher (@PBracher1) is a director at Deneys
BusinessLaw&Tax
Friday 31 July 2026
5
Business sales and zero-rated transactions By NYIKO FURUMELE & PETER BLANCKENBERG Blanckenberg & Associates Inc
Value added tax (VAT) is the primary form of taxation that is charged at a standard rate by the South African Revenue Service (Sars) (currently 15% at the time of writing) on the supply of most goods and services. Business enterprises are aware VAT is raised on certain goods and services. However, many business enterprise owners do not realise that VAT is raised on transactions where business owners sell their business enterprises to third parties. In Income Tax Case No 1622 59 SATC 334 1996, the court held that, in respect of sale of business agreements, the intentions of the parties, particularly, in transactions related to the sale of a business, are found in what the parties “agree to and record in the written agreement” between them. In transactions that deal with the sale of a business as a going concern, the sale agreement between the parties must be properly constructed to give effect to the intentions of the parties. In light of the above, the construction of a sale agreement is important because where the agreement meets certain requirements the parties to the transaction may receive certain taxation benefits. Essentially, where a business is sold as a going concern, instead of VAT being payable on the sales transaction at the rate of 15%, the parties to the transaction obtain the benefit of the transaction being subject to a VAT rate of 0%. This form of transaction is known as a zerorated transaction, and such transactions are regulated in terms of section 11 of the Value Added Tax Act 89 of 1991.
When then does a transaction qualify for zero-rating? The issue of zero-rating is dealt with in terms of sections 11(e) and 18A of the VAT Act. For a sale of business as a going concern to qualify for zerorating, the following requirements must be met:
VAT is raised on transactions where business owners sell their business enterprises to third parties ● A written agreement must be entered into between the parties which states that the business is being sold as a going concern; ● The written agreement must provide that the business is intended to be and is in fact an income-earning activity when it is transferred from the seller to the purchaser; ● The assets which are essential for the business’s operations must be transferred by the seller to the purchaser in terms of the agreement of sale; ● The VAT rate of 0% on the sale of business transaction should be agreed to in writing between the parties; and ● Both the seller and the purchaser must be registered for VAT as VAT vendors. Some examples of transactions that might qualify for zero-rating include the sale of a farming operation together with the equipment necessary for running the farm, or the sale of a nonresidential leasing business together with the fixed property used for the operation of such business. However, it is important to note that not all businesses being sold shall qualify for zero-rating. Further, notwithstanding the intention of the parties, the court held in Income Tax Case No 1622 that “whether the disposition is as a going concern or not is a question of hard fact … if what is sold in terms of the agreement amounts as a fact to a disposition as a going concern, then that is what the disposition is”. In short, the consideration of “intention” may be overruled by the “hard facts”. The requirements to qualify for this benefit can be complex — before entering into a transaction of this nature, the parties should consult with an experienced commercial attorney or a registered tax practitioner.
123RF — DESIGNER491
Franchise sector under competition scrutiny Franchisors brace for commission’s wide-ranging market inquiry By HEATHER IRVINE Bowmans
Franchisors and funders of franchises are likely to receive questions from the Competition Commission once it commences a market inquiry into the state of competition in the South African franchising sector. The commission has identified that franchising is a significant feature of the South African economy, with more than 800 franchisor brands, more than 3,500 franchisees and about 30,000 franchise outlets. The draft terms of reference for the inquiry, which were published on June 26, indicate that the commission thinks there may be market features which impede, distort or restrict competition or hinder participation in the franchise sector, including lower levels of entry and participation by small and medium enterprises and historically disadvantaged persons in franchise ownership; perceived power imbalances between franchisors and franchisees; increasing levels of concentration as a result of acquisitions; the native impact of requirements for funding and upfront capital contributions; as well as unfair franchise agreement terms and conditions and information asymmetries. The draft indicates the commission intends to focus on the requirements set by creditors and/or franchisors for access to franchise finance; the nature and impact of franchise agreement terms and related practices on competition and participation; and the extent to which information asymmetries may affect franchisees’ ability to make informed decisions. The commission is likely to focus on franchising in the fast food, construction, automotive, grocery, fuel, health and beauty sectors, as well as in agriculture, mining, manufacturing and industrial services, office buildings, home services, education and learning, retail and direct marketing services. The commission has extensive powers under section 43A-G of the Competition Act to undertake a wide-ranging investigation into whether there is any “feature of a market” which “impedes, distorts or restricts” competition. The commission need not establish the Competition Act has been contravened by any particular companies (for example, by a dominant supplier or buyer abusing its dominance, or a cartel fixing prices). The commission can issue summons to compel companies to produce documents and/or data, and may call witnesses to attend questioning under oath by commission officials. Given how wide the terms of reference for these inquiries typically are, the information or data requested by the commission can be extensive. In several market inquiries to date, the commission has requested company
representatives make presentations and answer questions in sessions which are open to the public (and broadcast on social media) — although the commission cannot compel any company to do so. Companies are entitled to file a confidentiality claim in relation to any documents or data which contain “confidential information”, although the commission tends to take a restrictive approach to these claims and frequently requests companies to waive or reduce their confidentiality claims. Submissions are generally published on the commission’s website, and will form part of the record of the market inquiry in the event of any appeals being lodged. Accordingly, there is a risk that highly sensitive pricing or strategy information may be accessible by trade unions, competitors, other regulators, government departments or customers. This risk needs to be carefully managed throughout.
Whether the tribunal can order any firm to comply with other kinds of commission recommendations remains an important question Amendments to the Competition Act which took effect in 2019 empower the commission to “take action” to “remedy, mitigate or prevent” any adverse effect on competition it has identified, which can include a recommendation to the Competition Tribunal to order a firm to divest of “shares, interest or other assets”. In the context of the online platform market inquiry, for example, the commission recommended online platforms such as Google, Meta, Apple and Booking.com change their prices and contractual terms, and adjust how they presented their services to consumers. In the media market inquiry, the commission negotiated with Google and YouTube to fund a R688m media support package. One of the main priorities for firms drawn into a market inquiry is accordingly to limit the scale, scope and costs of any “remedies” or commitments which may be required. It is important for companies to anticipate potential spend commitments arising from a market inquiry, since these may potentially impose complex and/or costly long-term obligations on the business. It is advisable to give consideration early in the process to whether there are
opportunities to proactively engage with the commission on appropriate measures to support participation by small businesses and promote transformation in a manner which aligns with the company’s strategy, as well as its budget. However, the extent to which the commission can actually enforce its recommendations remains unclear. Following a challenge by African Rainbow Capital in relation to the fresh produce market inquiry report, the Competition Tribunal held that the commission has no power to order any form to implement a divestiture — only the tribunal can do this. Whether the tribunal can order any firm to comply with other kinds of commission recommendations remains an important question on which the Competition Appeal Court (or the high court) has yet to deliberate. Given that these inquiries are a form of administrative action by the commission, and impact on the constitutional rights of affected persons, it seems likely that the Constitutional Court will eventually be called on to determine the scope of the tribunal’s powers. The commission also has the power to recommend “new or amended policy, legislation or regulations”. In the media inquiry, for example, the commission recommended the department of communications & digital technologies develop content-moderation regulations under the Electronic Communications and Transactions Act, introducing self-regulation frameworks for social media platforms and establishing an independent social media ombud to oversee public complaints and moderation practices. Generally, recommendations of this nature can only be implemented though new or amended legislation, which would have to follow the usual parliamentary process. The commission can also initiate new investigations into complaints about anticompetitive conduct which contravenes the act, or even refer complaints about this directly to the tribunal for adjudication. Franchisors and funders of franchises — particularly in the sectors identified by the commission in the draft terms of reference — should begin reviewing their compliance with the Competition Act and preparing their legal and economic submissions as soon as possible.
The commission can initiate new investigations into complaints about anticompetitive conduct which contravenes the act