The National Treasury published the draft General Public Procurement Regulations and draft Public Procurement Tribunal Regulations (“Draft Regulations“) for public comment as contemplated in section 63 of the Public Procurement Act, 2024 (“Act“). The Constitutional Court recently heard a challenge to the Act’s validity. Together, that challenge along with the publication of the Draft Regulations have placed ongoing conversations on the operation of the Act back in the forefront. In this article we draw specific focus on the dispute resolution mechanism contemplated in Chapter 6 of the Act.

The Act introduces a two-layered dispute resolution mechanism which allows bidders to challenge the decision of an organ of state to award a bid to another competing bidder.

The first layer to the dispute resolution mechanism is the internal remedy contemplated in section 35(1) of the Act. In terms of this provision, a bidder aggrieved by the decision of an organ of state may submit, to that organ of state, an application for reconsideration of the award. The application for reconsideration must be submitted within 10 days from the date on which the aggrieved bidder is informed of the decision to award the bid to another competing bidder. Upon receipt of the application for reconsideration, the organ of state has a choice to either: (a) dismiss the application for reconsideration; or (b) immediately institute an internal investigation and inform the bidder of its findings and decision within 30 days.

From our interpretation of the Act, the internal remedy must be complied with if an aggrieved bidder wishes to utilise the dispute resolution mechanism contemplated in the Act. Section 35(1) of the Act must be read together with section 35(2)(a) of the Act. Section 35(2)(a) of the Act expressly provides that a bidder must submit the application for reconsideration before it can approach the Public Procurement Tribunal (“Tribunal“) or a court to review the decision to award a bid. The only circumstance where this peremptory step need not be taken is if there are exceptional circumstances that are in the interests of justice. A failure to follow the process contemplated in section 35(1) of the Act could result in the Tribunal or court directing the aggrieved bidder to first submit the application for reconsideration.

The second layer to the dispute resolution mechanism is found in section 47 of the Act. This section provides that if an aggrieved bidder is not satisfied with the decision on the application for reconsideration, the aggrieved bidder may submit an application for review with the Tribunal. This application for review must be submitted within 10 days from the date on which the aggrieved bidder is informed of the outcome of the application for reconsideration. It is noted that the 10-day period may be extended to 15 days if the application for review raises public interest considerations. Upon receipt of the application for review, the Tribunal has 30 days to make an order (unless an extension has been requested). Once the order has been made, the order of the Tribunal may be judicially reviewed in terms of the Promotion of Administrative Justice Act 3 of 2000 or any applicable law.

At face value, the time periods contemplated in the two-layered dispute resolution mechanism suggest that procurement disputes will be addressed expeditiously. This view is supported by section 51(1)(b) of the Act which states that the Tribunal “must strive to ensure that proceedings are conducted with as little formality and technicality, and as expeditiously as possible…”. While we note that the rules of the Tribunal will only be determined once the Tribunal has been constituted, the framing and operation of the two-layered dispute resolution mechanism and the role of the Tribunal may not presently work as efficiently has contemplated. The unfortunate reality is that procurement law matters in South Africa are rarely matters which can be determined expeditiously or with little formality and technicality, unless the issue is narrow.

Procurement disputes often turn on whether a bid award complied with applicable procurement prescripts. This assessment may include consideration of the information considered by the organ of state at each stage of the procurement cycle and the procedure it followed. Depending on the scale and complexity of the bid, this may also involve reviewing extensive documentation and affidavits either supporting or challenging the impugned decision. This raises questions about whether an aggrieved bidder would have access to all of the documents it requires to support its complaint and whether the matter can be extensively and properly ventilated by the Tribunal within the timelines and format mandated by the Act.

With the above realities in mind, it is our view that the dispute resolution mechanism contemplated in the Act may not achieve its intended objective of expeditious resolution of procurement disputes.  Instead, it will add additional, potentially unsatisfactory, steps before final resolution of the dispute by a court. The question is whether the truncated timelines and informal processes of the Tribunal will assist in any way in reducing the number of procurement disputes which find their way to our courts.  Furthermore, would it not be more efficient for an aggrieved bidder, after exhausting the internal remedy contemplated in section 35(1) of the Act, to approach the court directly to review the award decision, rather than first approaching the Tribunal and thereafter seeking judicial review of the Tribunal’s decision?

Admittedly, an advantage of pursuing the dispute resolution mechanism contemplated in chapter 6 of the Act is the standstill mechanism in section 53 of the Act which by-passes the need for an aggrieved party to obtain an interim court order which prevents the organ of state from taking steps to conclude a contract with the successful bidder until the conclusion of the application for reconsideration and/or the application for review in terms of the Act. Once steps are taken outside of the Act, an interim court order will need to be obtained by the aggrieved bidder unless an agreement is reached with the organ of state.

It may be some time before it becomes clear how the Act’s two-layered dispute resolution mechanism will operate, and whether it will frustrate the resolution of procurement disputes or provide an effective and efficient alternative without overburdening the already constrained court system.

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South Africa is in the midst of what could prove to be one of the most significant reforms of its public procurement framework since democracy. Or it may not be, depending on what the Constitutional Court decides.

The Public Procurement Act 28 of 2024 (“the Act“) was assented to by the President on 18 July 2024 and published in Government Gazette No. 50967 on 23 July 2024, but it is not yet in force. Until it is, procurement decisions remain governed by the Preferential Procurement Policy Framework Act 5 of 2000 (“PPPFA“), the Public Finance Management Act 1 of 1999 and the Municipal Finance Management Act 56 of 2003, including the 90/10 and 80/20 preference point systems set out in section 2 of the PPPFA.

On 16 April 2026, National Treasury published the draft General Public Procurement Regulations, 2026 (“the Regulations“) and draft Public Procurement Tribunal Regulations, 2026, for public comment. The comment period has since been extended to 15 July 2026, which reflects the breadth of what is being proposed.

The new evaluation model

Under the current system, price drives the outcome. A bidder offering the lowest price will often prevail, provided it meets the basic threshold requirements and scores sufficient preference points.

Regulation 25 establishes a mandatory threshold-based model that departs materially from the current system. Procuring institutions must now assign weight across four criteria: capability and capacity to deliver, functionality and technical requirements, preference, and price. The first three criteria are each subject to a mandatory minimum threshold of 70%, and a bidder who fails any one is excluded before price is even considered.

Sections 17 to 19 of the Act reinforce the shift towards a threshold-driven model. Section 17 mandates outright set-asides for designated categories of suppliers; section 18 introduces prequalification thresholds that determine eligibility for participation, and section 19 imposes subcontracting obligations on successful bidders.

For contracts below R20 million, Regulation 56 requires procuring institutions to reserve certain procurement exclusively for identified categories of persons, including black people, black women, women, persons with disabilities, military veterans, youth, and small enterprises within a particular geographical area, provided the bidder demonstrates 100% ownership by that category. Where no qualifying bids are received, the procuring institution must re-advertise the bid or proceed with no preferential procurement, after making reasonable efforts and reporting to the Public Procurement Office and the relevant provincial treasury.

For contracts of R100 million and above, successful bidders must subcontract at least 25% of the total contract value to enterprises 100% owned by South African citizens. Draft Regulation 64 (6) includes a direct payment mechanism: if a supplier defaults on payment to a subcontractor, the procuring institution may pay the subcontractor directly and deduct that amount from what is owed to the supplier.  This is a meaningful protection for smaller businesses historically exposed to delayed or defaulted payments from main contractors, albeit it introduces a new layer of financial risk for suppliers.

Regulation 60 adds a retrospective eligibility requirement. To qualify under section 18, bidders must show that at least 40% of their prior procurement spend was on enterprises that are at least 51% owned and managed by black people, with proof of such compliance. Past procurement behaviour, not just a current B-BBEE certificate, now forms part of eligibility.

The concept of prequalification criteria is, however, not new, having been the subject of the legal challenge launched by Afribusiness, which made its way to the Constitutional Court in Minister of Finance v Afribusiness NPC 2022 (4) SA 362 (CC) against the now repealed 2017 Preferential Procurement Regulations. Prequalification criteria are reintroduced in section 18 which establishes a framework, requiring procuring institutions to apply specified conditions, within prescribed thresholds, to promote the participation of historically disadvantaged groups. These criteria may include minimum requirements for bidders to demonstrate black economic empowerment participation or to subcontract a portion of the contract to qualifying small enterprises, particularly those owned by black people, women, youth, persons with disabilities, and military veterans. The section further provides that bidders who fail to meet these prequalification criteria must be disqualified and obliges procuring institutions to identify opportunities where such measures can support transformation in underrepresented sectors.

The constitutional question mark

The Western Cape Government, joined by the City of Cape Town and amaBhungane, has launched an application in the Constitutional Court for a declaration that the Act is unconstitutional and invalid, on the grounds that Parliament failed to facilitate reasonable public participation on material amendments as required by section 59(1)(a) of the Constitution. The matter was argued before the Constitutional Court on 18 and 19 May 2026.

The challenge is procedural, not substantive in that it targets how the Act was passed, not what it does. The Constitutional Court has long been clear that meaningful public participation in the legislative process is not a formality. In Doctors for Life International v Speaker of the National Assembly 2006 (6) SA 416 (CC), the Court confirmed that a failure to facilitate genuine public involvement can render legislation invalid. If the Court finds that the passage of the Act fell short of that standard, the Act and the draft Regulations will fall with it.  Until then, the Act remains signed, not commenced, and constitutionally contested.

One element likely to survive any outcome is the debarment framework under section 15. A central debarment register will be established and procuring institutions will be required to verify suppliers against the database before awarding contracts, and to ensure that every transaction is digitally traceable.  As the Constitutional Court affirmed in Allpay Consolidated Investment Holdings v CEO, South African Social Security Agency 2014 (1) SA 604 (CC) said, compliance with procurement principles is a constitutional obligation, not a technical exercise. The debarment database will therefore strengthen this obligation.

Notwithstanding the current constitutional challenge, the direction of travel is clear. Whatever the Constitutional Court decides, the policy instinct behind the legislation i.e. tighter entry controls, traceable transactions and accountability for how preference is actually delivered is unlikely to disappear.  A successful challenge would remit the Act back to Parliament for proper public participation and not completely bury the reform agenda.

For businesses bidding in the public sector, the practical message is to prepare now rather than awaiting certainty that may not arrive on a convenient timeline.  Bidders must pressure-test their capability and technical documentation against the 70% thresholds, since these are now pass/fail gates.  In addition, businesses relying on subcontracting models should review payment processes and contractual terms in light of direct payment mechanism, which shifts real financial exposure onto main contractors.  Lastly, any business with a B-BBEE strategy built around point-in-time compliance should start tracking procurement spend given the retrospective threshold under Regulation 60.

One significant tension not resolved by the Regulations is that the measures designed to advance transparency and redress also add layers of threshold compliance, documentation and risk allocation which will likely lengthen procurement timelines, particularly for relatively small bidders without dedicated compliance resources. Whether the trade-off is justified is, in part, what the public comment process is for.

Readers are encouraged to participate in the public comment process before 15 July 2026. Comments can be submitted to DraftGeneralProcurementRegulations@treasury.gov.za.

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Introduction

In this article series, we take a deep dive into the South African Conduct of Financial Institutions (COFI) Bill – a major financial sector regulatory reform – one theme at a time.

COFI was drafted in conjunction with the Financial Sector Regulation Act (FSRA), the two pillars of the Twin Peaks regulatory reform. The Twin Peaks regulatory reform is a response to financial system weaknesses identified by the 2008 Global Financial Crisis, such as the systemic risks of large insurers and inappropriate market conduct practices.

The FSRA has already been implemented. The FSRA introduced the Twin Peaks regulatory framework, bringing into existence two regulators for the industry. The first regulator is the Prudential Authority (PA) responsible for the prudential regulation of financial institutions, while the second is the Financial Sector Conduct Authority (FSCA) responsible for regulating market conduct.

COFI represents a major overhaul of how financial institutions will be regulated in South Africa. Currently, different financial institutions are regulated by different legislation. COFI will involve shifting to a harmonised, principles-based conduct regime focused on customer outcomes, transparency and inclusion. COFI also provides for a single licensing and supervision framework and stronger enforcement and standards across the financial sector. Its implementation will unfold over several years and reshape regulatory expectations for financial institutions and consumers alike.

National Treasury has indicated that COFI will be finalised in 2026. COFI has recently been adop­ted by Cab­inet for sub­mis­sion to Par­lia­ment.

Governance and Accountability: Part 5

In our previous articles, we examined the Purpose and Application of COFI, the Licensing Framework, Consumer Protection and Transparency and the Principles and Conduct Requirements under COFI. In this article, we consider COFI’s approach to governance and accountability and the extent to which COFI seeks to influence not only what financial institutions do, but how they are run.

Conduct as a governance issue
A defining feature of COFI is that it elevates market conduct from a compliance function to a governance responsibility.

Under the current regime, conduct risk is often managed within legal or compliance teams. COFI, however, makes it clear that responsibility for delivering fair customer outcomes rests with the leadership of the institution itself.

This reflects a broader international regulatory trend: poor conduct is increasingly seen not as a failure of rules, but as a failure of governance, oversight and culture.

The role of the “governing body”

COFI places primary responsibility for conduct on an institution’s “governing body”. The governing body is expected to ensure that the institution conducts its business in a manner that delivers fair customer outcomes, oversee the effectiveness of conduct risk management frameworks and embed appropriate policies, processes and controls across the organisation.

This represents a shift from oversight of compliance to active accountability for conduct outcomes.

Conduct culture

COFI introduces a focus on “conduct culture”, being the values, behaviours and incentives that shape how an institution interacts with its customers. Financial institutions will be expected to demonstrate that their culture supports fair treatment of customers, responsible product design and distribution and ethical decision-making at all levels of the organisation.

This will impact expectations pervasively. For example, remuneration structures will need to be reevaluated to ensure that they do not incentivise poor customer outcomes.

Senior management accountability

While COFI does not introduce a formal individual accountability regime equivalent to those seen in some international jurisdictions (such as the United Kingdom’s Senior Managers and Certification Regime), it nonetheless places heightened expectations on senior management.

In practice, this is likely to lead to a more structured allocation of responsibilities within institutions, even if not formally prescribed in the legislation.

Key challenges

While the governance framework under COFI is conceptually aligned with international best practice, it
raises several practical and conceptual challenges.

Concepts such as “conduct culture” and “fair outcomes” are inherently difficult to define, much less measure and evidence. These concepts require institutions to make qualitative judgments about behaviours and outcomes. The reliance on broad, principles-based obligations introduces interpretive uncertainty, (particularly, before any conduct standards are issued – see our article: Principles and Conduct Requirements). In addition, it is unclear how the FSCA and PA will distinguish between genuine conduct failures and reasonable differences in business judgment. This begs the question: Will the emphasis on governing bodies, senior management and conduct culture lead to better customer outcomes on the ground? Without clear guidance on quantifiable outcomes and how they should be assessed and evidenced, there is a possibility that institutions will prioritise regulatory defensibility over substance.

Smaller institutions may face disproportionate challenges in implementing governance frameworks that are sufficiently robust to meet regulatory expectations. Concepts such as a “governing body”, formal conduct risk frameworks and sophisticated monitoring systems may not align neatly with the structures of smaller firms (see our comments about proportionality in our previous article: Purpose and Application). This, in turn, may serve as a disincentive for market entrants, scuppering objectives of inclusivity in the financial services sector.

Practical implications

COFI’s governance requirements will require financial institutions to reassess not only their policies and procedures, but also their decision-making structures and organisational culture.

In preparation, institutions should consider –

• clarifying the roles and responsibilities of boards and senior management;
• strengthening conduct risk governance frameworks;
• reviewing remuneration and incentive structures; and
• ensuring that appropriate management information is available to monitor customer outcomes.

COFI represents a ramping up in accountability. It is not only what a financial institution does that counts, but what its leadership does and what its culture is.

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Business rescue was introduced as a mechanism to rehabilitate financially distressed companies and preserve value. In practice, however, it is often invoked only once liquidation is imminent. This article considers how the defensive use of business rescue, rather than its application as a proactive restructuring tool, materially undermines its prospects of success, with many processes effectively constrained before they begin.

Chapter 6 of the Companies Act 71 of 2008 introduced business rescue as a mechanism to rehabilitate financially distressed companies. Its purpose is clear, to facilitate the restructuring of a company in a manner that allows it to continue operating on a solvent basis or, failing that, to achieve a better return for creditors than immediate liquidation.

In principle, it is a powerful and necessary tool for struggling companies. In practice, however, its effectiveness is often undermined by the circumstances in which it is invoked.

In many cases, by the time business rescue is considered, the business is no longer capable of being rescued. A mechanism built for intervention – not reaction – business rescue is designed to operate at the point of financial distress, not financial collapse.

The statutory framework assumes that, while the company is under pressure, it retains sufficient operational substance and stakeholder confidence to support a restructuring process. The moratorium on creditor claims is not an end in itself; it is a tool to create space within which a viable business rescue plan can be developed and implemented.

Central to this framework is the requirement of the “reasonable prospect of rescue”. This is a substantive threshold. It requires a credible, supportable basis on which the company can be rehabilitated, whether through operational restructuring, the introduction of new capital, or a compromise with creditors. It is not satisfied by the mere hope that conditions might improve.

In the current economic environment, that threshold is increasingly difficult to meet. South African businesses are operating under sustained pressure: elevated interest rates, constrained demand, rising input costs and ongoing infrastructure challenges. In this context, financial distress is often prolonged rather than sudden. Businesses absorb pressure for as long as possible, drawing on facilities, extending creditor terms and reducing internal buffers, while the inevitable is looming.

By the time formal proceedings are considered, the position has often materially deteriorated. Business rescue is therefore frequently initiated not as part of a restructuring strategy, but as a response to imminent liquidation. Its immediate function becomes the moratorium – a means of halting enforcement action and stabilising the position.

This is a fundamental shift. A process intended to enable restructuring becomes, in effect, a defensive measure. Where business rescue is invoked in these circumstances, a critical element is often missing: a realistic pathway to rehabilitation.

The underlying business may no longer be viable on any sustainable basis. Liquidity may be exhausted. Access to additional funding (including post-commencement finance) may be limited or unavailable. Creditor relationships may already be compromised. In these conditions, the business rescue practitioner is required to formulate a restructuring plan within a set of constraints that materially limit its prospects of success.

Where business rescue is initiated early and while the business still retains operational stability, there is scope to intervene meaningfully. Funding can be secured, cost structures adjusted and stakeholder support mobilised. The process functions as intended. Where it is initiated at the point of imminent liquidation, the position is fundamentally different. At that stage, the process becomes a futile exercise, and where the restructuring of the business is left with minimal options. The business rescue practitioner then has the unenviable task of managing a business that has largely exhausted any possibility of it being successfully restructured. Value erosion has already occurred, and the ability to reverse such erosion is limited.

The distinction between those two scenarios is often the difference between a viable business rescue and an inevitable failure.

The defensive use of business rescue also shapes stakeholder behaviour. Creditors are increasingly attuned to proceedings that appear to have been initiated to delay enforcement. Where confidence in the underlying viability of the business is limited, support by stakeholders for the proposed business rescue plan is correspondingly weak.

Funders adopt a similarly cautious approach. Post-commencement finance is, by its nature, risk capital (and often unsecured). It is unlikely to be made available in circumstances where there is no clear and credible restructuring thesis. Without stakeholder alignment, the process becomes self-limiting.

These dynamics are amplified by the current economic environment. Recent increases in input costs (fuel crises) have placed sustained pressure on margins across multiple sectors. At the same time, constrained consumer demand has limited the ability of businesses to pass those costs through. The result is a gradual erosion of profitability and liquidity.

Importantly, this erosion is often not immediately visible. Businesses continue to trade, but with reduced financial flexibility and increasing reliance on short-term measures. It is within this environment that business rescue is increasingly being invoked, not at the point of manageable distress, but at the point where that accumulated pressure becomes unsustainable.

None of this detracts from the value of business rescue as a mechanism. Where it is used as the statute intended, it remains a workable option for a proactive and well-considered restructuring strategy. Business rescue remains one of the most effective mechanisms for preserving value in the South African economy and provides a structured framework within which businesses can reorganise, negotiate with stakeholders and, where necessary, compromise debts and gain access to new capital.

The issue is not the tool. It is the timing and purpose of its use.

Business rescue is too often positioned as a last line of defence. In doing so, it is expected to resolve circumstances that have already progressed beyond the point at which meaningful and successful intervention is possible.

The question is not whether business rescue works. The statutory framework is clear, and where properly applied, it is effective. The question is whether it is being used in the way contemplated by Chapter 6.

When business rescue is deployed as a defence to liquidation, or to frustrate creditors rather than as a considered restructuring mechanism, its prospects of success are inherently limited. In that sense, many business rescues do not fail because the process is flawed. They fail because, by the time they begin, the outcome is already largely determined.

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In Minister of Defence and Military Veterans v Zeal Health Innovations (Pty) Ltd [2026] ZACC 21, the Constitutional Court (“the Court”) clarified the rights of service providers whose contracts with the State are later found to be invalid. As the Court noted in paragraph 47 of its majority judgment, the question concerning how to protect innocent contractors when public contracts are declared invalid is one that arises frequently in South African law.

The background: A familiar problem

Following a procurement process, the Department of Military Veterans (“the Department“) appointed Zeal Health Innovations (Pty) Ltd (“ZHI”) to provide healthcare and wellness services to military veterans for a three-year period between 2015 and 2018 (“the Tender”). ZHI rendered services under the contract for approximately two and a half months, from 1 June to 12 August 2015, and submitted invoices that became due and payable. On 11 August 2015, the Department informed ZHI that it intended to review the procurement process. Acting on this intimation, ZHI in effect suspended all services, except for emergency services, under the contract on 12 August 2015. The Department also refused payment of ZHI’s outstanding invoices, prompting ZHI to institute proceedings for specific performance. The Department, in turn, filed a counter-application to review and set aside the award of the Tender and the contract. The High Court ultimately reviewed and set aside the Tender and the contract, primarily because it exceeded the Department’s approved budget in breach of the statutory requirements contemplated in the Public Finance Management Act 1 of 1999. The High Court nevertheless found that ZHI was blameless in the irregularity and was therefore an innocent contractor. It did not, however, grant relief under section 172(1)(b) of the Constitution, nor did it consider what remedy would be just and equitable to compensate ZHI for the services it had rendered or to protect its position as an innocent contractor.

ZHI appealed to the Supreme Court of Appeal, primarily arguing that the review should have been dismissed. Alternatively, it sought relief under section 172(1)(b), preserving its contractual rights despite the declaration of invalidity. The SCA dismissed the appeal on invalidity. It further held, however, that section 172(1)(b) confers a true discretion to be exercised case by case. Although the contract was invalid, ZHI had rendered services, was not complicit in the irregularities, and had been found to be an innocent party. The SCA therefore held that ZHI was entitled to “payment of any amount it is able to establish.”

On appeal, the central issue before the Constitutional Court was what remedy, if any, is available to an innocent service provider that has performed under a State contract later declared invalid. In particular, and to quote the Constitutional Court, the question before it was: “does the absence of a right to benefit from an unlawful contract amount to an exclusion of such benefit from the exercise by a court of its just and equitable discretion under section 172(1)(b)?”

The Constitutional Court’s approach

The Court confirmed that a just and equitable order under section 172(1)(b) of the Constitution involves the exercise of a judicial discretion, which must be applied judiciously and with regard to the facts of each case. In this matter, several features were relevant to that discretion: ZHI was an innocent party and was not complicit in the Department’s irregularities; for a period of two and a half months it had performed actual services under the contract; it incurred costs in delivering those services and submitted invoices for payment; the Department had approved the invoices and the erstwhile Director-General had approved a memorandum authorising payment to ZHI which was later overturned by the Minister who instructed that ZHI should not be paid; and the Department only challenged the Tender after ZHI had already performed its obligations for a period.

Furthermore, the Court rejected the Department’s contention that ZHI’s recovery should be limited to out-of-pocket expenses without any allowance for profit. The Court correctly affirmed that where an innocent contractor has rendered services pursuant to an invalid contract, the appropriate point of departure is the preservation of accrued contractual rights, as recognised in State Information Technology Agency SOC Ltd v Gijima Holdings (Pty) Ltd 2018 (2) SA 23 (CC).

Mathopo J held that this principle entails that compensation for services actually rendered must be calculated at the contractual rate, which necessarily includes the contractor’s profit margin. In other words, while the contract cannot be enforced in full, an innocent contractor is entitled to be compensated on the agreed terms for the period of actual performance, rather than being confined to mere cost recovery.

Why the judgement matters

The significance of the judgment extends beyond the specific dispute between ZHI and the Department. It provides welcome certainty for businesses that contract with organs of state by confirming that an innocent service provider will not necessarily be deprived of compensation merely because a procurement process and the resultant contract are subsequently declared unlawful.

The Court’s approach recognises an important commercial reality. Service providers frequently invest substantial resources, incur operational costs, and allocate personnel in reliance on contracts awarded by the State. If contractors were restricted to recovering only their out-of-pocket expenses, or worse, left without any remedy at all, the risks associated with doing business with government would increase significantly.

The judgment therefore strikes an appropriate balance between two competing constitutional objectives. On the one hand, it preserves the principle of legality by confirming that unlawful procurement processes cannot simply be validated after the fact. On the other hand, it ensures that the consequences of invalidity do not unfairly prejudice innocent contractors who have acted in good faith and delivered value to the State.

Importantly, the Court’s reasoning also discourages opportunistic conduct by organs of state. State entities cannot readily rely on their own procurement failures as a basis to avoid paying for services they have received and benefited from.

That said, the Court did not afford innocent contractors carte blanche to claim for any period. Rather, a contractor’s entitlement is limited to the period during which services were actually delivered. Importantly, contractors should continue to undertake careful procurement due diligence, as the availability and scope of any remedy will remain dependent on the facts of each case.

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On 12 March 2026, the Minister of Communications and Digital Technologies, Mr Solly Malatsi, published for public comment the Draft Policy Direction on Matters Relevant to Electronic Communications Network Deployment Pursuant to the National Policy on Rapid Deployment of Electronic Communications Networks and Facilities, 2023 (“the Draft Policy”).

The Draft Policy largely concentrates on the rapid deployment of electronic communications facilities with the objectives being to give effect to existing national and sector policy pertaining to access required to use of both public and private land in order to facilitate the rollout of nationwide affordable high-speed broadband networks, it directs the Independent Communications Authority of South Africa (“ICASA“) to review and if necessary, strengthen the Facilities Leasing Regulations promulgated under the Electronic Communications Act, 2005 (“ECA“) having particular regard to:

• the qualifying criteria for licensees who wish to exercise their section 22 rights. As a minimum, ICASA is directed that this qualifying criteria must include that the licensee holds a valid electronic communication network service license and is incompliance with their obligations in accordance with the license; there are no other suitable forms of access requested to the facilities identified; and the requesting licensee has made available to ICASA the location of all of the facilities;
• the determination of essential facilities and the terms on which access to essential facilities will be granted;
• the concept of open access;
• improving the time within which requests must be considered and approved, and agreements finalised by licensees in terms of chapter 8 of the ECA; and
• monitoring, enforcement and implementation of the amended Facilities Leasing Regulations, which shall include the filling of all agreements with ICASA.

The explanatory memorandum to the Draft Policy, in respect of facilities leasing, further records that whilst the Facilities Leasing Regulations have been helpful in facilitating network-sharing and network access to enable competitors to avoid duplicating infrastructure, reducing the strain on the environment and reducing costs, the impact of the Regulations on network deployment and affordable access has not been assessed.

Although ICASA is yet to amend the Facilities Leasing Regulations, on 20 April 2026, the Minister introduced, in the National Assembly, the Electronic Communications Amendment Bill (“Amendment Bill“). In respect to facilities leasing, the Amendment Bill proposes the following amendments to the ECA:

• the addition of “AND WHOLESALE PRICING RULES OR STANDARDS” in the heading of Chapter 8 of the ECA;
• the inclusion in section 43(8) of an obligation on ICASA to prescribe the list of essential facilities within 12 months of the coming into operation of the Amendment Act;
• the amendment of the days provided for in section 43(8A) (b) for licensees receiving requests for leasing facilities to agree on non-discriminatory terms and the conditions for facilities leasing within 60 days and no longer 20 days and where there is a dispute on the non-discriminatory terms, that such conditions be imposed by ICASA within 60 days of receiving notification of the failure to reach an agreement; and
• the review of the Facilities Leasing Regulations at least once every 24 months with due regard to market and legal developments.

Similar to the memorandum to the Draft Policy, the memorandum on the objects of the amendment bill indicates that the Amendment Bill seeks to improve the facilities leasing framework. Hopefully the introduction of the Amendment Bill (and to some extent the Draft Policy) will lead to a more defined process for purposes of implementing section 43 (1) of the ECA read with Regulation 3 of the Facilities Leasing Regulations.

Section 43(1) of the ECA provides an obligation on licensees to, on request, lease electronic communications facilities (i.e. infrastructure) to another licensee (including exemption holders) subject to terms and conditions of an electronic communications facilities lease agreement which the parties must enter into, unless the request is considered unreasonable (often arising from economic or technical feasibility). A clear issue that has arisen is the interpretation of section 43(1) of the ECA relating to which party must initiate the process of facilities leasing and the corresponding rights and/or obligations of the respective parties, namely, the “facilities seeker” and the facilities provider”.

The issue raised above is compounded by the conflicting judgments handed by the Gauteng Division of the High Court, Pretoria in Octotel (Pty) Ltd v Chairperson, Independent Communications Authority of South Africa and Others 2026 JDR 0307 (GP) and Metrofibre Networx (Pty) Ltd v Independent Communications Authority of South Africa and others 2024 JDR 4018 (GP), on the interpretation of the said section insofar as which party must trigger the process, and further on the issue as to whether ownership of the electronic facilities, is an element to be considered in determining the process under section 43(1) of the ECA.

While both of these cases are currently on appeal in the Supreme Court of Appeal, it may have been beneficial for the drafters of the Amendment Bill to use the opportunity to add clarification language in the Amendment Bill which clarifies the interpretative mischief.

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The Labour Appeal Court’s judgment in Machi v Chep SA (Pty) Ltd and Others serves as an important reminder that workplace discipline is concerned with substance rather than technicalities. While employees are entitled to know the case they must meet, disciplinary proceedings are not criminal trials, and imperfectly drafted charges will not necessarily save an employee whose conduct fundamentally undermines the trust relationship.

The employee was employed by Chep as a Senior Human Resources Business Partner. In July 2017, while attending a company event in Cape Town, she requested permission to return early to Durban, explaining that she was feeling unwell and emotionally affected by the recent suspension of a colleague for fraud. Her manager approved the request and she flew back to Durban during normal working hours. However, instead of returning home to recover or reporting back to work, she went directly to the offices of a third-party company, Zala Corporates, where she chaired a disciplinary hearing. She later issued a finding in that matter describing herself as the company’s “HR Director”, despite not being a director or employee of Zala.   Following an investigation, Chep charged her with misconduct and dishonesty. She was ultimately dismissed.

The matter became more complicated at arbitration. The CCMA commissioner found the employee not guilty of the three formal charges contained in the charge sheet. Nevertheless, the commissioner concluded that the evidence revealed what was described as an “unexpressed fourth allegation” – namely that the employee had abused her employer’s trust by obtaining permission to leave a work function on grounds of illness and then performing work for another organisation during company time. The commissioner found that this conduct had destroyed the trust relationship and held the dismissal to be substantively fair, although procedurally unfair.

The employee challenged the award, arguing that the commissioner had improperly created a new charge that did not appear in the disciplinary notice. She contended that once she had been acquitted of the formal charges, the commissioner could not formulate a different basis to justify her dismissal. The Labour Appeal Court disagreed.

The Court held that the commissioner had not invented a new charge at all. Instead, the so-called “unexpressed fourth allegation” was simply a description of the conduct that had always formed the core of the employer’s case. The events of 6 July 2017 constituted a single factual narrative, and the employee had been fully aware throughout the disciplinary hearing and arbitration that her conduct in performing work for another entity after being excused from a company function was central to the allegations against her.

Importantly, the Court reaffirmed that disciplinary charges need not be drafted with technical precision. The real question is whether the employee understood the substance of the allegations and had a fair opportunity to defend herself. An employee suffers prejudice only where they are genuinely unaware of the case they are required to answer. In this instance, the employee had dealt extensively with the allegations during both the disciplinary process and arbitration and could not credibly claim to have been ambushed.

The Court was equally clear on sanction. As a senior HR professional, the employee occupied a position requiring a high degree of integrity, judgment and trust. By claiming to be unwell in order to avoid a work commitment and then undertaking work for another organisation during working hours, she engaged in conduct that struck at the heart of the employment relationship. Her actions were not viewed as a mere technical breach of policy, but as a deliberate and dishonest abuse of trust.

In dismissing the appeal, the Labour Appeal Court confirmed that dishonesty remains one of the most serious forms of workplace misconduct. Where an employee consciously acts in a manner that deceives the employer and undermines the trust relationship, dismissal will often be justified, particularly where the employee occupies a senior or fiduciary position.

The judgment offers a practical lesson for employers. While disciplinary charges should always be drafted carefully, labour tribunals will focus on the substance of the misconduct rather than the technical wording of the charge sheet. Ultimately, trust is the foundation of every employment relationship, and once that trust is deliberately betrayed, even a drafting defect is unlikely to save the employee.

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On 22 May 2026, South Africa’s Information Regulator served an enforcement notice on the Central Johannesburg TVET College after employees’ personal credential verification reports were accidentally emailed to unauthorised staff. The enforcement notice sets a significant precedent: even accidental, purely internal disclosures of personal information to unauthorised parties constitute a “security compromise” under the Protection of Personal Information Act 4 of 2013 (“POPIA“), triggering formal breach notification obligations. This article examines the enforcement notice, analyses its implications under POPIA, compares the position to the GDPR, and offers practical guidance for businesses.

Background

The Central Johannesburg TVET College (the “College“) had been placed under administration to address governance failures, including undisclosed criminal records and conflicts of interest among staff. As part of this process, employees’ personal information was collected to verify their academic qualifications and criminal records. This was done by a service provider preparing Personal Credential Verification Reports (“Verification Reports“). The Acting Chief Financial Officer erroneously included the complainants’ Verification Reports in a folder of finance policies, which was then emailed to unauthorised employees.

The email was recalled and a follow-up was sent alerting staff to the error. An investigation was launched and corrective action was taken against staff who forwarded the document.

The Information Regulator (the “Regulator”) identified three categories of POPIA violation. First, the College had failed to register an information officer or designate deputy information officers, breaching POPIA’s accountability condition (section 8). Second, distribution of the Verification Reports to staff uninvolved in the governance restoration exercise constituted further processing incompatible with the original collection purpose (section 15). Third, the College’s failure to maintain separate files for Verification Reports and finance policies, coupled with its failure to register an information officer, evidenced an absence of organisational controls to prevent unlawful access or processing (section 19). The Regulator found that the accidental internal disclosure triggered POPIA’s security compromise notification obligations under section 22, which the College had failed to discharge.

The Regulator directed the College to: (i) register an information officer and deputy information officers; (ii) formally notify the Regulator and affected data subjects of the compromise; (iii) issue a written apology to the complainants, to be circulated to all staff; (iv) take disciplinary action against the responsible employee; (v) develop and submit a POPIA Compliance Framework; and (vi) conduct staff awareness and training programmes. Failure to comply with an enforcement notice is a criminal offence punishable by a fine of up to R10 million, imprisonment of up to ten years, or both (section 103).

Accidental and Internal Breaches are Security Compromises

The most significant aspect of this enforcement notice is the Regulator’s confirmation that both accidental breaches and internal disclosures fall within the meaning of a “security compromise” for POPIA purposes. Section 22(1) requires a responsible party to notify the Regulator and affected data subjects “where there are reasonable grounds to believe that the personal information of a data subject has been accessed or acquired by any unauthorised person”. The provision does not distinguish between external attackers and internal employees, nor between deliberate and inadvertent disclosures. Any access by a person not authorised to receive the information is sufficient to trigger the obligation.

In the College’s case, the breach was entirely accidental: an employee attached the wrong file to an email, and the recipients were internal staff members, not external third parties. Nevertheless, the Regulator held that this constituted a security compromise triggering POPIA’s notification obligations in full. The College had attempted to mitigate the error by recalling the email, launching an investigation, and alerting employees that the information was not for staff use. However, the Regulator held that these good-faith remedial steps did not absolve the College of its statutory duty to formally notify the Regulator and affected data subjects. The message is clear: informal internal remediation, however swift, is no substitute for formal compliance with POPIA’s security compromise notification requirements.

This interpretation is grounded in the broad language of section 19(1), which requires responsible parties to take “appropriate, reasonable technical and organisational measures” to prevent, among other things, “unlawful access to or processing of personal information”. Read together with section 22, the statutory framework imposes a duty to safeguard personal information against all forms of unauthorised access, whether originating externally or internally, and whether intentional or accidental.

Key Takeaways for Businesses

Organisations must implement robust security measures to protect against both internal and external breaches. This requires both: (i) technological measures, such as access controls and data loss prevention technology; and (ii) organisational measures, such as policies, clear processes, and employee training. As the College’s case demonstrates, something as simple as storing personal information in a separate, access-controlled folder could have prevented the breach entirely.

Businesses should implement appropriate access controls to limit internal exposure to personal information. Personal information should be accessible only to those who require it for the specific purpose for which it was collected. Role-based access controls, file segregation, and clear protocols for handling sensitive documents are essential.

Every organisation should develop and maintain a comprehensive data breach response plan. The College’s experience illustrates that good-faith remedial steps – such as recalling an email and investigating internally – do not satisfy statutory breach notification obligations. A proper response plan should include: clear procedures for identifying and escalating potential security compromises; templates for notification to the Regulator and affected data subjects; designated personnel responsible for managing the response; and defined timelines to ensure notification is made “as soon as reasonably possible” as required by POPIA.

Most importantly, businesses must recognise the obligation to report all breaches to both the Regulator and affected data subjects. Unlike the GDPR, POPIA contains no materiality threshold. Every security compromise, no matter how minor, must be formally notified. Organisations should ensure that staff at all levels understand this obligation and that internal reporting channels are in place to escalate potential breaches promptly to those responsible for regulatory notification.

Conclusion

Although other jurisdictions, such as the EU and UK, also require reporting of internal and accidental breaches, they apply a materiality threshold and only high-risk breaches have to be reported. POPIA contains no such exception. The practical consequence is that private and public bodies under POPIA must report every security compromise, however minor, even a misdirected internal email. This places a considerable administrative burden on responsible parties, and it stretches the Regulator’s finite resources. In the absence of a materiality threshold, there is a real risk that regulatory attention is diverted from serious incidents to trivial ones. Until the legislature revisits this position, however, organisations must comply with the law as it stands.

Responsible parties must treat their data security obligations with the seriousness they demand or face the risk of a simple mistake inviting the full scrutiny of the Regulator, as was unfortunately the case for the College.

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In the judgment of Els v Venter and Another (449/2024) [2025] ZASCA 163 (27 October 2025), the Supreme Court of Appeal (“SCA“) clarified the application of the Consumer Protection Act No 68 of 2008 (“CPA“) to residential leases. In this article we discuss the judgment and our key takeaways.

Background

After emigrating to Australia, the respondents, Mr and Mrs Venter (the “Venters“), leased their Stellenbosch property at De Zalze Winelands Golf Estate, to the appellant, Mr Els, for a period of three years ending on 31 December 2023 (the “first lease“). After the first lease expired, the parties concluded a second lease agreement (the “second lease“) on 4 August 2023 for a further three-year period, commencing on 1 January 2024. The second lease permitted the Venters to terminate the agreement by providing three months’ written notice.

The property was subsequently sold on 19 December 2023, and the Venters issued a termination notice on 21 December 2023 requiring Mr Els to vacate the property by 31 March 2024. Mr Els challenged the termination on the basis that the second lease constituted a fixed-term agreement under the CPA, which could only be terminated by the Venters in the event of his material failure to comply with the lease agreement.

The parties failed to resolve the dispute, and the Venters launched an urgent application in the Cape Town High Court, seeking an order that the second lease was validly terminated and that Mr Els must vacate the property. The High Court agreed with the Venters that the CPA did not apply and ordered Mr Els to vacate by 31 March 2024. Mr Els subsequently took the matter on appeal to the SCA.

Key CPA Terms and Concepts

Before addressing its substantive reasoning, the court considered several key terms and concepts under the CPA. The CPA applies to every “transaction” occurring in South Africa, unless specifically excluded. A “transaction” is defined as a “person acting in the ordinary course of business“, as including, amongst others, (i) an agreement for the supply or potential supply of any goods or services in exchange for consideration, or (ii) the performance of services for or at the direction of a consumer for consideration.

“Service” is in turn defined as including, amongst others, access to or use of any premises or property in terms of a “rental“; whereas a “rental” means an agreement for consideration in the ordinary course of business in terms of which temporary possession of any premises or property is delivered to the consumer; or the right to use any premises or property is granted to the consumer.

The CPA does not define “ordinary course of business“. It does however define “business” as “the continual marketing of any goods or services” and “market” as to “promote or supply any goods or services“.

The Test for the CPA to Apply to a Residential second lease

The SCA held that for the CPA to apply to a residential lease, two requirements must be satisfied. First, the lessor must be in the business of letting or hiring. Second, the lease must be within the lessor’s ordinary course of business, being their normal, routine, or day-to-day business activities, rather than a once-off transaction. Only if both requirements are met will a residential lease constitute a “rental” for CPA purposes, and only then will the lessee be a “consumer“, namely a person to whom “services are marketed in the ordinary course of the supplier’s business“.

Whether a lease is in the lessor’s ordinary course of business is an objective test that depends on the circumstances of each case.

Application to the Facts

The court held that the letting of the property was not in the course of the Venters’ business or trade, let alone in the ordinary course of business. The Venters were not in the business of letting property for consideration: each of them was engaged in their own occupation, and they rented out their family home in South Africa after emigrating. The second lease was therefore an agreement between private individuals and not a commercial letting arrangement.

It followed that, for the purposes of the CPA, the Venters were not “suppliers” as they did not promote or supply any goods or services to consumers. Nor was Mr Els a “consumer” to whom services were marketed in the ordinary course of business.

The court further observed that the second lease was not a fixed-term agreement in terms of the CPA as it exceeded the maximum period of 24 months prescribed in Regulation 5(1) of the Consumer Protection Regulations (the second lease was for 36 months). This meant that Mr Els’s reliance on section 14(2)(b)(ii) of the CPA was misplaced. The section provides that a supplier may only cancel a fixed-term agreement after giving 20 business days’ written notice to the consumer of a material failure to comply with the agreement, and only if the consumer has not rectified the failure within that time. It should be noted, however, that this aspect of the SCA’s reasoning is questionable: if an agreement qualified as a fixed-term agreement but was for a period exceeding 24 months, the more logical conclusion would be that the supplier had contravened the CPA with regard to the length of the agreement, rather than that the agreement ceased to be a fixed-term agreement altogether.

The SCA also bolstered its interpretation by reference to the CPA’s underlying purpose, which it held was to protect the rights of historically disadvantaged persons who are vulnerable to exploitation. The court noted that Mr Els – the Chief Group Economist of Old Mutual – was not a vulnerable, low-income consumer. He had freely concluded the second lease on an equal bargaining footing with the Venters and was fully apprised of the circumstances, including that the second lease would be terminated once the property was sold.

The PIE Issue

Although the SCA dismissed Mr Els’s appeal in the main, it found that the High Court erred in ordering Mr Els to vacate the property by 31 March 2024. This order effectively amounted to an eviction order, which was incompetent because Mr Els was not yet an unlawful occupier under the Prevention of Illegal Eviction from and Unlawful Occupation of Land Act No 19 of 1998 (the “PIE Act“).

More fundamentally, the order cut across the powers conferred upon a court under section 4(7) of the PIE Act, which requires a court to consider whether it is just and equitable to grant an eviction, having regard to all relevant circumstances. The SCA accordingly set aside the High Court’s order in this regard.

Conclusion and Key Takeaways

Save for the setting aside of the High Court’s vacation order, Mr Els’s appeal was dismissed, with costs on the scale as between attorney and own client.

This judgment provides important clarity regarding the application of the CPA to residential leases. The CPA applies only to residential leases that are entered into in the ordinary course of the lessor’s business. Private individuals who let their own property on an occasional basis are unlikely to fall within the Act’s ambit.

Following an objective test, a court will consider not whether the transaction itself is ordinary, but whether it is carried out in the ordinary course of the supplier’s business. The SCA’s interpretation is both practical and sensible: a person in the business of letting property will be required to comply with the CPA (and ensure a lessee is provided with the protections contained in the Act); whereas someone renting out their home is unlikely to the CPA’s stringent obligations.

The SCA also relied on the CPA’s purpose to protect vulnerable and historically disadvantaged consumers and took into account Mr Els’s bargaining power when reaching its decision. We hope that the courts continue to take such a purposive and pragmatic approach to the interpretation of the CPA.

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For many years, workplace bullying occupied an uncomfortable space in South African labour law. Employers recognised the damage it caused, employees experienced its effects, but disciplinary action often struggled to gain traction where misconduct did not fit neatly into traditional categories such as insubordination, harassment, or misconduct. A recent CCMA arbitration award in National Education Health & Allied Workers Union obo Mosimane v University of the Witwatersrand provides a timely reminder that workplace bullying is not merely a management issue – it can justify dismissal where the conduct is sufficiently serious and sustained.

The employee, a Senior Faculty Officer with more than 22 years’ service at the University of the Witwatersrand, was dismissed following numerous complaints from junior colleagues who accused her of bullying, intimidation, victimisation, humiliation and harassment. The allegations painted a troubling picture of a senior employee who repeatedly belittled subordinates, publicly criticised colleagues, withheld training, undermined staff members in front of students and co-workers, and used her position of authority to create a climate of fear.

The employee challenged both the procedural and substantive fairness of her dismissal at the CCMA, seeking reinstatement.

Central to the dispute was Wits University’s bullying policy, which defines bullying as repeated unwanted conduct that humiliates, demeans, lowers self-esteem, creates a hostile environment, or results in an unacceptable working environment. The policy specifically recognises the abuse of power as a hallmark of bullying and acknowledges that such conduct may manifest through intimidation, harassment and interference with a colleague’s ability to perform their work effectively. This is aligned to the Code of Good Practice on the Prevention and Elimination of Harassment in the Workplace, released in 2022.

The evidence presented by the University was extensive. Multiple witnesses testified that the employee routinely shouted at colleagues, publicly embarrassed them, threatened their job security, undermined their competence, and failed to provide adequate training while simultaneously criticising performance shortcomings that arose from that lack of training. Several witnesses described feeling humiliated, intimidated and emotionally distressed by the employee’s conduct. One employee required counselling, while others became visibly emotional when recounting their experiences during the arbitration proceedings.

Significantly, the commissioner found that the evidence revealed a sustained pattern of misconduct rather than isolated incidents. The conduct was directed predominantly at junior employees and was enabled by the employee’s seniority and authority within the faculty. The commissioner concluded that the behaviour caused demonstrable psychological harm, disrupted workplace harmony and created a toxic working environment.

Perhaps more damaging than the misconduct itself was the employee’s response to the allegations. Rather than acknowledging any wrongdoing, she maintained that the complaints were fabricated and advanced a theory that multiple colleagues had conspired to remove her from the workplace. The commissioner rejected this explanation, finding it inherently improbable that several employees would independently manufacture complaints over an extended period.

The award contains particularly strong commentary regarding accountability. The commissioner observed that the employee’s continued denial of the conduct, coupled with attempts to minimise or dismiss the experiences of the complainants, demonstrated a profound lack of insight. Her refusal to accept responsibility, apologise or show remorse was regarded as a significant aggravating factor. Indeed, the commissioner noted that progressive discipline presupposes some appreciation of wrongdoing and a willingness to correct behaviour. In the absence of such insight, corrective discipline serves little purpose.

The commissioner ultimately concluded that dismissal was both procedurally and substantively fair. In doing so, emphasis was placed on the employee’s senior position, the repeated nature of the misconduct, the abuse of authority, the emotional harm suffered by multiple employees, and the complete breakdown of trust resulting from her continued denial and victim-blaming.

The decision sends a clear message to employers and employees alike. Modern workplaces are increasingly focused on psychological safety, dignity and respectful engagement. Bullying is no longer viewed as a personality clash or a management inconvenience. Where a senior employee engages in sustained conduct that humiliates, intimidates or victimises colleagues, particularly where power imbalances are exploited, dismissal may well be an appropriate sanction – even where the employee has lengthy service.

For employers, the case highlights the importance of having robust anti-bullying policies and taking complaints seriously. For employees, especially those in leadership positions, it serves as a stark warning that authority carries responsibility. Leadership by intimidation is not leadership at all – and where workplace toxicity becomes entrenched, the CCMA has shown little hesitation in endorsing dismissal as the appropriate remedy.

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