The Local Government Bargaining Council has turned down the City's application to be exempted from paying workers' salary increases of 3.5% as per the sector's collective agreement.
And the City has been ordered to pay the salaries of at least 29 655 employees with immediate effect, backdated to July 2021.
The City applied for an exemption from the Salary and Wage Collective Agreement, reached on September 15 on the basis that it had budget constraints.
According to the collective agreement, all employees were to receive an increase of 3.5%, a once off non-pensionable cash allowance of R4000 for those earning a basic salary of up to R12 500, and R3000 for those on a basic salary of R12 501 and upwards with effect from 1 July 2021.
The salary increase would also see the minimum wage payable in the sector increase to R8620 per month.
In its application, the City argued that the wage agreement would cost an additional R477, 47 million.
In defence of the application the City also submitted a long list of service delivery related projects saying it would suffer if the wage agreement was implement as it would use those allocations to meet its "constitutional obligation".
These obligations included:
* 32 housing projects aimed at addressing the shortfall, a further nine are in the tender phase along with 19 projects under construction. A sum of R2.1 billion has been allocated over the medium term to formal housing opportunities and R4 billion to informal settlements.
*R30b earmarked for investment in infrastructure over three financial years 2019 to 2023; R5.7b set aside to increase water supplies; and infrastructure such as road maintenance, at an exteneted cost of R276 million until next year.
The City also argued that due to the Covid -19 pandemic, the grant funding related to Equitable Share and Fuel Levy declined by R287 million for 2021/2022 year, adding that the revenue from rates, water, sanitation and waste disposal also dropped from R38b to 2019/2020 to R37.7b in 2021/2022.
The City also told the bargaining council that its cash reserves were depleted and it had withdrawn R5.3 billion from its capital reserves to meet " ongoing obligations".
In order to "cut costs," the City said froze 1386 posts and saved R378 046 416 had these posts been filled.
However, trade unions Independent Municipal & Allied Trade Union (IMATU) and the South African Municipal Workers’ Union (SAMWU) rejected the City's submission and argued that it had no cash flow problems and had budgeted "sufficient funds" to pay the increases.
IMATU argued the exemption application should be considered in light of the overall interests of the sector, fairness to all parties, and preserving the confidence in the institution of centralised bargaining itself.
The union further argued that the City was "bound" by the agreement and it was represented in the negotiations leading up to the conclusion of the agreement.
The union also also submitted that the City had "ample" cash reserves - quoting R9.3 billion as at end of June last year and a projected R6.1 billion at end July. IMATU rejected the City's argument on Covid-19 as “opportunistic and invalid".
SAMWU also called the application "malicious" and was in "bad faith".
The union said there was no evidence to suggest that the City was in financial distress or could not afford the increase.
The union also rejected the City's argument that it would have to curtail other services to meet the wage agreement as " unjustifiable".
The bargaining council found that the City was able to maintain its assets and that implementing the wage agreement would not necessarily lead to service delivery failures.
"There is no evidence of steps taken to cut costs other than freezing positions," the award read.
It said the City could afford to implement the wage agreement but would have to implement an adjustment budget to provide for additional costs.
"On the City’s own assessment, the budget is fully funded with a cash surplus of R5.7 billion rand. This is sufficient to fund the Wage Agreement which would cost R477.5 million," it said.
Trade union representatives welcomed the decision.
IMATU's regional secretary, Etienne Bruwer, said the union was delighted at the outcome.
SAMWU's Mikel Khumalo said: "We are celebrating the victory.".
City's spokesperson, Luthando Tyhalibongo said the City was studying the panel's outcome.