Prasa to cough up hundreds of millions for breaking wage agreement

play article
Subscribers can listen to this article
Gallo Images/ER Lombard
  • The troubled Passenger Rail Agency (Prasa) has been ordered by a court to pay hundreds of millions to employees.
  • The order follows Prasa's refusal to abide by the terms of an existing wage agreement.
  • Prasa, which has suffered huge operational losses, has asked employees to agree on a payment plan.
  • For more financial news, go to the News24 Business front page.

The Passenger Rail Agency (Prasa), which is under severe financial stress, has been ordered by the Labour Court to pay employees hundreds of millions of rands for failing to honour the wage agreement in 2021. 

The 5% increase will also raise the baseline of the wage bill for 2022/23 by 5%. Prasa's labour costs are in the region of R5.8 billion a year. Last year the agency made an R3.8 billion operational loss.

The increase is payable to members of the United National Transport Union (UNTU), the majority union. But Prasa will find it difficult not to extend the increase to the rest of the bargaining unit. Prasa is also responsible for UNTU's costs.

READ | Transport Minister Fikile Mbalula paints grim picture of Prasa's affairs

A three-year wage agreement for 5% per annum was signed in 2020/21. In March 2021 and 2022, Prasa reneged on the increase. UNTU general secretary Cobus van Rooyen said that the union planned further court action over the 2022/23 year.

The UNTU ruling differed from that made by the Constitutional Court in 2022 after government reneged on a three-year agreement with public servants. The Constitutional Court ruled in its favour and found that the wage agreement was illegal as correct mandating procedures were not followed and the National Treasury had been left out of the loop. The Treasury said that the agreement was unaffordable. 

The court gave Prasa until 3 February to inform UNTU members of the quantum due to them. 

In a letter to members, Van Rooyen said Prasa management had requested to meet with UNTU to discuss a payment plan. 

The battle is won but the war is not over, if Prasa chooses to fight this Labour Court ruling UNTU will continue the fight with great vigour. Furthermore, the failure of Prasa to adhere to the third year of the agreement is already being dealt with by our legal team, and we will keep the members abreast of further development on the fight for the third year increases.
- Cobus van Rooyen

In a statement late Thursday, Prasa confirmed that it would meet the requirements of the order.

"The Remuneration Committee chairperson, advocate Smanga Sethene, will be joined by Prasa management in a meeting with UNTU representatives in the coming week to find an amicable agreement that balances the needs of our employees and the sustainability of the business in the face of inflation and the soaring cost of living."

Prasa said it was confident that a mutually acceptable agreement would be reached. 

We live in a world where facts and fiction get blurred
In times of uncertainty you need journalism you can trust. For 14 free days, you can have access to a world of in-depth analyses, investigative journalism, top opinions and a range of features. Journalism strengthens democracy. Invest in the future today. Thereafter you will be billed R75 per month. You can cancel anytime and if you cancel within 14 days you won't be billed. 
Subscribe to News24
Show Comments ()
Rand - Dollar
Rand - Pound
Rand - Euro
Rand - Aus dollar
Rand - Yen
Brent Crude
Top 40
All Share
Resource 10
Industrial 25
Financial 15
All JSE data delayed by at least 15 minutes Iress logo
Company Snapshot
Editorial feedback and complaints

Contact the public editor with feedback for our journalists, complaints, queries or suggestions about articles on News24.

Government tenders

Find public sector tender opportunities in South Africa here.

Government tenders
This portal provides access to information on all tenders made by all public sector organisations in all spheres of government.
Browse tenders