Court case highlights inequities in South Africa's security industry

IN a watershed moment for South Africa’s private security business, The Association of Private Security Owners of SA (Tapsosa) took its struggle for equity and inclusiveness to the Labour Court.

The case, which began in late 2023 and involves claims of systemic exclusion, is not just about compliance or governance; it is a war for the soul of a sector that employs more than 800 000 people and is crucial to the country’s security sector.

Tapsosa’s case, heard before the Labour Court in November 2023, exposed the deep-rooted flaws within the Private Security Sector Provident Fund (PSSPF), which controls billions of rand in retirement savings for private security workers.

The association argued that the fund’s trustees, many of whom are not directly employed by or shareholders in security companies, have consistently prioritised the interests of a select few at the expense of the majority. This, Tapsosa contended, led to the marginalisation of black-owned and emerging businesses as well as the exploitation of workers.

The court heard how the PSSPF’s trustees, allegedly influenced by organisations like the SA National Security Employers Association (Sansea) and the Security Association of SA (Sasa), have used the fund as a tool to target black-owned companies.

One of the most damning allegations was that the fund’s resources were being used to support legal actions against black-owned businesses that had won tenders, effectively stifling competition and perpetuating economic inequality.

The Labour Court’s findings, delivered in December 2023, painted a grim picture of the PSSPF’s operations. The court noted that the fund’s trustees had failed in their fiduciary duties, particularly in ensuring that the procurement of service providers was done in a cost-effective and transparent manner.

The court also highlighted the lack of democratic representation in the appointment of trustees, with black employers and workers largely excluded from the decision-making process.

One of the most shocking revelations was the misuse of member funds to pay for extravagant expenses, including luxury travel and entertainment for trustees. The court found that these practices not only breached the Pension Funds Act but also eroded the trust of members, many of whom are low-paid security workers struggling to make ends meet.

Tapsosa’s case is not an isolated incident but part of a broader crisis in South Africa’s private security sector. According to the FSCA’s 2023 report, retirement fund arrears in the local government sector have reached alarming levels, with unpaid contributions estimated at R1.4 billion across 10 retirement funds. The report also revealed that 58% of the country’s municipalities were in arrears, leaving thousands of workers without access to their retirement savings.

Unathi Kamlana, the Commissioner of the FSCA, described the situation as a “ticking time bomb”, warning that the failure to address these issues could have devastating consequences for the country’s retirement system. Kamlana called for urgent regulatory and legal reforms to hold employers and trustees accountable for their actions and to protect the interests of workers.

The real victims of this crisis are the workers, many of whom were left without access to their retirement savings or risk benefits due to non-payment of contributions. The introduction of the two-pot retirement system in September 2023, which allowed members to access a portion of their savings in emergencies, exposed the extent of maladministration.

Many workers found themselves unable to withdraw funds because their employers failed to make timely contributions, leaving them financially vulnerable.

The situation is further exacerbated by the use of labour brokers and independent contractors, who are often excluded from retirement funds and other benefits. Tapsosa called for stricter enforcement of labour laws to protect these workers and ensure that all employees, regardless of their employment status, are covered by providend funds.

The establishment of a National Bargaining Council for the private security sector added another layer of complexity to the crisis. Tapsosa and other stakeholders argued that the council was being pushed by a small group of predominantly white employers and trade unions to maintain the status quo and marginalise black-owned and emerging businesses.

The figures presented in the application for the council were criticised as misleading, with Tapsosa pointing out that the total number of employees and employers in the sector far exceeded the numbers claimed by the applicants.

The fear was that the council would be used as a mechanism to enforce compliance in a way that disproportionately targeted black-owned companies while allowing established players to thrive unfairly.

Tapsosa called for a more inclusive and transparent approach to regulation, one that strengthens existing institutions like the Private Security Industry Regulatory Authority (PSIRA) and the Department of Labour rather than creating overlapping and potentially exclusionary structures.

The retirement fund crisis in South Africa is a stark reminder of the need for accountability, transparency, and inclusion in the management of workers’ savings. Tapsosa’s Labour Court case shone some light on the deep-seated issues within the PSSPF and the broader private security sector, highlighting the urgent need for reform.

As the country grapples with this crisis, it is imperative that the government and regulatory bodies take decisive action to address the systemic failures that have led to this point. The future of hundreds of thousands of workers depends on it. The time for empty promises and half-measures is over; what is needed now is a comprehensive and inclusive approach to reform that ensures justice for all.

Tapsosa’s fight is not just for its members but for the entire industry, and its victory in the Labour Court could be the first step towards a fairer and more equitable future.