The importance of compliance and good governance when making executive appointments.

In a significant ruling handed down on 23 December 2024, the Labour Court declared the appointment of the acting CEO of the National Home Builders Registration Council (NHBRC) unconstitutional and unlawful, reinforcing the critical importance of governance integrity in public institutions. NEHAWU, on behalf of its members, challenged the appointment of a former NHBRC Council member as the acting CEO following the suspension of the incumbent CEO.

The NHBRC Council, facing alleged leadership gaps in its executive ranks, appointed the Second Respondent—who had recently served on the Council—as acting CEO. This appointment was made with the concurrence of the Minister of Human Settlements, despite clear advice from the NHBRC’s own Company Secretary that such a move would violate internal policy.

The NHBRC’s Acting Policy explicitly limits acting appointments to permanent employees and explicitly excludes Council members and temporary employees. Despite this, the Council claimed it could “waive” these provisions due to exceptional circumstances.

Judge Prinsloo rejected this argument, finding that:

The Council has no authority to waive provisions of the Acting Policy… The fact that the Minister concurred does not validate the ultra vires and unlawful decision taken by the Council.”

The Court emphasized that policies exist to uphold governance standards and that public entities cannot circumvent them at will, even under perceived operational pressures. The judgment drew on Section 195 of the Constitution, which mandates that public administration must be conducted in a transparent, accountable, and lawful manner.

The Court further found that:

 The appointment violated principles of good governance and that the Council acted ultra vires, lacking the legal authority to override its own policy.

Ultimately, the appointment was set aside and was found to be unlawful and unconstitutional. Finally, NHBRC was ordered to pay NEHAWU’s legal costs.

This ruling sends a clear message to public bodies: policies are not optional, and governance shortcuts—even with ministerial backing—will not withstand legal scrutiny. The judgment reinforces the importance of transparency, consistency, and legality in managing public institutions. As South Africa continues to push for stronger governance in its public sector, this case may well serve as a landmark warning against arbitrary administrative decisions and a reminder that the rule of law prevails.

Nikhiel Deeplal acted for the successful applicant, NEHAWU, in this application.

Read Judgment here

More articles, news, seminars, events and judgements