Lackay left SARS in February 2015 amid a furore about the legitimacy of the unit and its activities that continues to stalk the revenue service's former top brass, including former commissioner and current Finance Minister Pravin Gordhan.
Lackay, who worked for SARS for 11 years, took the taxman to the Commission for Conciliation, Mediation and Arbitration alleging constructive dismissal.
He wants the CCMA to order the service to pay him 12 months' salary in compensation.
The hearing began yesterday with Lackay's lawyer, Paul Pretorius SC, sketching the "context" in which SARS operated at the time.
He then introduced questions about the establishment and legality of the "rogue unit".
Lackay is among former SARS employees who have said that the establishment of the covert unit was aboveboard and had ministerial approval.
He said the unit was set up with the approval of Gordhan and of former finance minister Trevor Manuel.
SARS lawyer Wisani Sibuyi objected when Lackay was asked if state security agencies were consulted when the unit was formed. Sibuyi objected to the questions on the formation and existence of the unit on the grounds that Lackay did not work for it. - Additional reporting by Sibongile Mashaba and Nelly Selepe
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