The term ‘collective bargaining’ is over a hundred years old and by no means a new concept locally or abroad.  This term was first used by Beatrice Webb, a British economist and labour historian.  This month of February, we at CEO will delve into this topic and its various forms of applications in the employment spectrum.


To date, collective bargaining has been regarded as one of the most important functions of a trade union on behalf of its members and itself.  Collective bargaining is however used for other purposes by employers and businesses whereby employers seek to ‘level the playing field’ between themselves with uniform wage schedules, working conditions and benefits that are attributed to labour.  The idea here is to enable businesses to compete on equal footing when it gets to the labour cost of its operations.  Mediation, arbitration, strike and lock-out actions can also be part of the process.


Due to global economic downturn which has also been herded on by the international Covid-19 pandemic, businesses have suffered increasingly to keep their doors open, whereby many businesses had to restructure their operations which gave rise to retrenching their employees, apply for business rescue and even business closures.  We believe that the time of ‘one-way’ negotiations whereby only unions have demands are over.  If businesses in established and regulated industries are to survive the new economic norms, they will have to proactively engage with unions and bargaining councils with their own set of demands in order to claw back economic stability.  This will give rise to a severely robust new way of negotiations.  Unions to date, are usually the only party that brings their demands to negotiations where organised employers merely responded thereto.


However, rising material costs and operational overhead costs were not historically bargained with third parties such as suppliers, service providers and State-Owned Enterprises (SOEs).  In turn, collective bargaining naturally created labour peace, stability and surety within an industry as collective agreements are cyclical.  However this is on the brink of change as employers now seek to proactively negotiate their own demands with trade unions on the cost of labour, but also now seek to collectively negotiate with third parties having a mutual interest in a specific industry that are suppliers and service providers, i.e. SOEs.  The challenge here is that the current legal framework of collective bargaining does not allow for that tier of negotiations to currently take place.


The term collective agreement is defined in Section 213 of The Labour Relations Act as amended being a written agreement concerning terms and conditions of employment or any other matter of mutual interest concluded by one or more registered trade unions on the one hand and on the other hand, one or more employer(s), -registered employers organisation(s), -and employers and one or more registered employers’ organisation(s).  Any mutual interest of any of the parties may feature in such an agreement, which is of potential value, which has to be explored afresh by employers, like our members.  We at CEO believe that the legislator is to consider redefining the definition of collective bargaining to rope in suppliers, service providers and SOEs.


Various forms of collective bargaining or centralised bargaining exist and not only on a bargaining council level.  This is observed on the shop floor of a business the moment a group of employees are represented by a representative or trade union, having various objectives.  Here are the predominant forms of collective bargaining currently in South Africa: (These forms will be comprehensively discussed by CEO in the month of February)


Workplace Forums are regulated by Chapter 5 (sections 78 to 94) of the Labour Relations Act, as amended (LRA).  This forum is a plat-level forum where employees group together to address/negotiate matters of mutual interest with its employer.  There are some criteria that are legally to be complied with to establish such a forum.  This may include or exclude the representation of a trade union.  This form of centralised bargaining is largely uncommon as the historic perception is that workplace forums are open for abuse by employers at the cost of its employees.


Recognition agreements are agreements where an employer recognises a certain union or unions who have rights to represent and negotiate on behalf of employees in that workplace.  It will clarify whether a particular union has sole negotiating rights for a bargaining group, or whether the employer recognises two or more unions jointly.  This is regulated by Chapter 3, Part A and B (sections 11 to 26) of the LRA.  Various competing case law exists regarding recognition agreements, which will be discussed and unpacked going forward.


It is important to note that this may also include or exclude specific other forms to a recognition agreement such as a Closed Shop Agreement or Agency Shop Agreement:


An Agency Shop Agreement is where a representative trade union and an employer or employers’ organisation conclude a collective agreement, to be known as an agency shop agreement, requiring the employer to deduct an agreed agency fee from the wages of employees identified in the agreement who are not members of the trade union but are eligible for membership thereof.  The purpose of the legislator here was to account to the trade union where all employees benefit from the trade union’s activities, such as wage negotiations. Still, only union members pay the union in the form of membership fees.


A Closed Shop Agreement is where a representative trade union and an employer or employers’ organisation conclude a collective agreement, to be known as a closed shop agreement, requiring all employees covered by the agreement to be members of the trade union.


Last but not least there exist 48 bargaining councils registered with the Department of Employment and Labour, whos’ scopes of operations range from a national-, provincial-, regional-, municipal-, or government department footprint.  Bargaining councils play a pivotal role in providing the needed platform for businesses and trade unions that are parties to a specific industry, to negotiate collective agreements towards the sustainability, surety and security of an industry.  This is an important platform as such collective agreements may be extended to all third parties/non-parties by the Minister of Employment and Labour.  We have observed some concerning actions of certain bargaining councils regarding their collective agreements.  CEO is currently party to 5 national councils and is considering to become a party to other councils too in representing our members herein.


Please follow our articles for the month of February for more in-depth information.


Article by: Johann Preiss

National Collective Bargaining Coordinator