The case National Bargaining Council for the Road Freight and Logistics Industry (NBCRFLI) v Bloch N.O. offers critical insights for employers, particularly those managing incentive schemes under collective agreements. This judgment sheds light on the legal principles surrounding compliance, particularly “substantial compliance,” and the obligations employers have when implementing such schemes. Here’s what employers need to know to avoid legal pitfalls and maintain compliance with collective agreements.

In this case, the NBCRFLI sought to review an arbitration award that upheld an employer’s compliance with a collective agreement despite technical breaches. The employer, Crystal Cool Logistics, had implemented an incentive scheme for its drivers without initially following all the procedural requirements of the relevant collective agreement. Although there were gaps in compliance, the employer eventually rectified the issues by setting up a joint management-employee committee and obtaining an agreement on the terms of the incentive scheme.

The Labour Court found that the employer had substantially complied with the requirements of the collective agreement, even if not strictly adhering to every procedural step at the outset. The court emphasised that the goal of the enforcement process is to ensure compliance – not to punish employers unnecessarily.

Key Takeaways for Employers:

  1. Substantial Compliance Can Save the Day: The court in this case upheld the principle of substantial compliance. This means that even if an employer does not follow every procedural requirement of a collective agreement to the letter, it can still comply with the agreement’s purpose if corrective measures are taken in good faith. For employers, this is a critical concept – non-compliance can be remedied, and rigid adherence to formalities is not always necessary if the substance of the agreement is met.
  2. Incentive Schemes Require Careful Implementation: Incentive schemes, while beneficial for increasing employee productivity, must be established in line with collective agreements. The collective agreement in this case required that any incentive scheme must be negotiated with a committee of employee representatives and management. The employer failed to establish this committee initially, which triggered the compliance dispute. However, after setting up the committee and gaining approval, the employer was deemed compliant.

Employers should ensure that all necessary procedures are followed when setting up incentive schemes, including:

  • Forming representative committees.
  • Documenting agreements in writing.
  • Securing approval from the bargaining council where required.
  1. Remedial Action is Key: The court stressed that the purpose of the enforcement process is not to punish but to ensure compliance. When faced with a compliance order, employers should take swift action to rectify the issue. In this case, the employer’s willingness to address the problem by establishing the required committee and securing the necessary approvals worked in its favour.

What Employers Should Do:

  • Take compliance orders seriously and act quickly to resolve any issues.
  • Keep thorough documentation of all steps taken to address compliance concerns.
  • Engage with the bargaining council early to avoid disputes escalating to arbitration.

Employers should recognise the oversight role that bargaining councils play in ensuring collective agreement compliance. In this case, the NBCRFLI delayed approval of the incentive scheme even after the employer had met all requirements. This led to prolonged uncertainty for the employer, highlighting the need for employers to stay proactive in their communication with councils. When the bargaining council is slow to respond, don’t hesitate to follow up and document all interactions. 

Practical Steps for Employers

To avoid falling into similar disputes, employers should take the following proactive steps:

  • Before introducing incentive schemes or any changes to employee remuneration, ensure that you understand the specific requirements of the collective agreement. Work with your legal advisors or human resources team to identify all necessary steps, including forming representative committees.
  • Ensure that employees are properly represented when negotiating incentive schemes or other significant changes to working conditions. This not only avoids legal challenges but also fosters a cooperative workplace environment.
  • Stay in regular communication with the bargaining council to ensure that any collective agreements or incentive schemes are approved promptly. If there are delays, document all efforts made to secure approval.
  • If a compliance issue arises, take immediate steps to rectify it. The courts have shown leniency where employers act in good faith to correct non-compliance, but delays or a lack of responsiveness can harm your case.

A Proactive Approach to Compliance

The NBCRFLI v Bloch N.O. case is a reminder to employers that compliance with collective agreements is not just about following procedures but about achieving the purpose of those agreements. Employers should aim for substantial compliance and act swiftly when issues arise. By being proactive, engaging with employees, and working closely with the bargaining council, employers can avoid costly legal disputes and ensure that their incentive schemes benefit both the business and their workforce.

This judgment should encourage employers to view compliance as an ongoing process and to prioritise collaboration and communication with bargaining councils. Ultimately, the focus should be on creating systems that benefit employees while maintaining the operational flexibility businesses need to thrive.

Article By Shakti Jainarain

Senior Dispute Resolution Official at Consolidated Employers Organisation (CEO SA)