In my previous article last week, I demonstrated the legal and practical challenges employers face when applying for an exemption from their industry bargaining council’s agreements.  This article will unpack the options or other remedies that are at the disposal of employers when faced with an unsuccessful outcome of their exemption application.  What is clearly needed is a change in the way employers and their organisations strategise and approach centralised bargaining.

Yet again, the matter of the Free Market Foundation (FMF) v Minister of Labour and Others 2016 (8) BLLR 805 (GP) surfaces as the court stated that there do exist review remedies for the FMF and therefore held that section 32 of the Labour Relations Act, as amended (LRA) was not unconstitutional; such extension is based on the principle of majoritarianism, and does not have to be in the public’s interest.  Majoritarianism should therefore be the basis for the extension of a collective agreement whereby an industry/bargaining council is sufficiently represented, in order to make paramount decisions for its entire industry.  This is usually the challenge bargaining councils face where such agreements are still extended to an industry, but its trade union and/or employer parties are not representing the majority of its industry.

When an employer is faced with an unsuccessful exemption’s outcome from a bargaining council’s exemption’s panel, an employer should consider to speedily consult with its labour consultant and employer’s organisation like CEO and look at the following remedies:

Other than abandoning the exemptions process and selecting to comply with the particular term(s) and condition(s), an employer may opt to apply to the council’s Independent Exemption’s Appeal’s Board (IEAB) in an attempt to overturn an unsuccessful exemption outcome.  It is important that employers do not procrastinate with such an application as there is always a timeframe in which an employer may apply for an exemption appeal, and if missed, whereby the employer remains liable towards compliance.  The challenge herein is that such an application is usually a ‘rerun’ of the initial exemption’s application, with the same “red-tape”.  Unless the employer has compelling new evidence or where the initial exemption board made an obvious error in interpreting the employer’s application, such applications may not always be the answer.

Before a court may be approached, an employer must go through the above process of an exemption appeal application.  Employers cannot skip off directly to the courts on this issue.  The courts will always enquire if the applicant employer exhausted its ‘internal’ remedies before approaching the court, and if not, refer the employer back to it.  The other challenge herein is that taking a matter or review to the Labour Court is costly and not a speedy manner in expediting such a dispute, where it may even take years to adjudicate.  I am of the opinion that the Labour Court should only be approached in exceptional circumstances with high levels of success as issues of exemption / non-compliance affects the workplace and employees therein negatively, which demotivates staff, creates labour conflict and negatively impacts on production and work ethic, whilst the dispute remains pending at the courts.

Lastly, employers should note that the mere fact that a matter is taken to the Labour Courts does not necessarily stay any compliance/collection processes by the bargaining council; an additional application must be brought at the Labour Court to ensure that the bargaining council stays all proceedings, pending the outcome of the matter at the courts.

To be frank, there are not a lot of remedies to the disposal of employers herein.The above remedies are but direct and short-term responses to unsuccessful exemption applications.However, it does not address issues of complexity, and the tedious process regarding the minefield employers face.We are reminded that the basis of compliance and exemption applications are entrenched in a bargaining council’s collective agreements that were negotiated by parties.Therefore, it remains subject to renegotiations on a national industry level when said agreements have run their cycle and are up for renegotiations.This is where the real and parament change can take place.

I have always prophesised that bargaining councils and, therefore, its parties jointly, should evolve with the times as it cannot afford to conduct centralised bargaining like in the past when South Africa was still an affluent upcoming and emerging market with economic prosperity.If they do not, bargaining councils may become a thing of the past as an economic luxury, which most large and established industries cannot afford to take place.It is a hard-learned fact that centralised bargaining does ensure labour peace, stability, surety and may even safeguard the sustainable growth of a prosperous industry between SMMEs (the job creators) and large businesses (job securers), harmoniously.

Organised labour / Trade unions have historically done well for their members in most public and private sectors by, among other, denouncing and abusing the term “downwards variation” when it gets to negotiations on working conditions, benefits and wages of its employee members, which they do not negotiate on whatsoever; this has been the narrative of the unions within South Africa.  This ever upward trend of negotiations being the unions’ prerogative is forced by organised labour whether with or without mandates from their members and with or without sufficient representation within a particular industry.

Unfortunately, in some instances, this allows for a minority element that strongarms an industry into negotiations with unaffordable and unsustainable wage hikes, for the sake of labour peace, whereby employers and employees pay the ultimate price at the end, loss of financial sustainability/income.  This manner of negotiations is not a sustainable model for centralised bargaining, as something must give.  In the past, employers may have negotiated for financial prosperity, in enlarging its profit margins, however, those days are long gone.  Today employers cannot afford to negotiate expensive labour cost collective agreements, as it has the potential to topple an entire industry if it becomes uncompetitive in the international market.  The soaring costs of overheads and materials in the international/local market (which are largely uncontrolled) has put a lot of pressure on the labour market to be as efficient as possible in order to survive.

As stated above, parties to bargaining councils must reinvent themselves if they wish to survive in today’s economic climate and establish a new narrative in the realm of centralised bargaining.  Out of the box thinking is critical herein.  The following are just some strategies councils should consider:

  1. Chamber related bargaining

It must be accepted that the “one-size-fits-all” approach does not work, and has never worked, between sectors of an industry; SMME’s and large businesses should also be allowed to negotiate separately;

  1. Interest-based arbitrations as an alternative to industrial action

Industrial action is more often than not a lose-lose situation for all.Arbitration on the other hand, is a quick and effective way to disburse of a wage/working condition disputes;

  1. Automatic Exemptions

These exemptions should be considered inherently in collective agreements for employers/businesses under certain operational- and financial thresholds in avoiding civil disobedience and a large surge of exemption applications in an industry; and

  1. Entry-level wages/youth grade wage rates should be inherent of wage agreements

This type of wage rate will allow for first-time jobseekers after their training/qualification to enter the work market more quickly, develop their skills and experience and at the same time, their income.This will also add significant value to employers.The principle of a symbiotic relationship is key for success for employees and employers alike, which will positively impact the local economy.

Article by: Johann Preiss
National Collective Bargaining Co-ordinator – Pretoria