Some sectors in our country are governed and regulated by the Basic Conditions of the Employment Act (BCEA), being an act of parliament put in place by the government to regulate and protect employees from exploitation by employers.  This Act has set minimum regulations for employers.

However, other sectors are not regulated by the BCEA, such as those companies that fall within the scope of a specific bargaining council.  Those companies are, however, regulated by a Main Collective Agreement of the respective Council.

Upon a bargaining council being established in terms of the Labour Relations Act (LRA) and that has been accredited by the CCMA to operate under the auspices of the CCMA, Employer Organisations and Trade Unions have the constitutional right to apply to become be a party to the council.

After due process has been followed by the concerned parties regarding the applications to be a party to the council, the council will issue correspondence as per the council’s constitution to the said employer organisation and trade unions about the seats they have attained, and their membership status.

Thereafter, in most instances, wage negotiations may commence in which it will be decided by the parties to conduct the process by centralised bargaining, which is favoured by most trade unions in South Africa.

Centralised bargaining means that employers in a said sector get together and bargain with one or more trade unions representing the employees of those employers. Furthermore, centralised collective bargaining can also occur at the level of a group of companies or at the national or regional level of a company.

Different trade unions face different situations with collective bargaining and negotiations as they take place at various levels, namely: Centralised bargaining level, company level, plant level and sectoral determination & coordination.

In the past, some employers have opted for decentralised bargaining.  This is a system where conditions of employment are determined by employers and individual employees, plant level.

In August 2019, a news article published by Business Day with the headline “Coal employers ditch centralised wage bargaining” stated that the employers in the coal industry had withdrawn from the centralised bargaining process under the auspices of the Minerals Council SA, informing trade unions that wages will be negotiated at company level in the future.

The article further elaborated that the Centralised bargaining in coal and gold mining has been a key feature of South Africa’s industrial relations architecture for decades, predating the existence of many of today’s trade unions. Solidarity, NUM, and NUMSA were some of the trade unions who were unhappy about the decision of the Minerals Council SA withdrawal from centralised bargaining.

One of the concerns which were expressed by Solidarity was that decentralised bargaining will result in intensive and unnecessary administration for trade unions, and that it will place major demands on trade unions’ resources, having to participate in all the talks where they have to represent members. The trade union further mentioned that the battle between companies in the industry as far as the standardisation of conditions of service is concerned will again become a reality, posing a certain threat to the industry. The centralised platform offered a platform where employers could hold each other accountable and also served as a platform where trade unions could hold employers accountable.

In the matter of the Free-Market Foundation v Minister of Labour and Others 2016 (8) BLLR 805 (GP), the Free-Market Foundation (FMF) challenged the constitutionality of section 32(2) of the LRA. Section 32(2) provides that the Minister of Labour must extend collective agreements concluded in bargaining councils should their members request such and should certain preconditions be satisfied. The FMF initially challenged the constitutionality of section 32 on the basis that it infringes the rights to equality, freedom of association, administrative justice, dignity and fair labour practices.

The FMF subsequently abandoned this point and instead challenged section 32(2) solely on the basis that the grounds of judicial review in respect of the extension of collective agreements were inadequate.  In this regard, the FMF argued that section 32 violated the principle of legality as it permitted the extension of collective agreements to non-parties, contrary to public interest.

The court was required to consider the scope of judicial review in respect of the extension of collective agreements to non-parties, as well as whether the Minister must act in public interest when extending collective agreements to non-parties.

The court found that the Minister does not have the discretion in determining whether or not to extend the agreement in the event that the council has complied with the requirements of section 32(2). In such circumstances, the Minister must extend the agreement.

Before the Minister extends the collective agreement, certain preconditions must be met:

  1. The Minister must be satisfied that the numerical requirements of majoritarianism have been met. This will be satisfied if the majority of employees who will be covered by the agreement once extended are members of trade unions that are parties to the council.
  2. Furthermore, the decision of the bargaining council must comply with legal prerequisites.; and
  3. Finally, there must be an exemption procedure in place applying fair criteria to be exempted from the extension. It must also not discriminate against non-parties.

It is only if all these requirements are satisfied that the Minister must extend the agreement.

Where the majoritarianism requirements are not met, the Minister may extend the collective agreement provided that other jurisdictional conditions are met, such as the parties to the bargaining council must be sufficiently representative within the registered scope of the council; the Minister must be satisfied that the failure to extend the agreement would undermine collective bargaining at sectoral level or in the public service as a whole, and the Minister must have invited and considered comments on the application to extend.

Given the fact that there are appropriate review remedies available to the FMF, it was held that section 32 was not unconstitutional – it was based on the principle of majoritarianism – which is consistent with international law. The application was dismissed, but no costs were ordered against the FMF as it was found that the application had been made in good faith in the interests of small businesses and the unemployed.

Article by: Ernest Masupye
Collective Bargaining Coordinator – Pretoria