THE bargaining council system is coming under increasing pressure as employers take to the courts to challenge one of its fundamental aspects: the basis on which agreements can be extended to non-parties.
With a judgment against the Metal and Engineering Industries Bargaining Council (MEIBC) granted late last year, a case against the National Bargaining Council for the Clothing Industry under consideration and talk in legal circles of a constitutional challenge to the Labour Relations Act (LRA) in the wings, bargaining councils and the minister of labour are facing an upsurge in litigation.
The extension of collective bargaining agreements to companies that are not members of an industry bargaining council is believed by many employers and economists to be a central cause of inflexibility in the labour market. In particular, bargaining councils are accused of forcing up entry-level wages by acting as a “legalised cartel” to keep new entrants to industry out.
The minister of labour must extend a collective agreement to parties outside of the council if she is certain the parties on the council are sufficiently representative. She may also decide to extend an agreement, even if the parties are not representative, if she has grounds to believe that collective bargaining would be damaged if she failed to do so.
At the end of last year, Labour Court judge Andre van Niekerk ruled that Labour Minister Mildred Oliphant had not applied the test for representivity in its entirety before extending the MEIBC agreement to the rest of the industry.
Not only must the parties in the bargaining chamber constitute a majority of the workers and the employers in the industry, but the agreement can only be extended if a majority of workers and employers are members of the trade unions and employers associations that signed the agreement. Ms Oliphant was given 90 days to remedy the error and to consider extending the agreement under a different provision.
A similar argument was, two weeks ago, put before the KwaZulu-Natal High Court when small-scale Chinese clothing manufacturers challenged the minister’s extension of a collective agreement of the National Bargaining Council for the Clothing Industry on grounds that the council was not representative.
The applicants claim that the council and the represented trade unions represent only 48.5% of the total employees in the industry. The matter is at present under consideration.
Bowman Gilfillan director and labour law specialist John Brand says he believes that bargaining councils are in a crisis as it is questionable whether many still cover a majority of their industries. A legal blow against the extension of agreements would cause the entire system to unravel as large employers would no longer benefit from being part of what amounts to “a legalised cartel”.
As well as an upsurge in litigation, consideration is being given to a constitutional challenge to provision in the Labour Relations Act which compels the minister of labour to extend collective agreements made in bargaining councils.
The applicants in the case against the National Bargaining Council for the Clothing Industry have also requested the court to consider whether this provision of the LRA is constitutional as it “permits the minister to extend a collective agreement without acting reasonably and without having regard for the consequences of such an extension for employment”.
Meanwhile, the Southern African Clothing and Textile Workers Union (Sactwu) last week hit back at University of Cape Town professors Nicoli Nattrass and Jeremy Seekings who have claimed in a research paper that the compliance drive by the National Bargaining Council for the Clothing Industry would shut down 450 firms and put 16,000 people out of work.
Sactwu general secretary Andre Kriel said that the council was poised to act against 297 factories, employing 5,500 workers. In a media statement, Mr Kriel also contested the claim that bargaining councils tended to set wages that were too high for new entrants.
“Actually, wages are bitterly low. In Durban metro, the gazetted starting minimum wage for a machinist is only R364.10 per week. In Cape Town it is R446.50 and in Johannesburg R360.40. This is lower than the R525 weekly wage recently prescribed for farm workers.”