The inhumanity of powers granted to Bargaining Councils by unjust laws

The loss of jobs and hardships imposed on small businesses by the extension of Bargaining Council Agreements to micro and small businesses is inhumane. It is these businesses that have the potential to provide jobs to the majority of the 8.4 million currently unemployed people.

Instead of having their jobs protected by the law, the employees of micro and small businesses are having their jobs destroyed by large businesses and labour unions that collude together to impose unbearable costs on their employers. Extension of Bargaining Council agreements to non-parties can have only one major objective, which is to reduce competition in the “industries” in which the process occurs. The beneficiaries are the owners of the participating companies and their unionised employees. The victims are the employees and owners of the businesses who have the agreements forced upon them and consumers who lose the benefits of increased competition.        

In March 2013 the FMF, with the support of donors concerned about the job-destroying consequences of the extension of Bargaining Council agreements to non-parties, launched a challenge against the constitutionality of the process. A court date is expected early in 2015. The Bargaining Councils, unions and other opponents of the challenge have delayed the hearing of the case for almost two years, adding unnecessary costs to the burden being borne by Herman Mashaba, the main donor who is funding the challenge.

The challenge is against a provision in the Labour Relations Act that does not give the Minister of Labour the discretion to extend or not to extend Bargaining Council agreements to non-parties. Inclusion of discretion would allow the Minister to decline to extend agreements, for instance, that would increase unemployment. The negative effects of forcing such agreements on non-parties are generally suffered by small businesses and their employees, many of whom are totally unaware of the demands that will be made on them by the extension of the agreements. Parties to the agreements are generally big labour and big business.

The beneficiaries of a successful FMF constitutional challenge will be the employees of small businesses, whose jobs are jeopardised if their employers are forced to pay big-business wage rates, and the small businesses whose survival is jeopardised when they have unexpected additional costs imposed on them.    

Owners of small firms tell us that Bargaining Council representatives typically descend on them, inform them that they should be registered with and paying membership fees to the Council; that they are years in arrears with contributions; that they have been underpaying their employees in terms of the agreements they know nothing about, and that they should also have been paying contributions towards retirement funds. Further, they are told that they are subject to penalties for failure to register. If the businesses don’t start paying according to the Bargaining Council determinations they are threatened with being shut down. Many small businesses have closed down as a result.

National Employers’ Association of SA (NEASA) has won what they describe as a “huge victory” in their battle to stop these impositions on small businesses. The Labour Court recently set aside a three-year Bargaining Council agreement in the metals industry as a result of a series of court battles fought by NEASA on behalf of its 3,000 member companies and their employees.

The FMF’s constitutional challenge is aimed at removing an anomaly in the law that gives Bargaining Councils, which are private organisations, the right to request the Minister of Labour, in a manner that is tantamount to an instruction, to impose their agreements on parties who have not been involved in negotiating the agreements. Removal of the anomaly would save many jobs and prevent the destruction of many small firms.

Author: Eustace Davie is a director of the FMF and a contributing author to the book Jobs Jobs Jobs, published by the Foundation. This article may be republished without prior consent but with acknowledgement to the author. The views expressed in the article are the author’s and are not necessarily shared by the members of the FMF. 

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