File photo: REUTERS
File photo: REUTERS

The extension of a bargaining council’s collective agreement is not unconstitutional. This view was upheld by Judge John Murphy on behalf of a full bench of the North Gauteng (Pretoria) High Court in the 2016 Free Market Foundation (FMF) v Minister of Labour & Others Judgment.

The argument that collective agreements adversely affect non-party employers by requiring them to pay higher wages than they would otherwise have done may well be correct, but the question is whether the law can take the same narrow view.

Labour law is derived from our Constitution, which is dedicated to the achievement of social justice. Fundamental to this, as Marikana reminded us, is the reduction of inequality.

Collective bargaining is a cornerstone of the system and the reduction of disproportionate income differentials is one of its purposes. Add to this the right to strike, which is constitutionally entrenched for the very purpose of allowing workers to exercise economic pressure — in other words, forcing employers to pay higher wages than they would otherwise have done — and it becomes less obvious why collective bargaining aimed at achieving the same outcomes should be regarded as reprehensible.

The point here is that section 32 of the Labour Relations Act (LRA) expressly empowers — indeed, requires — bargaining councils and the labour minister to follow a specific procedure for extending bargaining council agreements. This procedure was agreed upon in 1995 by the parties to Nedlac, including the representatives of business.

Twenty-three years on, the system stands accused of being unfair. In reality, arguments supportive of this view are, at best, inconclusive or, at worst, speculative.

No less contentious is the belief that the extension of bargaining council agreements is a significant barrier to job creation, and that the millions of unemployed South Africans stand to gain employment if collective bargaining — and, implicitly, the extension of collective agreements — is done away with.

Interestingly, less than a third of SA’s workforce is subject to bargaining council agreements and less than 5% are affected by extended agreements, thus leaving the greater part of the economy free from this real or imagined evil.

Collective bargaining at sector level, as the court put it in the Free Market Foundation (FMF) v Minister of Labour & Others, "will be undermined if bargaining agents in a majoritarian setting were uncertain at the outset of negotiations about whether or not their agreements would be extended".

That is precisely what Parliament, in enacting section 32 of the LRA, set out to achieve: in essence, to oblige the minister to extend a bargaining council agreement at the behest of the parties (employers and trade unions), provided the formal requirements set out in section 32 are met.

In particular, these requirements are that: one or more registered trade union/s whose members constitute the majority of the members of the trade unions that are party to the bargaining council vote, in favour of the extension; and one or more registered employers’ organisations, whose members employ the majority of the employees employed by the members of the employers’ organisations that are party to the bargaining council, vote in favour of the extension.

According to the latest Department of Labour determination of the representativeness of the metals and engineering industries bargaining council issued in terms of section 49 of the LRA, the following representative determination is made:

• The trade unions party to the council represent 163,214 (38.4%) of 424,365 of the employees concerned;

• Of the 424,365 employees, 277,602 (65.4%) are employed by the employers’ organisations that are party to the council, falling within the registered scope of the council (the Seifsa-affiliated employer associations alone represent 59%, the Confederation of Employers Organisation represents 4%, Neasa represents 19%, the Plastics Converters Association of SA 12%, and the South African Engineers and Founders Association 6% of these employees); and

• A total of 3,875 (37.9%) of 10,215 companies are members of the employers’ organisations party to the council in the registered scope of the council. The Seifsa-affiliated employer associations alone represent 27%, the Confederation of Employers Organisation 12%, Neasa 43%, the Plastics Converters Association of SA 11%, and Saefa 7% of these employers.

At the metals and engineering industries bargaining council management committee meeting on May 17, four of the five trade unions that signed the 2017-20 settlement agreement voted in favour of the extension (one trade union tendered its apologies).

The 21 Seifsa-affiliated employer associations that signed the 2017-20 settlement agreement represent 59% of all employees employed by all the employers’ organisations that are party to the bargaining council.

As matters currently stand, in the case of a section 32 extension, where an agreement is negotiated and concluded by bargaining agents who represent and employ the majority of employees falling within the council’s coverage, the extension of a bargaining council agreement is seen as a reasonable and necessary mechanism of sectoral collective bargaining.

This is the legislative model that the social partners agreed on in 1995 and which Parliament duly enacted. Some may not like it, but it can be changed only by legislative amendments and not by court order.

Preventing and/or delaying extension may well delay the implementation of higher wage increases for nonparties, but the indirect effects are no less important.

For the affected workers and their unemployed family members, this would almost certainly translate into greater distress. It is hard to reconcile this with the goal of social justice.

Trentini is the operations director of the Steel and Engineering Industries Federation of Southern Africa (Seifsa).