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WHAT ARE COLLECTIVE AGREEMENTS, AND DO THEY APPLY TO ENTREPRENEURS?

09.02.2021
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Introduction

The Minister of Labour and Employment recently extended a Collective Agreement of the Bargaining Council for Fast Food Restaurant Catering and Allied Trades (“BCFFRCAT”) to non-parties. As a result, the following rules will likely be extended to employers and employees in the Restaurant, Catering and Fast Food industry who are not members of the BCFFRCAT:

  1. A bargaining council expense levy (paid to the council): Every month, the company must pay R5 per employee. Each employee must also pay R5;
  2. Dispute resolution levy (paid to the council): Every month, the company must pay R3 per month per employee. Each employee must also pay R3;
  3. General establishment levy (paid to the council): R25.00 per month per establishment;
  4. Funeral benefit: An employer must pay R12.50 per month per employee, and the employee must also pay R12.50 per month;
  5. Provident fund: The company must contribute 5% of the employee’s monthly wages, while the employee must contribute another 5%; and
  6. Uniform: R17.50 per week payable to each employee if they are required to wash their own uniforms on all other days except on their off days.

Restaurant entrepreneurs are furious over the additional burden, particularly as this comes about during a devastating pandemic on businesses. As a result, a well-known representative organisation in the industry launched an interdict against this extension. Meanwhile, questions have been raised about the nature and purpose of Bargaining Councils and the binding effect of Collective Agreements.

Most entrepreneurs, understandably, worry about operating requirements, regulations applicable to their businesses and compliance with other laws. Whilst entrepreneurs pay attention to Labour laws regarding the employer and employee relationship, they rarely focus on collective Labour Law.

Collective Labour Law regulates the relationship between one or more registered trade unions on the one hand and an employer or an employers’ Organisation on the other. You might say, “this does not affect me, my employees are not unionised, and I’m not a member of an employers’ Organization”. Well, below we’ll discuss Bargaining Councils – their purpose, binding effect of Collective Agreements and how collective labour law affects entrepreneurs.

Bargaining Councils and why are they formed?

Bargaining Councils are created by groups of employees, represented by one or more registered trade unions, and employers or employer’s organisations. Both employees and employers are equally represented in these Councils with a 50/50 balance of representativeness.

Once created, these Bargaining Councils are the forums within which trade unions, and employers or employer’s organisations negotiate Collective Agreements. In addition, they also serve as dispute resolution forums, much like the Commission for Conciliation, Mediation and Arbitration (“CCMA”). Therefore, Bargaining Councils’ commissioners determine disputes between employers and employees and issue binding arbitration awards.

On the other hand, Bargaining Councils are empowered to promote training and education schemes to empower employees. They are further empowered to establish and administer pension, provident, medical aid, sick pay, holiday or unemployment funds for the benefit of one or more members of the parties to the council.

What are Collective Agreements and who must comply with their provisions?

Collective Agreements are “terms and conditions” of employment or other matters of “mutual interests” agreed to by parties to the Council. Once signed, Collective Agreements bind all the parties or members of the parties to the Council. This means that a Collective Agreement binds all parties and their members, even if they don’t participate in its negotiation.

Moreover, Councils may request the Minister of Labour and Employment to extend the application of Collective Agreements to non-parties. These include trade unions and employers’ organisations within the registered scope of the Council which are not party to the Council. When thus extended, a Collective Agreement binds every employer and employee falling within the registered scope of the Bargaining Council.

How does Collective Labour Law affect entrepreneurs?

Now that we have explained what Bargaining Councils and Collective Agreements are, as well as how Collective Agreements can be extended, the question is what can entrepreneurs do? Well, the first option is to join an employer’s organisation which meaningfully participate in Bargaining Council negotiations to champion their interests.

Collective Agreements are statutorily required to have built-in procedures for employees to apply for exemption from their application. For example, the BCFFRCAT Collective Agreement makes provision for small employees with 10 or less employees to apply for exemption. An applicant must satisfy the Council that the terms of the Collective Agreement restrict its entrepreneurial initiative or employment opportunities.

It is not quite clear how an entrepreneur can satisfy the Council that the terms of a Collective Agreement restrict its entrepreneurial initiative or employment opportunities. But one thing that comes to mind is that, in the current economic climate any additional expenses will likely to restrict entrepreneurial initiative and will most definitely restrict employment opportunities.

However, if an entrepreneur is not granted an exemption, this may prove detrimental, especially in the present economic climate. Therefore, another important question that has been raised is how Government, more specifically, the Department of Labour can assist. It appears that the Department of Labour was instrumental in encouraging the disgruntled restaurateurs to launch an interdict against the extension of the BCFFRCAT’s Collective Agreement.

However, it appears that once the Minister extends a Collective Agreement, other than the built-in dispute procedures, there is very little that Government will be able to do. It will be up to the Courts to offer more guidance.

Conclusion

Under normal circumstances, the extension of the BCFFRCAT may not have been received with  such hostility. However, we are living in unprecedented times and some of these negotiated collective labour law policies or Agreements ought to reflect these prevailing circumstances.

The current BCFFRCAT collective agreements is quite at odds with the current economic conditions and it is hoped that the Interdict application may provide more clarity on this issue.

Sudden Mutsengi – 9 February 2021

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