Section 32 of the Labour Relations Act 66 of 1995 (‘LRA’) makes provision for the Minister of Employment and Labour (‘Minister’), in accordance with the statutory requirements, to extend a collective agreement concluded in a bargaining council to a non-party employer that is within its registered scope and identified.
However, the Minister’s extension is not without exception. A non-party employer is entitled to seek exemption, or even partial exemption, from an extended collective agreement.
This should be in compliance with the relevant procedure and criteria (to the extent applicable, but which should be fair and promote the primary objects of the LRA). If a non-party employer is unsuccessful with exemption or if exemption granted is later withdrawn, it ought to be entitled to pursue an appeal to an independent appeal authority.
In both the Labour Court and Labour Appeal Court, a number of decisions have been made in addressing the question on the test and considerations to be applied when granting or refusing an exemption.
This article will discuss some of these.
In an earlier decision of Ncungama & Others v Bargaining Council for the Liquor Catering & Accommodation Trades, South Coast, KwaZulu Natal & another [2002] 8 BLLR 766, the Labour Court was faced with this question. The employer applied for exemption from the bargaining council’s provident fund (collective) agreement. The bargaining council refused to grant exemption as it claimed the benefits of the employer’s fund were less beneficial than its own fund. The employer thereafter sought to review that decision in the Labour Court. The employer claimed, amongst others, that the:
criterion on which the council based its decision was unconstitutional as it infringed on the right to freedom of association;
process of seeking exemption was procedurally unfair; and the
decision to refuse the exemption was unjustified.
Although the court in Ncungama & Others recognised that the right to freedom of association could be limited, it confirmed that the bargaining council failed to provide its written comments and should have given the employer an opportunity to respond to those comments which pertained to the exemption application. It concluded that the bargaining council, through its exemption panel, decided to refuse the exemption without hearing a response to those comments. The Labour Court held that this aspect constituted a material and procedural irregularity.
Furthermore, in Ncungama & Others, the bargaining council’s substantive reasons submitted to the court were, amongst others, that it would encourage employees to remain in employment in the trades under its jurisdiction. According to the bargaining council, this apparently secured the best interest rates for their investments i.e. the council’s provident funds.
Notwithstanding the latter reasons, the Labour Court held that these reasons were not cogent given the tenuous nature of the industry’s work. It further held that the refusal to grant the exemption was not only wrong but also a misdirection in failing to consider all the material information properly before it and that the council was partial in fettering its discretion in favour of its fund’s administrator.
The court accordingly reviewed and set aside the decision. It substituted this with the decision to grant the employer the exemption.
In Tao Ying Metal Industry (Pty) Ltd v Pooe NO and Others [2006] 5 BLLR 456, the Labour Appeal Court (‘LAC’) had to determine whether an exemption certificate granted in favour of an employer could still apply when the main collective agreement, from which exemption was initially granted, was thereafter replaced by another agreement. The bargaining council’s position, in line with the employer, was that the exemption operated even after the collective agreement was replaced.
The representative unions of the bargaining council disagreed and pursued enforcement proceedings against the employer in the CCMA. They claimed the exemption did not apply to the new collective agreement.
On appeal to the LAC, the conclusion of the court in Tao Ying was that the bargaining council acted ultra vires i.e. beyond its powers by purportedly recognising the operation of the exemption certificate in excess of the life of the collective agreement in which the exemption was sought.
In another decision of Trafford Trading (Pty) Ltd v National Bargaining Council for the Leather Industry of SA & others [2010] 1 BLLR 95, the Labour Court held that the employer had to prove:
the council was grossly unreasonable; and
that it denied the employer the right to fully and fairly hear the matter.
The court in Trafford Trading found that the council exhaustively dealt with each ground of the employer’s application and correctly held that both the bargaining council and appeal authority were correct to refuse the employer’s application for exemption.
The Labour Court importantly concluded that the employer would perpetrate an injustice by paying its workers less than the prescribed rate and denying them those benefits should it be granted the exemption.
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