Trade union Solidarity has succeeded in its application to have the Metal and Engineering Industries Bargaining Council (MEIBC) placed under administration.

The first of its kind in the country, Solidarity deputy general secretary Marius Croucamp welcomed the judgment by Judge Sean Snyman, noting that it was a necessary step to ensure the MEIBC “is rescued from going under”.

The trade union believed the court order would “dramatically” change the landscape in the steel and engineering industry, with the appointment of an administrator, ensuring that the MEIBC would not regress further.

Snyman noted that the MEIBC had fallen into financial disarray owing to maladministration, including the failure to submit yearly financial statements, failure to finalise its statements, no permanent financial manager being employed, nondisclosure of essential information by the MEIBC GM and the misappropriation of funds.

“[It] will be financially sound again. The preservation of the council is crucial for the stability of the steel industry that is already under severe pressure," said Croucamp.

Solidarity said the administration would not be an easy task, with the administrator needing to “take major steps to sort out mismanagement and financial irregularities”.

“The bargaining council has been trading while being technically insolvent. Creditors have been knocking on the door and threatening to liquidate the council. Important functions such as dispute resolutions have come to a standstill for months on end but will now be able to get on track again,” Croucamp said.

Snyman also raised concerns over MEIBC’s ongoing funding of the Dispute Resolution Centre (DRC), as its dispute resolution functions “have all but collapsed”.

It is projected that the DRC would have to attend to some 6 500 matters this year, on top of a current backlog of more than 2 700 cases. “This situation is truly dire,” said Snyman.

The Department of Labour, the National Union of Metalworkers of South Africa and employers’ organisations have agreed to the court order.

“We are very pleased that important role-players have finally agreed to the process of administration. The administration process can be compared with a business rescue process often used in the private sector to save a business from failing. The alternative was liquidation, which would not be in the best interests of the bargaining council,” Croucamp added.