The Labour Court has dismissed an application brought by the National Employers’ Association of South Africa (Neasa) and the South African Engineers’ and Founders’ Association (Saefa) to declare Section 32(1) of the Labour Relations Act unconstitutional and halt the extension of the Main Agreement of the Metal and Engineering Industries Bargaining Council (MEIBC) to nonparties.

This follows after the MEIBC in May recognised in its Main Agreement that small, medium-sized and microenterprises (SMMEs) had been ignored in respect of no small-employer dispensation, which was largely unaffordable for small and starter businesses until now.

The MEIBC Main Agreement allows SMMEs to gradually phase in their wages, upon these businesses applying for such an exemption.

In June, a meeting of the MEIBC resolved to request the Employment and Labour Minister to extend the agreement to nonparties, whereupon Neasa and Saefa launched an urgent application in the Labour Court to halt this process and have a section of labour law declared unconstitutional.

However, in a rebuke of the applicants, acting Judge Sean Snyman struck down their application in its entirety and ordered them to pay the respondents’ costs.

While the Consolidated Employers’ Organisation (CEO) believes Neasa and Saefa will appeal the court’s decision, it says the judgment is another confirmation of the “overwhelming benefit” that the new MEIBC Main Agreement will deliver to SMMEs and employers across the board.

Snyman in his judgment pointed to Neasa’s consistent efforts since 2014 to scupper any attempt to extend the Main Agreement of the MEIBC to nonparties.

“This has left the untenable situation that nonparties to the metal and engineering industry, being the industry over which the MEIBC presides, are not bound by what had been negotiated and agreed to at industry level for the whole industry.

“This not only makes proper enforcement of minimum conditions of employment for the industry virtually impossible, but leads to a disparity of conditions of employment in the industry,” explains CEO, citing Snyman in his court judgment.

The organisation believes Snyman correctly reiterated the applicant’s approach of “attempting everything in their power to get out of the Main Agreement”. This has been the pattern for several years and has led to the constant destabilisation of the industry, CEO adds.

When looking at the mandate received from CEO’s members and considering becoming signatories to this agreement, the organisation’s main objective has remained the business welfare of its members and the industry as a whole.

“With the ongoing struggles faced by our members, who are predominantly SMMEs, the continued instability of the industry could lead to irrevocable losses. We had no choice but to act in our members’ best interests. 

“We welcome the judgment and the applicable cost order, confirming that the courts do not view frivolous and vexatious applications lightly. We eagerly await the Minister’s assessment of the ongoing public comments received regarding the extension,” CEO states.

Moreover, the Steel and Engineering Industries Federation of Southern Africa (Seifa) comments that Neasa and Saefa have the freedom to challenge collective bargaining any way they see fit, with the Constitution guaranteeing that right.

What is “deeply disappointing” for the federation, however, is that Neasa and Saefa are “hell-bent on favouring narrow agendas above the big-picture consequences of their actions”.

Seifsa echoes CEO’s view that all efforts since 2014 to extend the Main Agreement of the MEIBC to nonparties have been scuppered by Neasa, and lately Saefa.

The federation admits that this has left the untenable situation that nonparties to the metal and engineering industry are not bound by what was negotiated and agreed to at an industry level for the whole industry.

Seifsa says, in line with CEO’s and Snyman’s view, this makes proper enforcement of minimum conditions of employment for the industry virtually impossible, leading to a disparity of conditions of employment in the industry.

“It makes it possible for individual employers to gain a competitive advantage over others in the same industry off the back of remuneration and conditions of employment, which is not acceptable. This, in part, explains the extensive efforts since 2011 to finally get a binding Main Agreement in place for the whole industry,” Seifsa says.

The federation adds that “it is simply irrefutable” that employee parties to the MEIBC stand to suffer a whole lot more than any prejudice Neasa and Saefa members stand to suffer.

As Neasa and Saefa are only two out of 19 parties to the Main Agreement, it is only their members that would benefit, Seifsa notes.

“This is unduly prejudicial and unfair to the industry as a whole and in particular the objectives all bargaining councils are designed to achieve,” Seifsa adds.

The court unequivocally concluded that Neasa and the Saefa failed to make a proper case and, accordingly, Snyman found the awarding of cost against the applicants wholly justified.

Seifsa believes that, in the eyes of the court, this application should never have been brought in the first place. “This matter, the court concluded, was nothing more than an ill-fated attempt at an artificial construct to get out of the Main Agreement,” it says.

Snyman concluded his judgment by stating that Neasa and Saefa’s conduct was not in the interest of an orderly and effective bargaining council whose very purpose it was to take care of an industry. “It is tantamount to eroding the MEIBC from within.”  

OPPOSING VIEW

Neasa and Saefa stated in their court application that they sought relief in the form of the MEIBC being interdicted and restrained from requesting the Minister to extend the Main Agreement to nonparties; however, this had already happened by August 3, and secondly that the Minister be interdicted and restrained from extending the Main Agreement to nonparties.

Overall, the two parties wanted to set aside the decision taken at the meeting of the MEIBC in June relating to the Main Agreement.

Neasa contended that extending the Main Agreement to nonparties was unlawful, and it and Saefa also believed there to be irregularities and deficiencies in the Main Agreement.

Neasa said in a statement following the court judgment that it did not “spell the end of the road, but it is, in fact, only the beginning”. The association intends to pursue all legal avenues to prevent or set any extension of the Main Agreement.

The association says it strongly advocates for every employer to decide the wage level of its staff, based on its own operational needs. It is also against the self-proclaimed right of businesses, situated in economic hubs, to force upon small businesses a similar wage, pointing to “the hypocrisy of employers signing this deal and then applying for an exemption, simultaneously supporting the extension thereof to others who chose not to be part of this deal”.

The Main Agreement, Neasa explains, wishes to extend to 90% of employers in the steel industry a demand that a minimum wage (cost-to-company) of R78 an hour be paid for an unskilled employee.

However, the association says very few companies can afford this, and it will cause a jobs bloodbath in the industry.