The National Employers' Association of South Africa (Neasa) has pledged its support to Constitutional Court action to have sections of the Labour Relations Act changed.

"Neasa fully supports the Free Market Foundation in its challenge, as we agree with the notion that the extension of bargaining council agreements to non-party members, do in fact limit job creation," Neasa CEO Gerhard Papenfus said.

Business Day reported on Wednesday that the foundation launched a constitutional challenge against Labour Relations Act sections, which allow collective agreements made in bargaining councils to be extended to non-member employers and employees.

According to the challenge, brought in the High Court in Pretoria on Tuesday, the foundation believes the practice pushes up wages and puts smaller employers out of business.

It believes it is unconstitutional for agreements reached among private parties to be extended to others not in any way involved in making them.

This also acts to eliminate competition and is in the interests of the parties who make the agreements.

According to the act, the minister is compelled to extend an agreement to non-parties if the employer parties constitute a majority of employers, and the trade unions in the council represent a majority of employees in the industry.

The minister has the discretion to extend an agreement if she believes collective bargaining will be damaged if she does not.

The foundation is challenging the constitutionality of the former.

"We agree with the Free Market Foundation that this provision is unconstitutional and detrimental to the freedom of association, as it gives private individuals the power to force the minister to hold people who weren't party to the agreements to them," said Papenfus.

Neasa said it was concerned about the non-competitive nature of the bargaining council system, as it allowed a few large players and trade unions in industries to set wages that the smaller players could not match.