This post was contributed by Kate Paterson

The High Court has overturned a decision by the Minister of Labour to extend a collective agreement in the textile industry to non-parties to the bargaining council.

The agreement set out the minimum wages that employers who were parties to the agreement had to pay their employees.  The extension meant that employers who were not parties to the agreement now also had to pay these wages.  The recent judgment declared the decision to be invalid retrospectively because the Minister had not properly applied her mind to the decision-making process.

This is the second judgment in just over a year that has invalidated a Minister’s decision taken in terms of section 32(2) of the Labour Relations Act, which mandates the Minister of Labour to extend a bargaining council agreement at the request of a bargaining council.

The applicants in the matter were clothing companies and employees not registered with the Bargaining Council who insisted that they could not afford to pay the minimum wage stipulated in the agreement.

They took the matter to the Pietermaritzburg High Court on the following basis:

  • The Minister did not properly consider whether the minimum requirements for extension had been  met;
  • The extension clause provided for in section 32 is unconstitutional in that it unjustifiably infringes fundamental rights, including the right to freedom of trade, occupation  and profession.

The High Court did not comment on the constitutionality of the decision, but decided that the Minister’s decision to extend was invalid for non-compliance with section 32(3)(c).  This section requires:

  • That the majority of  employees who fall within the scope of the collective agreement are  members of trade unions party to the bargaining council; and
  • That the majority of  employees who fall within the scope of the agreement are employed by  employers who belong to the employers’ organisations party to the council.

The Minister relied on a certificate of representativeness issued by the registrar in terms of section  49(4) of the Labour Relations Act to gauge the representativeness required by section 32(3)(c).  The Court, however, found that the data on the certificate was inaccurate, and that the Minister in fact had before her accurate data that she had chosen not to consider in favour of the certificate.

As a result, the Court found that the Minister did not exercise the discretion required by section 32(3), and the decision fell short of the principle of legality.

It seems, therefore, that there must be an element of actual representativeness in bargaining councils for a section 32 extension to be valid.  The Minister must be truly satisfied that the statutory requirements for extension have been fulfilled before extending a bargaining council collective agreement to third parties.  Parties to such collective agreements will need to ensure that their bargaining council is adequately representative if they intend to bind non-parties in their industry.

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