Scrap extension of collective bargaining agreements to small businesses

Issued by Dr Michael Cardo MP – DA Shadow Minister of Employment and Labour
03 Mar 2021 in News

Please find attached soundbite from Dr Michael Cardo MP.

The Democratic Alliance (DA) welcomes the urgent interdict granted to the Federated Hospitality Association of South Africa (Fedhasa) and the Restaurant Collective to stop the extension of the collective agreement struck in the Bargaining Council for Fast Food, Restaurant, Catering and Allied Trades.

The urgent interdict prevents any Bargaining Council employee or representative from enforcing compliance with the agreement on establishments that are not members of the Bargaining Council, pending the outcome of a review application.

In January, the Minister of Employment and Labour, Thulas Nxesi, extended the collective agreement to all employers and employees in the industry. At the time, the DA said that the extension of this agreement, and its enforcement, would deliver the death-blow to an industry that has been battered over the past year and is already on its knees.

In terms of the agreement  all employers in the fast-food, restaurant and catering industry have to:

  • Implement a mandatory increase in hourly wages for various categories of workers and a 1.5% increase over and above inflation on those wages from 1 May 2021 onwards.
  • Provide employees who work for 12 consecutive months with one week’s wages as an annual bonus during December, and those working for 24 consecutive months or more with 2 weeks’ wages as a bonus.
  • Provide a stipend of R17.50 per week to employees if they are required to wash their own uniforms.
  • Pay various levies including a levy for ‘Council expenses’ (R5 per month per employee); a ‘general’ levy (R25 per month per restaurant); and a ‘dispute resolution levy’ (R3 a month per employee).

For many small operators in the industry, this is simply unaffordable. Many of the fast food outlets, restaurants, and caterers that remained open only barely survived the hard lockdown. The extension of this agreement could result in the complete closure of their businesses and lead to thousands of job losses.

The DA welcomes the urgent interdict, notes that the Bargaining Council did not bother to file papers or appear in court, and hopes that the Minister’s ill-advised decision will ultimately be set aside.

The automatic extension of collective bargaining council agreements to small businesses (and others who didn’t sign them in the first place) is a jobs-killer. It is a flaw in the Labour Relations Act (LRA). And it undermines the ANC’s putative economic reform agenda. That is why the DA intends to submit a Private Member’s Bill that will scrap this provision in the LRA.