A key provision of the recently gazetted Main Agreement is that it must contain an effective procedure to deal with applications for exemptions and such applications must be dealt with within a period of 30 days. An additional legal requirement is that the collective agreement must make provision for an independent body to her and decide as soon as possible and not later than 30 days after the appeal is lodged, any appeal brought against the bargaining council’s refusal to grant an exemption.

A wage or wage-related exemption (e.g., wage increases, relief from the leave enhancement pay, etc.) will require the submission of audited financial statements, an auditor’s report together with balance sheets and income statements for the last three months. The application will also require a motivation and business plan.

It is important to note that the Bargaining Council is obliged to consider all applications for exemption irrespective of the basis on which they are founded.

This effectively means that financial reasons are not the only criteria which must be considered. Employers may apply for an exemption on any one or more of the following reasons (but not limited to):

  • increased competitive threats;
  • the inability of the employer to pass on cost increases to final customers;
  • technological changes threatening business survival;
  • inherently high difference between wage rates actually paid and current affordability of market competitive considerations facing an employer;
  • market decline, projections, etc.;
  • loss or potential loss of business;
  • existing/ current unprofitable contracts the consequences of which are only likely to manifest themselves in future/ current (unreported) accounting periods;
  • expansion opportunities (including capital investments) where cheaper labour costs could influence investment decisions; and/ or
  • new ventures/ operations which justify retention or creation of job opportunities at reduced wage costs.

Importantly, reaching an agreement with affected staff is not a prerequisite for being granted an exemption. What is important is the financials and accompanying narrative supporting the application.

Should you decide to submit an application, rest assured that the financials are stripped-out and embargoed and are only seen by an independent auditor appointed by the bargaining council. All the Exemptions Committee sees is a report, essentially summarising the financial health of the company and a recommendation on whether or not the financials, motivation, and business plan support the application being sought.

Whilst the deadline date for party employers has passed (i.e., 31 October) non-party employers have until 17 November to submit an application.

For party employers who for one or another reason missed the deadline, all is not lost. If you are in this position and would still wish to submit an exemption application, please contact the SEIFSA Office on (011) 298-9400 and ask for Vuyiswa, Michael, Monica, or Lucio we will be more than happy to assist.

If you would like to find out a little bit more about the benefits of joining an Association federated to SEIFSA fill in the membership form or send us an email at nuraan@seifsa.co.za – we know you won’t be disappointed.

Next week I will cover the ins and outs of the Special Phase-in Dispensation, watch this space!

Lucio Trentini