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Can employers apply for an exemption from the upcoming wage increases?
In these difficult economic and trading times, some companies may be battling to survive or be competitive. They are often forced to cut costs where they can. To achieve these objectives, companies look at various options to cut costs – and one of the options is labour.
When considering labour costs, companies often look at the following:
- Retrenchments – this can include up to two months of difficult and time-consuming consultations and the company is often faced with exorbitant severance payments.
- Lay-offs – the Main Agreement allows companies to implement lay-offs after a two-week consultation process. A lay-off is an unpaid temporary suspension from work.
- Short time – the Main Agreement allows companies to implement short time after five calendar days’ consultation process. The employees pay will then be reduced, based upon the reduced time that they work each week.
- Exemptions to the wage increases – the Main Agreement allows companies to apply for an exemption to any provision in the Main Agreement, and many companies have made use of this provision in the Main Agreement to apply for an exemption to the wage increases.
As a brief background, it is useful to give consideration to the following:
The Labour Relations Act (LRA) 1995/66 (S 31) states that parties to the MEIBC are bound by the collective agreements concluded in the bargaining council. Once a collective agreement has been concluded in the bargaining council, the parties to the bargaining council may apply to the Minister of Labour, in terms of the Labour Relations Act 95/66 (S 32), to extend the agreement to non-parties, namely, employers and employees who work in the sector or industry in the Bargaining Council’s registered scope, but who are not party to the agreement. The Minister will only extend the agreement to non-parties if:
- The majority of all the employees who, upon extension of the collective agreement, will fall within the scope of the agreement, are members of the trade unions that are parties to the bargaining council;
- The members of the employers’ organisations that are parties to the bargaining council will, upon the extension of the collective agreement, be found to employ the majority of all the employees who fall within the scope of the collective agreement.
However, the LRA (S)32 (5) further provides that the Minister may extend a collective agreement even if the parties to the bargaining council are only sufficiently representative within the registered scope of the bargaining council and the Minister is satisfied that failure to extend the agreement my undermine collective bargaining at sectoral level or the public service as a whole.
The Minister of Labour, when considering whether or not to extend a collective agreement concluded in a bargaining council to non-parties, must be satisfied that the parties meet the requirements of the Labour Relations Act 66 of 1995, which include the following:
- Adequate provision must be made for an exemption procedure in respect of non-parties to the bargaining council;
- Provision in the collective agreement for an independent body to hear and decide on any appeal brought against the council’s refusal of an application for exemption or the withdrawal of an exemption by the Council;
- The criteria for granting exemptions must be set out in a collective agreement; and
- The collective agreement does not discriminate against non-parties.
Once a bargaining council agreement has been extended to cover non-parties, the provisions of the collective agreement bind all employers and employees falling within the registered scope of the bargaining council. These employers and employees may apply for exemption from certain provisions of the collective agreement.
All applications must be in writing and fully motivated, and sent to the MEIBC’s regional office in the area in which the applicant is located. Applicants must complete an application form which is available from the employer’s nearest regional MEIBC office or from the SEIFSA office. The application will include a motivation, a business plan and financial information, including audited financial statements.
In scrutinising the application, the MEIBC will consider the views expressed by the employer and the workforce, together with any other representations received in relation to that application.
The employer must consult with the workforce, through a trade union representative or, where no trade union is involved, with the workforce itself, and must include the views expressed by the workforce in the application:
- Where the views of the workforce differ from that of the employer, the reasons for the views expressed must be submitted with the application;
- Where an agreement between the employer and the workforce is reached, the signed written agreement must accompany the application;
- In the event of an appeal against a decision of the council, the council will, upon receipt of the appeal by an employer/workforce/union, submit it to the Independent Exemptions Appeal Board for consideration and finalisation; and
- Applications for exemptions involving monetary issues may not be granted retrospectively and exemption is only granted for the duration of the agreement, which is normally for a period of one year (from 1 July to 30 June of the next year).
Can employers apply for an exemption to the Leave Enhancement Pay (LEP), (Leave Bonus)?
The answer is yes.
However, please note that because in the past the council has experienced considerable difficulties with firms which submit late applications for exemption for the payment of LEP, which meant that employees only heard just before they went on leave that they will not be getting their expected leave bonus, , which would negatively impact on their holiday plans. Therefore, the parties agreed that all applications for exemption from the payment of LEP must be submitted to regional council offices by no later than 31 October each year.
The procedures for submitting an application for exemption are clearly set out in Clause 23 of the Main Agreement and must be in accordance with the administrative procedures of the Regional Council Office. Applicants must complete an application form which is available from the employer’s nearest regional MEIBC office or from the SEIFSA office. The application will include a motivation, a business plan and financial information including audited financial statements.
In addition it is important to take note of the following:
- Clause 14(4) of the Agreement which reads:
- “Every employer in the industry is required to make an adequate monthly financial provision for the payment of employees LEP. The parties to this Agreement regard full compliance with this provision as being of particular importance”.
- Clause 14(6)(m) of the Agreement, which reads:
- “The Council shall deem employers who do not wish to participate in the Council’s LEP monthly contribution scheme as financially capable of meeting their obligations in this regard. The Main Agreement provides for a monthly contribution scheme as set out at clause 14(6). This scheme allows employers to pay the monthly LEP amounts to the Council (by way of the monthly contribution returns) and the full bonus is then available at the annual shutdown date”.
The SEIFSA office provides assistance on nearly all company-related matters and problems, including the ones mentioned in this article, such as:
- Short-time, and
- Exemptions to the wage increases.
Please do not hesitate to contact the SEIFSA Industrial Relations and Legal Services team if you need any assistance on these matters or any other Industrial Relations matter, such as
- the chairing of disciplinary hearings,
- representation at dispute meetings,
- retrenchment meetings, and
- any Main Agreement-related matters.