Urgent bid to stop new restaurant pay rules – and employers say govt supports their interdict

21 January 2021 by Luke Daniel

  • An urgent interdict has been launched against new employment requirements in the stricken restaurant sector. 
  • Wage increases, mandatory bonuses, provident fund contributions and weekly payments to clean uniforms are part of a bargaining council agreement recently signed into law by the labour minister.
  • But employers argue that the bargaining council does not represent the majority of parties in the industry.

A legal battle has been launched to kill new wage requirements for restaurant and fast-food outlet employers – and in a surprise twist, it appears that government suggested that employers launch the urgent interdict.

From this week, the industry faces a costly set of new rules for staff pay, which includes mandatory wage hikes, December bonuses, weekly payments to staff for cleaning their uniforms, as well as a range of new levies and mandatory contributions to provident funds and funeral plans.

This is part of a collective agreement  by the newly formed Bargaining Council for the Fast Food, Restaurant, Catering and Allied Trades, which has been extended to all employers in the industry.

Signed into law by Labour Minister Thulas Nxesi, the collective agreement applies to almost all employers in the food service sector, with exceptions extended to hotels and service stations.

Up until now, the industry has been governed by the hospitality industry’s sectoral determination legislation, which has much less stringent requirements. Only establishments in Johannesburg and Pretoria have been subjected to collective agreements as members of regional employer organisations.

The new agreement, which is modelled on the one in Gauteng, now extends to employers throughout South Africa.

It has been met with outrage from many embattled restaurants, as the pandemic, the alcohol ban and lockdown decimate their income.

Under the new law, employers have until 18 February to register with the bargaining council, and they must comply with the new guidelines from this month.

But the Federated Hospitality Association of South Africa (Fedhasa), the national trade association for the hospitality industry, has launched an urgent interdict that seeks to overturn the extension, which was gazetted earlier this month.

“We wanted the minister to withdraw this [so] we could go back to consultation,” explains Rosemary Anderson, National Chairperson of Fedhasa, in detailing an urgent plea to the department of labour which was lodged shortly after the extended agreement was signed into law.

“As sympathetic as they [labour department officials] were, because this had already been legally gazetted by the minister and signed off by the registrar, there was no other option but for us to go to the courts.”

“They said that, legally, there was no other option,” says Anderson.

“We had mentioned before that we may have to take an urgent interdict and during the conversation, they said that, unfortunately, that was the only way to go [and that] it may actually provide clarity for both sides.”

While speaking to Business Insider South Africa, Anderson was quick to point out that Fedhasa had experienced a good working relationship with the department of labour and that lines of communication towards better cooperation were mostly honoured.

Fedhasa will fight the extension on the grounds that the bargaining council does not represent the majority of the industry.

By law, bargaining councils need to represent the majority of employers and employees for which their collective agreements will impact. This equates to an active membership of at least 50% plus one, a representation requirement which Anderson, and other legal experts Business Insider spoke to, say is highly unlikely to apply to the Bargaining Council for the Fast Food, Restaurant, Catering and Allied Trades.

The two employer organisations which form part of Council, namely the Guardian Employers Organisation (GEO) and Catering, Restaurant and Tearoom Association (CATRA), have a strong presence in Gauteng but, as argued by Anderson, lack representation in other parts of the country. Both organisations claim to represent, at most, 5,000 members.

“This [figure of 5,000] would mean that the hospitality industry, which includes tearooms, taverns, pubs, restaurants, etcetera have only just over 10,000 employers, which we know is just not possible,” explains Anderson.

“They [the Council] would get a single digit figure [of representation] maybe only a percentage of a single digit figure, that’s the only representation they have.”

Determining representation is not, however, the role of the minister and the department of labour.

This due diligence rests with the Registrar of Labour Relations, who is tasked with determining majority representation before any agreements can be extended by the labour minister. Also, unlike Fedhasa, the department of labour doesn’t believe that a strict majority is necessary.

“The registrar can make a determination considering whether parties to the Council are sufficiently representative even in this case where representation may be below 50%,” says Musa Zondi, acting spokesperson for the department of employment and labour.

“If the registrar has provided this Certificate, then the Minister must extend the agreement. That is the law as it stands.”

Zondi confirmed that government is aware of the interdict application brought before the courts by Fedhasa.

“In fact, it was the department which indicated to them [Fedhasa] that if they want the minister to change his decision, the only option for them was to approach the Courts,” Zondi adds, while reiterating that Nxesi had applied the law correctly “subject to the determination by the court”.

The core responsibility apportioned to the registrar is echoed by Anderson, who says that the minister, on recommendation from the registrar, is not required to engage in any further consultation.

“The department has indicated that all they are looking for is clarity, and we’re hoping that the minister and the registrar will not in any way stand in front of this application… maybe GEO and CATRA will, but we know that they don’t have anything to stand on,” adds Anderson.

No court date has yet been set to hear the urgent interdict application brought by Fedasa and the department of labour has refused to comment on whether or not Nxesi will contest the legal challenge.

Citing critical procedural flaws in the signing into law of the extended collective agreements, attorney Jan Truter of Labourwise advised restaurateurs and other affected parties to “consider holding back” pending the outcome of a legal challenge lodged by a “well-known association that represents employers in the hospitality industry”.

Source: Business Insider South Africa at https://www.businessinsider.co.za/urgent-bid-to-stop-new-restaurant-pay-rules-and-employers-say-govt-supports-their-interdict-2021-1