Archive Issues  > Issue 08

Construction Bargaining Councils

Thu, 15 Oct 2009 14:19

The abuse of labour in the construction industry has come under heavy fire of late. In particular, wage disputes, working conditions, benefits and worker's rights. Added to this, there is a strong undercurrent of unethical business practice on behalf of the contractors themselves.

In managing these issues, the role of industry bargaining councils holds potent relevance. Their very mandates are designed around the protection and development of industry, and the upholding of both the employers and employees rights.

Bargaining councils are formed in terms of the Labour Relations Act (LRA), which basically makes provision, as far as conditions of employment are concerned, for an industry to govern itself. The rationale is that ‘the industry knows best' in terms of working hours, leave periods, minimum wages, the differences between labourers, general workers, semiskilled and artisans, as well as the ratios between the number of workers and their levels of skill and experience. These numbers often differ from area to area. For instance, the now-defunct bargaining council in Gauteng used to have a much higher ratio of labourers to artisans than the Western Cape.


The industry in the Western Cape and Boland is governed by employers who are members of the Master Builders Association Western Cape and the Boland Master Builders Association, on the one side, and representatives of the employees from four separate trade unions – the Building Workers Union (BWU), Building and Allied Workers Union of South Africa (BAWUSA), the National Union of Mineworkers (NUM), and the Building Construction and Allied Workers Union (BCAWU) on the other side..

The groups come together and negotiate a ‘collective agreement', which contains all the conditions of employment, such as:

  • Hours of work
  • Overtime pay
  • Minimum wages
  • Annual leave

Included in the collective agreement are the social benefits and funds, such as:

  • Holiday fund
  • Bonus fund
  • Pension and provident funds
  • Medical aid fund (for artisans)
  • Sick pay fund

With a completed collective agreement in hand, the council must then show the Minister of Labour that the parties to the agreement are representative of the majority of employees. If they can prove a ‘50% plus one' majority, the Minister is obliged to extend these minimum conditions of employment to the entire industry. He will sign it off, at which point it is gazetted in the Government gazette, to then become law and applicable to the whole industry in the Council's area of jurisdiction.

Henry Strydom, Secretary of the Building Industry Bargaining Council (BIBC), says, "In terms of the collective agreement, the secretary and his or her support staff are appointed. In the smaller councils, the secretary is often the only employee, and will have to perform all the council's tasks. This will include doing inspections, writing minutes and all the administrative work. As they grow, so to does the support staff, as is the case in the Western Cape where we have 70 staff members." Once the collective agreement becomes law, it applies to all members of the industry – employers and employees. The employer is then obliged to register with the bargaining council and abide by the collective agreement.


Henry adds, "Naturally, there are those who don't abide by the laws. This is where the Monitoring and Compliance Department enters the fray. Members of this department are termed ‘Designated Agents'. These Agents have certain powers vested in them by the LRA. Effectively inspectors, they can enter premises, interview people, and issue compliance orders.

"When the agents find an employer underpaying, or not paying over contributions to the various funds, they can issue a compliance order, which the employer then has to abide by. This is much like the National Homebuilders Registration Council (NHBRC), which manages the quality of work, and can issue compliance orders requiring the builder to fix any quality issues within the building. "If, for one or other reason, the person fails to comply with the compliance order, he or she can be taken to the Labour Court, which will then issue an order of the court. If there is yet further failure to comply, that person will be held in contempt of court and can be thrown in jail.

In days gone by, the process was far less accommodating. Contraventions of the council agreements and the LRA constituted a crimi-nal act, and people could be taken to court immediately. Contraventions have since been ‘decriminalised' in a way. The idea being that the parties involved should be afforded the opportunity to resolve issues before they are dragged into the (already inundated) court system.

The compliance and monitoring department do a lot of dispute resolution. It often comes in the form of an employee complaint, and the council will then discuss the situation with the employer and try to reach an amicable solution. Whether it be wage disputes or unfair dismissals, the council's first goal will be to mediate and reconcile. Only if that process fails will the issue go to arbitration. Once again, with arbitration, whatever the court dictates, that will need to be adhered to, otherwise it becomes a criminal concern.


"We have a unique system in terms of fund management. By virtue of the migratory nature of the building industry, employees seldom accrue leave or holiday pay. It is commonplace for employees to move between many different employers in the space of a single year.

"To accommodate this, we calculated annual contributions to the various funds and scaled it down to a daily rate, based on a figure of 245 working days in the year. That daily rate is then multiplied by the number of days the employee worked. The employer will then pay that benefit, which includes the pension fund, provident fund, medical aid, sick pay, leave pay and bonus fund, to the council. Outside of the pension fund, all funds are administered in-house. As such, the council invests the money and derives interest, which is then used to pay for the administration of the funds and the general running of the council. Both the employer and the employee pay a levy to the council as well. Bearing in mind that the council is a non-profit company, and is not subsidised by Government, the industry effectively pays for the council. However, while healthy worker compensation is being built, is the rationale anti-competitive?


It has been said that this collection of compulsory fees is a major obstacle for small businesses trying to enter the market. Indeed, accusations have been levelled at the alleged ‘cartel-forming nature' of bargaining councils. Furthermore, poor levels of representation for small business stain the image of councils around the country.

Small business owners tend to join associations, and the like, driven by big companies. They simply lack the staff, resources or time to focus on issues not directly related to the survival of the business. While partnerships between business big and small hold many benefits, problems surface when their interests clash. Simply, big business benefits when there are higher barriers to entry. The argument suggests that large companies agree to union demands for high wage increases, making them too high for entrylevel employers. If the bargaining councils achieve majority representation, the wage levels become law. Thus, only those companies that can afford corporate pay packages can survive.

In many cases, start-ups are being persecuted for failing to pay luxury perks such as holiday bonuses to their workers. This culminates in a disabling environment for small business, the polar opposite of what this country needs to be striving toward.

The problem is that there is no distinction within the collective agreements between the cash flow of a large corporation and that of a small business. More often than not, one has a cash flow, the other does not. Would certain allowances within council structures not alleviate these pressures, and promote the development of entrepreneurship? For example, the Bargaining Council for the Furniture Manufacturing Industry offers a gradual phasing-in approach for small business owners. Companies with five or fewer employees are granted automatic exemption from paying levies and contributions for two years. After which, they are granted a further three years whereby they are gradually phased in. Only after six years will they be expected to pay full amounts.


It is common knowledge that the Minister of Labour favours the elimination of labour brokers in their entirety. This argument is based on the premise that brokers do not offer ‘decent work', a term coined by the International Labour Organisation (ILO). While they seem to be having difficulty formulating what decent work actually is, it revolves around job security and freedom from exploitation. Henry says, "The labour broker that supplies labour to a building contractor has to comply with the collective agreement – employees are not being prejudiced at all. We have many brokers on our books, and we monitor them, make sure they pay over the contributions, and make sure they pay proper building industry wages.

"I simply think that brokers need to be regulated and controlled. Saying that, we go out of our way to ensure that those who supply labour to the building industry are properly managed. Responsibility falls upon each industry to ensure that its brokers are properly registered, and that exploitation is removed." All too often, companies employ temporary workers for months, if not years at a time. Furthermore, they often work alongside permanent employees receiving an array of social benefits. This amounts to a basic evasion of social responsibility, and industry should be playing a far more active role in wiping out this kind of practice.

Henry says, "One of the attractions for business to employ the use of labour brokers is that the service allows owners to fire staff when the situation justifiably demands it. However, this leaves the door open for abuse, and in two ways. Law tends to stand on the side of labour, and in many cases, disruptive or underperforming labourers can take their employers to court under the premise of ‘unfair dismissal'. On the other hand, employers are often found to fire workers for reasons unfair as well.

"In my opinion, a longer probation period might be the answer, between six and nine months for example. This is more than enough time for the employer to assess whether the employee is fit for the job. If the employer keeps an unfit worker aboard, he or she must accept responsibility for that decision. However, if the employer decides to terminate the employment, he or she should be safe from prosecution."

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