Labour is a crucial cornerstone of business, and reasonable compensation has been integral to keeping employees motivated and productive. However, when the cost of labour, due to employee/trade union demands, becomes too expensive for employers, they may have no choice but to start retrenching or even close their business doors entirely. This in turn not only leads to job losses and unemployment but also impacts our economy and society negatively. Locally, as in the rest of the world, this issue is addressed through a legal process called “collective bargaining,” In South Africa, collective bargaining is defined and promoted by the Labour Relations Act 66 of 1995 (LRA). This article examines how collective bargaining works in lay terms and why every employer should participate in this critical process. Suppose they do not fall under the jurisdiction of a specific bargaining council. In that case, they could negotiate collectively with other employers in the same industry at a centralised negotiating forum.

What is collective bargaining?

Collective bargaining is a process that enables employers (represented by their employers’ organisations) and employees (represented by their trade unions) to reach an agreement about salaries or wages and working conditions. The platform where these negotiations take place is called “bargaining councils.” For each industry where both the trade unions and the employer organisations have sufficient membership, there is a different bargaining council., These bargaining councils and the two main parties involved in the negotiation process, namely the trade unions and employers’ organisations, must be formally registered with the Department of Employment and Labour (DEL) and operate within the relevant legal parameters.

The role of each party in collective bargaining

The bargaining council aims to facilitate labour-related negotiations between employers’ organisations and unions, solve labour disputes, establish various employee incentive schemes, and provide guidance and advice on labour-related policies and laws. The employers’ organization aims to represent or advance the interest of employers or groups of employers in matters pertaining to employment. Similarly, the purpose of the trade union is to represent or advance the interest of employees or groups of employees in these matters. As soon as all parties have agreed to the salaries or wages and working conditions, the agreement details are incorporated in a “collective agreement” signed by the parties involved.

When does a collective agreement become legally binding on non-parties?

A signed collective agreement may be sent to the Minister of Labour with a request to extend the agreement to non-parties. The Minister must then extend the collective agreement to all employers and employees in that industry, should the parties have sufficient representation amongst the employers and employees, by publishing a notice in the Government Gazette within 60 days of receiving the request. Typically, collective agreements are in place for one to two years. Upon the expiry of this period, should the parties have retained their respective membership numbers, the terms are renegotiated, and the collective agreement is sent to the Minister for a further extension period.

Who is bound by a collective agreement?

A collective agreement is binding on all the employers and employees of the trade union(s) and employer organisation(s) that have signed the collective agreement. The moment the Minister extends a collective agreement, it becomes legally binding on all the other employers and employees in that industry, or within the relevant geographical area, depending on their representation, regardless of whether they participated in the collective bargaining process or not. By law, the onus is furthermore on the employer to determine which industry their business falls in and research which bargaining council and collective agreements may inform their terms and conditions for employment. This is why all employers or their dedicated labour relation(s) practitioners should always be well-informed of the terms of the latest collective agreement that pertains to their industry.

How to get a seat at the labour decision-making table

As discussed above, only registered employers’ organisations and trade unions can participate in collective bargaining. These entities must apply to become a “party” to the bargaining council to participate. Voting rights are then allocated according to the number of “seats” the entity has. The number of seats is generally determined by membership numbers and varies from bargaining council to bargaining council.

One bargaining council can, for example, determine that an employer’s organisation or trade union must have 500 members to get one seat, while another could determine that it must be 100. The way seats or votes are allocated is negotiated by the parties to the council, to ensure they are realistic and practical for the industry or segment of that particular industry.

Simply put, an employee, who wants a voice at this decision-making table, needs to join a legally registered trade union who then needs to apply on behalf of its union members to get a seat at that industry’s bargaining council. Similarly, employers who wish to have their voices heard must join a legally registered employer’s organisation. After all, you cannot sit on the sideline and criticise the rules of collective agreements binding you if you have chosen not to participate in the relevant negotiation forums.

So, if you are an employer, you can start shaping and leveling your own labour playing field by emailing to join South African United Employers Organisation (SA)UEO today. For more than 22 years, we have been trusted to represent employers in South African industries across the board and promote their interests in a manner that is as fair as possible to all parties involved. For more info, visit