Restaurants in South Africa
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  • From this week, restaurants and fast-food outlets face new rules for employee remuneration, including a new requirement to pay a December bonus and a range of new levies.
  • This after government extended the newly formed bargaining council’s collective agreement to all employers – including those who are not part of the council.
  • But restaurants – bleeding from lockdown restrictions - plan a legal fight.
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From this week, all restaurants and fast-food outlets in South Africa face a costly set of new rules for staff remuneration, which includes December bonuses and weekly payments to clean uniforms.

This after the Department of Employment and Labour extended the main collective agreement of the newly formed Bargaining Council for the Fast Food, Restaurant, Catering and Allied Trades to all employers – including those who are not part of the bargaining council. All restaurants and fast food outlets have a month to register with the council.

Previously, restaurants were covered by the sectoral determination for the hospitality sector, which had far less tenuous requirements.

Restaurants are now threatening legal action against government to stop the new bargaining council rules from taking effect.

Under the new requirements, all restaurants and fast-food outlets must pay wages that, even at the lowest level for waiters, exceed the national minimum wage by at least 7% (by 1 May 2021). Employers must increase wages by inflation (CPI) plus 1.5% in future, and will not be able to reduce the salary of staff who have been paid higher-than-prescribed rates.

Small businesses, which employ ten people or fewer, may pay employees 10% less than the prescribed wages, but not less than the national minimum wage.  

Other costs which are now required include:

  • A bargaining council expense levy (paid to the council): Every month, the company must pay R5 per employee. Each employee must also pay R5. 
  • Dispute resolution levy (paid to the council): Every month, the company must pay R3 per month per employee. Each employee must also pay R3.
  • General establishment levy (paid to the council): R25.00 per month per establishment
  • Funeral benefit: The company must pay R12.50 per month per employee, and the employee must also pay R12.50 per month.
  • Provident fund: The company must contribute 5% of the employee’s monthly wages, while the employee must contribute another 5%.
  • Uniform: R17.50 per week payable to each employee if they are required to wash their own uniforms.

Additionally, a December bonus – of one week’s wages – must be paid to all employees who have been employed for a year. Those who have worked at the establishment for two (or more) years must receive a bonus of two week’s wages.

In total, the new requirements will increase the overhead costs of restaurant employers by at least 16%, according to the National Employers Association of South Africa.

It has been a shock to the industry, says Labourwise attorney Jan Truter. "Few of the affected parties saw this coming."

The new requirements come at a time when South Africa’s restaurant industry has been decimated by the Covid-19 pandemic and subsequent lockdown laws.

It comes into effect on Monday 18 January 2021, and employers in these sectors will need to register with the Council before 18 February 2021.

Those excluded from the new regulations include establishments run by hotels, casinos, or petrol stations.

Gauteng establishments also have their own set of bargaining council agreements, which look by and large the same, says Labourwise attorney Jan Truter.

Wendy Alberts, CEO of the Restaurant Association of South Africa (Rasa), says legal action has already been prepared against the extension, and that an industry body has indicated that it will lodge an urgent interdict, which will have the support from other organisations, including RASA.

Before extending the bargaining council requirements, labour minister Thulas Nxesi had to be satisfied that the council represents the majority of employees and employer members impacted by extended agreements. But this has not been proven, Alberts contends.

“We’ve asked Nxesi to remove the extension, firstly because [of] Covid and also [because] the institutions which put the bargaining council together need to prove their membership, which they can’t do,” explains Alberts. “If they claim they hold 51% representation in South Africa, they need to prove that.”

Truter agrees. "It is highly questionable whether they have this level of representivity, especially if one considers that the Johannesburg and Pretoria regions are excluded." 

He believes extending the bargain agreement to all restaurants and fast-food outlets in South Africa is ill-conceived. He says the previous sectoral determination was entirely adequate - and that employers and employees had the flexibility to enter into their own unique arrangements.

The agreement, which aims to offer greater financial protection to employers, adds another layer of red tape which will discourage entrepreneurship, argues Truter.

 “A large proportion of employers in the industry, especially in fast foods, are entrepreneurs,” explains Truter. “These entrepreneurs tend to be sensitive to costs and averse to red tape. They are the ones who would be particularly hard hit.”

“Considering the severe impact of the extension of the Main Agreement, affected employers should consider holding back, pending further developments.”

The article has been updated to correct the monthly levies and other contributions payable under the new guidelines.

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