Restaurants win first round of legal fight to stop new wage rules
- In January, new wage rules were gazetted for all restaurants in South Africa as part of a controversial collective agreement.
- Industry bodies launched a legal bid against the new agreement, and on Tuesday was granted an urgent court interdict.
- For now, employers won't have to comply with the new rules, which included mandatory pay hikes, December bonuses and weekly payments to clean uniforms.
- For more articles, go to www.BusinessInsider.co.za.
The restaurant industry struck a legal blow against a costly set of new rules for staff pay, which would have included mandatory pay hikes, December bonuses and weekly payments to clean uniforms.
In January, the rules were gazetted as part of a controversial collective agreement for the restaurant and fast food sector.
But on Tuesday, the Federated Hospitality Association of South Africa (Fedhasa), with support from industry body Restaurant Collective, was granted an interdict by the Labour Court. The court found that employers who were not part of the Bargaining Council for Fast Food, Restaurant, Catering and Allied Trades could not be forced to comply with the collective agreement.
Many restaurants, already damaged by restrictive lockdown regulations, were strongly opposed to the timing of the collective agreement.
Initially signed into law by Labour Minister Thulas Nxesi in January, the collective agreement applies to almost all employers in the food service sector, with exceptions extended to hotels and service stations. The agreement was finalised by the newly formed Bargaining Council for the Fast Food, Restaurant, Catering and Allied Trades.
But restaurants argued that the department of labour couldn't prove that the bargaining council represented the majority of the industry.
The agreement meant that the industry had to pay 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.
The industry was previously governed by the hospitality industry’s sectoral determination legislation, which has much less stringent requirements. Only establishments in Johannesburg and Pretoria were subject to collective agreements as members of regional employer organisations.
The new agreement, which is modelled on the one in Gauteng, extended to employers throughout South Africa.
But Tuesday's urgent interdict, which was granted without a challenge, means that restaurants won't have to comply with the stringent new rules. The Bargaining Council, which initially said it would oppose the interdict, did not file opposing court papers.
“We are delighted with this outcome, which is a positive first step in the process to get this legislation set aside,” explained Rosemary Anderson, National Chairperson of Fedhasa.
“It has been greatly encouraging to see all the major restaurant brands joining forces with Fedhasa to fight this extension, which if implemented in its current form, could have a devastating impact on an already battered industry.”
The collective agreement will now be reviewed and the department of labour must prove that the bargaining council represented the majority of restaurants in South Africa.
By law, bargaining councils need to represent the majority of employers and employees who will be impacted by the collective agreements. 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, said 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,” Anderson previously explained.
“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.”
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