My previous article highlighted the fact that trade unions can approach employers in terms of the Labour Relations Act (LRA) and demand recognition. One of the key demands of the union will be to negotiate wage increases for their members in your employ. This can have extremely serious consequences for employers because:

➢ On the one hand, refusing the demand could result in a strike. Not only would a strike be bad for business but it could also ferment workforce hostility against the company’s management.

➢ But, on the other hand, if you agree to bargain annual wage increases with the union then your right to manage the company’s finances goes out the window. For example, if you can only afford an 8% wage increase the union could succeed in forcing you to a 14% increase. This extra 6% could come to, say, R500 000. This means that you will be forced, by an outside party (the union), to borrow half a million rand or to take that money out of your profits or expansion budget.

Furthermore, having increased wages by 14% this year, you will commence wage negotiations next year from a much higher base and the task of resisting another 14% (or higher) increase next year will be extremely difficult because your workers’ expectations will have been raised. Therefore, employers have become nervous at the prospect of concluding collective agreements with unions. Three reasons for this concern on the part of employers are:

➢ Previous experience with such agreements which have been one-sided in favour of employees

➢ The employer’s ignorance as to what it could demand in the interests of the company

➢ The employer’s uncertainty as to how to negotiate such agreements.

However, collective agreements, just like all contracts, are two-sided and cannot be concluded without the agreement and signatures of both parties.

There is also confusion as regards the different types of collective agreement. The more common types of collective agreement include:

➢ A recognition agreement via which an employer grants a trade union certain organisational rights (such as the holding of union meetings and the right to elect shop stewards) in return for undertakings that the union officials and shop stewards will exercise their rights in an orderly manner which does not disrupt the business or peace of the organisation.

➢ Agency shop agreements allow employers and trade unions to force non-union members to pay a “service” fee to the union even if the service is not wanted.

➢ Closed shop agreements between employers and unions force new recruits to the enterprise to either join the union or lose the appointment.

➢ A substantive agreement, which is an agreement on wages and employment conditions. Here the employer and union traditionally negotiate over what wage increase the employees will get and other matters such as leave and hours of work. Unfortunately, most employers get stuck in this rut instead of trying to negotiate pay for performance packages.

Whichever type of collective agreement an employer is entering into he/she needs to ensure that the business gets as much out of it as possible. What employer would negotiate a business contract with a customer or supplier without looking to make capital out of the contract? This principle should apply equally to agreements with unions.

In order to ensure that they do get the maximum out of collective agreements with unions, employers require the following:

➢ Above all, a clear idea as to what they want to achieve out of the agreement
➢ Training in the objects of the various types of agreement
➢ Negotiating skills
➢ The assistance of a labour law/industrial relations expert experienced in dealing with trade unions. This strategy could help you avoid the costs of a strike on the one hand and the cost of an excessive wage increase on the other hand. But, should you bring in a labour expert be sure that he/she:

• Has experience in dealing with trade unions and wage bargaining
• Is an expert in strategising and preparing for wage negotiations
• Has a thorough knowledge of the labour legislation which dictates what the bargaining parties are and are not allowed to do
• Understands your need to gain from the negotiations the workers’ willingness to earn better pay by improving productivity
• Is able to win you the best deal but, at the same time, reduce the chance of a strike through the use of a professional and unemotional approach.

To book for our seminars on NEW CHANGES AND DANGERS IN LABOUR LAW 2012 in Cape Town (9 March 2012) and Durban (15 March 2012) please contact Ronni via (011) 782-3066, 0845217492 or ronni@labourlawadvice.co.za.

Written by lvan lsraelstam, Chief Executive of Labour Law Management Consulting
Contact:
Tel: (011) 8887944
Cell: 0828522973
E-mail address: labourlaw@cinet.co.za
Website: www.labourlawadvice.co.za

This article first appeared in The Star.