The Labour Court in Johannesburg on Monday dismissed an urgent application by the National Employers Association of South Africa (Neasa) to prevent the Metal and Engineering Industry Bargaining Council (MEIBC) from requesting Labour Minister Mildred Oliphant to extend a July agreement between the Steel and Engineering Industries Federation of South Africa (Seifsa) and trade unions, to nonparties.

The National Union of Metalworkers of South Africa and five other unions had accepted Seifsa’s offer of a 10% wage increase for the lowest-grade employees for three years; however, Neasa had not signed the agreement, arguing that the increase was at an “unsustainable level” and would cause the metals and engineering industry to decline even further.

The Labour Court on September 25 and November 4 granted interim orders that prohibited the MEIBC from approaching the Minister with a request to extend the July agreement, with final arguments having been heard on November 14.

“This morning, the Labour Court made public its ruling, dismissing Neasa’s urgent application. On a first and cursory reading of the judgment, it is clear that the court has erred in many ways,” Neasa said in a statement.

The employer body further noted that the court had premised its findings on the belief that the parties were still involved in arbitration to determine whether or not the MEIBC was properly constituted in terms of its Constitution, while that arbitration had already been concluded in Neasa’s favour in 2011.

Further, Neasa stated that the court had ignored the fundamental differences between employers’ organisations and employers’ federations.

“The effect of this judgment is that decisions which affect nonparties to an agreement can be taken in an unconstitutional environment and in an unconstitutional manner.

“This in effect implies that no rules need apply when a bargaining council makes a decision. This judgment opens the door for bargaining councils to function in an illegal, unconstitutional and lawless manner,” Neasa CE Gerhard Papenfus stated.

Neasa added that it would study the judgment and announce further actions in due course.

The employer body said that, while an appeal to the Labour Appeal Court was likely, it was hopeful that the Minster would act conscientiously when she was required to decide whether or not the MEIBC’s decision complied with the peremptory provisions of the Labour Relations Act.

“The July 2014 agreement was reached outside of constitutional structures and in an unconstitutional manner. This, more than anything else, will lead to the downfall of centralised collective bargaining.

“Employers will not subject themselves to these kind of unlawful agreements. Neasa will continue to contest all attempts by the Minister to extend the agreement with all means at our disposal. The extension of this agreement will only result in further job losses in an already crippled metal Industry,” Papenfus said.

Meanwhile Seifsa welcomed the ruling, with CEO Kaizer Nyatsumba stating that he was “delighted that the Labour Court had upheld the rights of our employer associations to designate Seifsa as their representative in negotiations with labour”.

“Associations affiliated to Seifsa look forward to the conclusion of the arbitration process to bring stability within MEIBC structures in the country. We are confident that the formula used in other bargaining councils, in terms of which seats are allocated to employers on the basis of the number of people in their employ, will also apply in the MEIBC,” he said.

Further, Seifsa operations director Lucio Trentini said the court judgment had restored some certainty and stability into the system and placed the prospect of further unnecessary labour relations disruptions and economic harm on the back burner.

He added that Seifsa would continue to support the bargaining council in seeking the promulgation of the agreement by the Labour Minister.

“We will do everything in our power to offer assistance and guidance, through the bargaining council national exemptions policy, to individual employers who find difficulty in implementing elements of the agreement,” Trentini said.