SMALL employers and employers’ associations say bargaining councils – to which businesses big and small are mandated to join – are killing businesses. Bargaining councils make small businesses pay the same wages and benefits as large corporate companies who dominate the bargaining councils.
The one way out of this is for a small firm to apply for an exemption, but many say exemptions are not being granted.
In his 2005 State of the Nation address President Thabo Mbeki hinted at the granting of blanket exemptions to small businesses from bargaining councils. But the Minister of Labour Membathisi Mdladlana has since said the system of exemptions “appears to be functioning well” pointing to research conducted in 2005 that indicates that more than 70% of firms that apply for exemptions are granted them.
Yet Johan de Lange of Cofesa, an employers’ association that represents over 5 000 employers, many of them small, says very few businesses apply for exemptions because the chances are they “won’t get it”.
Exemptions are largely granted from provident fund contributions and usually run for a temporary period of no more than a year.
One former secretary of an employer’s association described exemptions procedure as a “joke” and said exemptions were presided over by employers from the employers’ association and by trade unionists. Businesses applying for an exemption had to submit their full financials, a breakdown of their wages and a business plan.
“I might as well say to my opposition here is my business come and run it,” said the former secretary.
Michael Bagraim, a labour lawyer who runs the Small Business Employer’s organisation says the exemptions procedure is complicated and forms can run to 12 pages long and have to be fully motivated to be accepted.
Bagraim says the basis on which exemptions are applied – that one first has to join your bargaining council before you can apply for exemption – forces many businesses to go under the radar in case they aren’t successful with their application.
Labour inspectors often tell him they will oppose an application for exemption “with whatever they have got” and says the exemptions committee often doesn’t buy the idea that the applicant will have to start retrenching staff unless they can be exempted. Says Bagraim: “I advise those people who aren’t registered to stay off the radar”.
Wendy Wolhuter who runs small transport firm, JDW Transport, contacted her bargaining council requesting an exemption. But in an emailed response, the administrative head of the National Bargaining Council for the Road Freight Industry (NBCRFI) Paul Mndaweni told her that her chances of getting an exemption were “very minimal”.
The council’s general secretary Joe Letswalo, told Business Report that this was because the council doesn’t readily grant exemptions from the council’s provident fund.
But he added that last year the council exempted 138 businesses of its 2 800 registered employers.
He said 75% of those that applied for the exemption from benefit schemes, were successful in their application. Exemptions run for the duration of the agreement – in this case two years.
The council has an independent board consisting of three attorneys, that presides over exemptions.
But Ben van Rooyen, a former regional secretary for National Bargaining Council for the Road Freight Industry said in the nine years he served at the bargaining council “only one” exemption was granted to a business owner in the Western Cape region. He argues that the council as well as employer association and trade union also sits on the council. Van Rooyen left the council last year.
The Bargaining Council for the Furniture Manufacturing Industry KwaZulu-Natal, offer businesses of five or fewer employees a phase-in period running for five years after which they are expected to pay full levies and contributions.
Chairperson of the KwaZulu-Natal Furniture Manufactures' Association Alexander Kahn, who sits on the council, says “two or three” exemptions are granted to businesses a month. But Kahn could not name a single business that had been exempted. He referred all questions to Gawie Blignaut the council secretary, who did not return calls.
Ziyad Ally who heads the Cut-make-and-trim (CMT) association and runs a clothing manufacturing business says the clothing bargaining council has continually refused to provide the association with the number of exemptions it grants annually. Ally’s business has also been turned down twice for exemption.
Another business owner Faizel Omar, who runs Poodle Clothing and Manufacturers had two machines attached by his bargaining council last year, for failing to pay levies he owed said he never tried to get an exemption because an exemption would only run for a temporary period.
When approached by Business Report the general secretary for the National Bargaining Council for the Clothing Manufacturing Industry Sicelo Nduna was reluctant to say how many exemptions the council granted last year.
However Ian Macun, executive manager of bargaining councils at the Department of Labour, said figures submitted by bargaining councils to the department showed that 2 670 applications for exemption were made to bargaining councils last year and that 86% of these were granted.
But Macun could not say whether these exemptions included automatic exemptions granted to micro firms under several councils.
Alistair Smith, the secretary of the Metal Engineering Bargaining Council said his council granted 991 exemptions last year out of a figure of 1 022 applications made.
This article appeared in Business Report on 8 May 2008.
Stephen Timm is a