Response to BDP Attorneys communications to the industry

Introduction

1. It has come to our attention that a letter from a firm of attorneys, BDP Attorneys, has been circulating among employers in the industry since at least October The letter contains several inaccurate and questionable statements which need to be addressed.
2. The basis for the letter is explained as follows:
   
   

   “[The BIBC] has been acting unfairly towards your business and others of the same nature which are situated within the borders of the Western Cape by only enforcing its rules and regulations on you and on no other business which falls outside of the borders of the Western Cape. This in itself is unlawful and unreasonable.”

3. This statement is incorrect for the reasons noted below.

What the letter claims

4. The letter summarises the power of the BIBC to conclude collective agreements between employer organisations and trade unions that are party to the BIBC and request the Minister of Employment and Labour to extend an agreement to non-party employers and employees. Correctly, it states that after such extension –
   
   

   “all persons engaged in the building industry within the demarcated area of the Building Industry Bargaining Council (BIBC) are legally obliged to comply with the terms of the collective agreement, whether they were signatories to the agreement or not” (underlining added).

5. Based on this reasoning, BDP Attorneys then claim that the actions of the BIBC are “unlawful and unreasonable” in that the BIBC is not compelling employers outside the Western Cape to comply with the collective agreement. This leads them to invite employers to launch a class action via their office in which they would claim the following:

“1.        The BIBC should either enforce its rules and regulations nationally or do away with it on a national basis."

“2.        To set aside, or to confirm, on a national basis the terms of the Collective Agreements gazetted by the minister."

“3.        To set aside all penalties together with interest levied thereon against all the members of the BIBC in the Western Cape.”

6. For the reasons set out below we are advised that the proposed class action is not only without merit but is moreover unnecessary.

Why claims 1 and 2 are unfounded

7. Claims 1 and 2 of the intended class action are obviously misguided in that BDP Attorneys appear to be under the impression that the BIBC has national jurisdiction and the power to enforce or revoke the collective agreement In fact, the BIBC is one of six regional bargaining councils in the building industry and, as clause 1 of the collective agreement states, its scope is limited to:

“the Magisterial Districts of Bellville, Goodwood, KuiIs River, Malmesbury, MitchelIs Plain, Paarl, Simonstown, Somerset West, Stellenbosch, Strand, The Cape, Wellington, Wynberg and the Local Municipality of Overstrand”.

8. The BIBC, therefore, does not have the power to take the actions proposed in claims 1 and 2 of the intended class action (paragraph 5 above) in respect of the industry on a national scale. For this reason, any such claims brought in a court of law would not be successful.

Why claim 3 is unfounded

9. The current collective agreement, promulgated on 22 November 2019, was extended to non-parties by the Minister of Employment and Labour on 28 February 2020 for the period up to 31 October Its provisions are therefore binding on all employers and employees, parties as well as non-parties, within the BIBC’s registered scope (i.e., the abovementioned areas of the Western Cape).
10. The collective agreement must be interpreted in accordance with the Bill of Rights and the purposes on the Labour Relations Act of 1995 (the LRA). In line with these purposes, the collective agreement serves to regulate the building industry with a view to ensuring fair competition and protecting vulnerable workers. Thus, it covers arrangements whereby employers who are subject to the collective agreement make use of sub-contractors in order to avoid complying with the collective agreement or which result in non-compliance. In such cases, both parties are regarded as employers who are subject to the collective agreement and are jointly and severally liable for non-compliance (see clause 7 of the collective agreement).
11. Clause 57 of the collective agreement expressly provides for penalties to be imposed for any failure to comply with a provision of the collective agreement. If there is non-compliance by any party, it can be reported to the This also applies to failure by a sub-contractor to comply with the collective agreement (see clause 7 of the collective agreement). The purpose, and the effect, must be to ensure a level playing field, to prevent some employers from undercutting others and to ensure that employees receive the wages and benefits which are provided for in the collective agreement.
12. We are satisfied that any penalties imposed on employers for non-compliance are in accordance with the terms of the collective agreement. Obviously, if any party questions the correctness of a particular penalty, this can be addressed through the remedies provided for in the collective agreement and, where the penalty is contained in an arbitration award, an aggrieved party is entitled to apply to the Labour Court to review and set aside the
13. However, there is no basis for a blanket claim that “all penalties together with interest levied thereon” must be set aside.

Approaching the Constitutional Court

14. It should be noted that the proposal to bring an application in the Constitutional Court is also highly Whereas section 167(6) of the Constitution (read with rule 18 of the Constitutional Court Rules) allows parties to approach the Constitutional Court directly “in the interests of justice and with leave of the Constitutional Court”, such access has been granted in relatively few cases. Disputes involving the powers of bargaining councils should be dealt with by the Labour Court as the specialist court of first instance and there is no clear reason why it would be “in the interests of justice” to bypass the Labour Court and Labour Appeal Court in the present case.

Scope of the collective agreement

15. The letter from BDP Attorneys also contains claims that the businesses of particular employers do not fall within the scope of the collective agreement and are therefore “not governed by the BIBC”. We are satisfied that any such claim is erroneous and that the definitions set out in clause 5 of the collective agreement cover all employers in respect of whom the BIBC seeks to apply the terms of the agreement.
16. Again, however, if any employer has any disagreement about the application and interpretation of agreement or if an employer wishes to apply for exemption from the agreement, they can make use of the processes as set out in the collective agreement (see clauses 58 and 60).

Conclusion

17. The call for a class action as set out by BDP Attorneys is accordingly It would involve substantial legal costs since it would involve a series of costly legal procedures, including –
    1. A court application for permission to institute a class action, which is subject to strict requirements and may very possibly be refused;
    2. An application to the Constitutional Court for direct access which, for the reason given above, is unlikely to succeed;
    3. An application to the Labour Court, being the correct forum for matters of this nature, to seek the relief which BDP Attorneys have in mind; and
    4. Possible appeals to the Labour Appeal Court and Constitutional Court, should the initial application be unsuccessful, which we are advised would be the most likely outcome.

18. Employers who agree to join in the proposed class action would be liable to bear the costs of all the litigation launched on their behalf. Should the application ultimately prove unsuccessful, as we believe would be the case, it is very possible that costs would follow the result and that the applicant employers would also be ordered to pay the costs which the BIBC incurred in opposing the application.
19. In conclusion, however, we would re-emphasise that the collective agreement makes provision for the expeditious resolution of any dispute by any party concerning its application and/or interpretation, which may potentially be done without incurring any legal The proposed class action is thus not only without legal merit but would also be unnecessary and disruptive of the BIBC’s efforts to provide good governance of the sector.
20. We trust that this clarifies what can only be seen as confusion created by the letter from BDP Attorneys which has been circulated.

Yours faithfully,

Pearl Pugin Secretary