The Free Market Foundation has launched a constitutional challenge against Labour Relations Act sections allowing collective agreements made in bargaining councils to be extended to non-member employers and employees, according to a report.
Business Day reported on Wednesday that according to the challenge, brought in the High Court in Pretoria on Tuesday, the foundation believe the practice pushes up wages and puts smaller employers out of business.
It believes it is unconstitutional for agreements reached among private parties to be extended to others who were not in any way involved in making them.
This also acts to eliminate competition and is in the interests of the parties who make the agreements.
According to the act, the minister is compelled to extend an agreement to non-parties if the employer parties constitute a majority of employers and the trade unions in the council represent a majority of employees in the industry.
The minister has the discretion to extend an agreement if she believes collective bargaining will be damaged if she does not.
The foundation is challenging the constitutionality of the former.
Because the minister had no discretion in this instance, the state delegated its powers of statutory regulation to a private body, which it could not do without violating the Constitution.
The minister can also coerce a majority into complying with the terms of employment set by a minority.
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