IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT CAPE TOWN
CASE NO: C201/2024
In the matter between:
SVENMILL (PTY) LTD Applicant
and
EXEMPTION APPEAL BODY OF THE NTBC First Respondent
NATIONAL TEXTILE BARGAINING COUNCIL ((NTBC) Second Respondent
T MANGANYI N.O. Third Respondent
SACTWU Fourth Respondent
Date of hearing: 6 November 2025
Date of delivery: 25 November 2025
Summary: Review of refusal to exempt Applicant from the annual bonus
requirement contained in a Bargaining Council Collective Agreement – factors to
be considered in exemption application – evidence required where the issue of
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affordability raised – no ground for reviewing the decision of the Exemption
Appeal Committee.
________________________________________________________________
JUDGMENT
_______________________________________________________________
A OOSTHUIZEN AJ
1 Second Respondent to these proceedings is the National Textile
Bargaining Council (“ the NTBC”). The parties to the NTBC concluded a
Main Agreement for the Textile Industry, which provides that each
employer in such industry must pay an annual bonus as specified in Part 2
of the Main Agreement. The calculation of that bonus depends on the
length of service of each employee.
2 Some years ago, the Main Agreement was extended to non- parties. It
consequently became binding on the Applicant, and remains binding on
the Applicant.
3 In November 2023, the Applicant applied for exemption from the obligation
to pay bonuses in terms of the Main Agreement at the end of 2023. The
application for an exemption was refused by the Exemption Committee in
February 2024, and the refusal was upheld by the Exemption Appeal
Committee. The Applicant seeks an order in terms of Section 158(1)(g)
read with Section 30(1)(k) of the Labour Relations Act, No 66 of 1995 (“the
LRA”), setting aside the exemption appeal outcome, and substituting such
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outcome with a finding that the appeal was successful or, alternatively,
remitting the matter for hearing before a fresh presiding officer.
4 Before dealing with certain procedural aspects, and the relevant factual
determinations, the nature of an application for exemption from the
provisions of a bargaining council collective agreement require emphasis.
5 Section 31 of the LRA unequivocally affirms the binding nature of a
collective agreement on the parties stipulated in Section 31(a) to (c).
Section 32 empowers the Minister to extend a collective agreement to
non-parties, but then circumstances under which this may be done are
spelt out carefully and in detail. The self -evidently important role which
collective agreements play, in regulating employment contracts in the
sector to which each agreement applies, is trite and well-established.
6 Bargaining Councils fulfil the function of imposing terms and conditions of
employment, and norms pertaining to other workplace aspects, on the
industries over which they have jurisdiction. The legislature has
promulgated a dispensation under which businesses in particular
industries have to comply with the terms of Bargaining Council
agreements. An applicant for exemption is in effect asking to be placed in
a position different from other businesses in that sector, and such
applicant should therefore clearly establish the facts which justify an
applicant not being bound by an agreement which applies throughout the
particular industry.
4
7 Various factors might play a role in deciding the fate of an exemption
application. They include:
7.1 Whether the exemption will give the employer an unfair competitive
advantage (Ram International Transport (Pty) Ltd v NBC for the
Road Freight Industry (2002) 23 ILJ 1943 (BCA) ; Superstone
Mining (Pty) Ltd v NBC for the Road Freight Industry (2004) 25
ILJ 1567 (BCA));
7.2 Whether the exemption would undermine collective bargaining in
the relevant sector and area ( SATAWU v Road Freight
Employers’ Association (2004) 25 ILJ 1556 (BCA) ; Loutrans v
NBC for the Road Freight Industry (2008) 29 ILJ 498 (BCA));
7.3 Whether the employer is proposing any acceptable alternatives
aimed at fulfilling the requirement from which exemption is sought
(Henro Bulk Carrier Trust v NBC for the Road Freight Industry
(2008) 29 ILJ 2326 (BCA));
7.4 Whether the consent of affected employees has been sought, and
obtained ( Armstrong Interiors v Furniture, Bedding &
Upholstery Business (2001) 2 BALR 107 (CCMA);
7.5 The extent to which the employer is suffering substantial detriment
and/or having its future placed in jeopardy;
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7.6 The applicant’s past record of compliance with the provisions of the
council’s collective agreements.
8 Whether each of these factors should be taken into account in a particular
exemption application and, if so, what weight is to be attached to them, is
always a matter within the discretion of the Exemption Authority, having
regard to all the facts presented.
9 Clause 40.4 of the National Textile Bargaining Council’s Collective
Agreement (“the Main Agreement ”) sets out the information furnished by
the party seeking exemption, being:
9.1 The provisions of the agreement in respect of which exemption is
sought;
9.2 The number of persons in respect of whom exemption is sought;
9.3 The reason why the exemption is sought;
9.4 The nature and size of the business in respect of which the
exemption is sought;
9.5 The duration and lifetime of the exemption for which application is
made;
9.6 The business strategy and plan of the applicant seeking the
exemption;
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9.7 The applicant’s past record of compliance with the provisions of the
Main Agreement;
9.8 The recorded views of the trade union;
9.9 Other relevant supporting data and financial information.
10 Clause 40.15 of the Main Agreement sets out the factors which the
Exemptions Committee or the Exemption s Appeal Committee must take
into account in deciding an exemption application. These factors are:
“40.15.1 Whether the granting of the exemption or appeal will
prejudice the objectives of the Bargaining Council or
contravene the provisions of any labour legislation or
Collective Agreements;
40.15.2 The circumstances prevailing in the Textile Industry
as a whole or the subsectors/sections likely to be
affected by the application and/or the interest of the
industry regarding unfair competition, collective
bargaining, potential for labour unrest and increased
employment;
40.15.3 the nature and size of the business in respect of
which the application is made;
40.15.4 whether the duration of the exemption or appeal is for
a limited or specified period;
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40.15.5 any representations made by the employees likely to
be affected by the application and interest of
employees as regards exploitation, job preservation,
sound conditions of employment, possible financial
benefits, health and safety of workers and
infringement of basic rights;
40.15.6 whether the business strategy and plan presented by
the applicant demonstrates that the granting of the
exemption will make a material difference to the long-
term viability of the business in respect of which the
exemption or appeal is sought;
40.15.7 whether a refusal to grant an exemption or appeal will
result in undue financial hardship to the applicant;
financial instability, impact on productivity, future
relationship with the employees trade union and
operational requirements;
40.15.8 whether the granting of the exemption or appeal will
undermine collective bargaining and be likely to cause
undue financial hardship to the employees affected;
40.15.9 whether the granting of the exemption or appeal will
impact negatively on parity agreements; and
40.15.10 whether the granting of the exemption or appeal will
impact negatively on local competitors who are
complying with Collective Agreements; and
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40.15.11 Whether the employees or their representatives have
been consulted and their views recorded, and/or any
agreement reached between the applicant and the
workforce;
40.15.12 Any other relevant supporting data and financial
information as prescribed by the Bargaining Council
and supplied by the Applicant.”
11 Where, as is the case here, the Employer’s main argument is one of
affordability, the Exemption Committee and Exemption Appeal Committee
are called upon to consider two competing interests. On the one hand,
there is the primacy of collective agreements, and the need to ensure that
employees do not receive less than their statutory entitlement. On the
other hand, the Exemption Authorities must be aware of, and take into
account, the danger that refusing an exemption might give rise to an
application for winding- up or business rescue, with concomitant loss of
employment. The benefits flowing from the fact that a business can
sustainably continue to operate, and the adverse consequences to
employees if the business closes down and retrenches its workforce, both
need to be carefully considered.
12 Which of these countervailing interests will outweigh the other depends on
the case advanced by the applicant for exemption, and the facts put up in
support of their case. The position cannot be that whenever an employer
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advances economic necessity as one of the grounds for seeking an
exemption, that affordability outweighs all other factors which an appeal
functionary has to take into consideration. A carefully considered decision
which seeks to find a balance between the aforesaid two public policy
considerations should be the aim of the Exemption Authorities.
13 I turn to the facts of this application.
14 The decision in Putco (Pty) Ltd v SA Road Passenger Bargaining
Council & Others (2019) 30 ILJ 2389 (LC) usefully illustrates the manner
in which the issue of affordability must be dealt with in exemption
applications. In that matter, the Applicant had provided considerable
detail as to its precarious financial position, and its efforts to address the
financial problems. It disclosed details of its cost rationalisation measures,
which included a delay in implementation of wage increases for about ten
months, and an exemption from payment of the annual bonus, and
explained how both of these would provide cashflow relief and avoid the
risk of employees being subject to business rescue. The Exemption
Authority had granted partial exemption, but its ruling did not take into
account the detailed information placed before it regarding Applicant’s
financial position, and the measures Applicant had taken to resolve its
financial difficulties.
15 The Putco judgment does not state that, where affordability is raised as a
reason for seeking exemption, the exemption Tribunal is obliged to grant
the application even if the information regarding the financial dilemma and
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the remedial steps taken is inadequate. The Putco decision does nothing
more than reaffirm the well -established principle that a decision- maker
must take into account all relevant information placed before that decision-
maker.
16 The approach adopted in Argent Steel Group v Motor Industry
Bargaining Council (unreported case number PR156/14) , in which
judgment was delivered on 30 January 2018 (“Argent”), is of assistance.
At para 37 of that judgment, the Court said the following:
“Also, by the very nature of the exemption application, Argent
sought to be treated more advantageously than its competitors and
to treat its employees less favourably than others in the same
occupations in the sector. The applicant is essentially asking for
exceptional treatment and in those circumstances it really fell to it to
persuade the board that it was entitled to more favourable
treatment. Furthermore, unlike the tender situation, the information
required to consider the exemption application will usually be
almost entirely within the applicant’s own knowledge and it has to
explain the unique position it finds itself that distinguishes it from its
competitors and justifies advantageous treatment for itself and
disadvantageous treatment for the affected employees.”
17 In Argent, the Court also emphasised why an applicant for exemption
must furnish details of consultations with its workforce, and said the
following at para 44:
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“At least part of the object of consultation must be to see if the
interested parties can open up discussions on alternatives to the
exemption. In the absence of sufficient consultation, the application
was bound to fail as an important requirement for granting
exemption was not met, even if the financial motivation could have
been shown to be more coherent after obtaining more clarity on
that aspect.”
18 It is appropriate to evaluate the exemption application submitted by the
Applicant, in the light of the requirements of the Main Agreement, and the
above-quoted authorities. At page 14 of the Exemption Application, the
Applicant is required to furnish details of consultations held with
employees. A diagonal line is drawn through this section of the form , and
no information whatsoever is furnished. At page 8, Applicant is asked to
explain how the exemption application impacts on the interests of the
industry in regard to unfair competition, collective bargaining and the
potential of labour unrest. Applicant furnishes no meaningful information
on these aspects.
19 At page 4 of the Exemption Application, Applicant is required to furnish a
statement of material facts in chronological order. Applicant lists the fact
that the business is “ still in a loss making position. This has been since
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2018, in addition our costs have increased over time”. This is a woefully
inadequate response.
20 It goes on to record that “ our utilities costs remain very high. We have
outstanding debts with the CoCT” (the City of Cape Town). No details are
furnished as to how the Applicant proposes addressing what it identifies
as these primary problems, namely the high utility costs and the
outstanding debt with the City of Cape Town. Indeed, in its supplementary
submissions it advanced verbally at the exemption hearing, these factors
were not even mentioned by Mr Greenblatt, the sole director of the
Applicant who was the primary representative of the Applicant at the
exemption hearing.
21 These are substantial and serious shortcomings in the exemption
application. There is an additional aspect of concern to me. An applicant
for exemption must ensure that the Exemption Tribunal is furnished with
current and up to date financial information. The exemption application
meeting was held on 20 March 2024. The financial documentation placed
before the Exemption Committee was a draft annual financial statement,
not signed by the auditor who compiled the statement, for the year ending
31 December 2022. It is difficult to believe that the Applicant did not have
substantial information in the form of, for example, monthly management
accounts.
22 Although these would not have been embodied in an audited financial
statement, they would have provided the Exemption Tribunals with up to
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date financial information. One cannot assume that the Applicant did not
retain information on its financial affairs on a month- to-month basis
because the Applicant was statutorily obliged to keep adequate records
reflecting its financial and business affairs, and there is no suggestion that
it did not do this. The Applicant has only itself to blame if the financial
information it provided was inadequate.
23 A further factor, which cannot be disputed on the evidence, is the finding
of the Third Respondent that the Applicant did not have a plan in place
which demonstrated that the granting of an exemption would make a
material difference to the long term viability of the business. Unlike the
applicant in the Putco case, the present Applicant furnished no details of
any strategy which it has in place to utilise the money it will save, if not
obliged to pay bonuses, in order to put the Applicant in a position where it
is trading profitably and able to pay annual bonuses. The paucity of
information furnished indicates , if anything, the opposit e position, namely
that Applicant is trading unprofitably and will continue to do so in future.
24 To grant an exemption in those circumstances sets a dangerous
precedent where an applicant can simply, in subsequent years, approach
a bargaining council and proclaim that it continues to trade unprofitably
and should, for that reason alone, be granted further exemptions. To
grant an exemption in such circumstances substantially undermines the
Bargaining Council Collective Agreement.
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25 This particular factor was, in my view, correctly considered by the Third
Respondent who found that the perpetual granting of exemptions to the
Applicant prejudices the objectives of the Main Agreement. That finding
cannot be faulted.
26 Having regard to all off the aforegoing, I cannot find that Third
Respondent’s award exhibits any reviewable irregularity, or that Third
Respondent’s decision is one that no reasonable functionary could have
reached on the available material. The application for review falls to be
dismissed.
27 Lastly, I deal with Second Respondent ’s procedural contention, based on
Section 32(3)(e) of the LRA. That section requires that, when a collective
agreement is to be extended to non- parties, the Minister must be satisfied
that provision is made in the collective agreement for an independent body
to hear and decide on appeals against, inter alia , the Bargaining Council’s
refusal of an application for exemption. It is common cause that the
independent body appointed in this matter is TOKISO . The argument
advanced is that TOKISO is a necessary party, and that failure to join
TOKISO renders the application for review defective.
28 The founding papers allege that the Third Respondent is a TOKISO
appointed panellist. The papers reveal that the only role played by
TOKISO is that Third Respondent was appointed from a panel put
together by TOKISO . Other than the compiling of this panel, TOKISO
does not appear to have played any role in the exemption procedures
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which led to this review application, and certainly exercised no decision-
making function apart from that exercised by its duly appointed panellist,
the Third Respondent.
29 The question of whether it is necessary to join a party depends on the
extent to which the court order may affect the interests of that party
(Amalgamated Engineering Union v Minister van Landbou 1948 (3)
SA 637 (A) at 657; Benson v Joelson 1985 (3) SA 566 (C) at 569F –
570B). There are no facts before me showing that the interests of
TOKISO would be affected to any extent by the order made in the review
proceedings.
30 If Second Respondent viewed the joinder of TOKISO as necessary
Second Respondent could, of course, itself have applied for such joinder.
It did not do so, and instead raised the procedural point of non- joinder in
its answering papers. The approach thus adopted is unhelpful, and does
not assist in expeditiously resolving the merits of the matter, and should
be discouraged. I am disinclined to uphold the non- joinder argument
advanced by Second Respondent.
31 In the circumstances the following order is made;
Order
1. The application for the review and setting aside of the Exemption
Appeal outcome is dismissed, with costs.
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__________________
AC OOSTHUIZEN A.J.
Acting Judge of the Labour Court of South Africa
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Appearances:
For the Applicant : Adv L Myburgh
Instructed by: Bagraims Attorneys
For the Second Respondent: Brett Purdon, Purdon & Munsamy Attorneys