South African restaurants face rising costs as new labour agreement sparks clash

The extension of a collective bargaining agreement to all South African restaurants has sparked fierce debate between industry bodies and trade unions. While labour representatives champion the move as a crucial safeguard against the exploitation of vulnerable staff, hospitality leaders warn that rising payroll costs could force closures and trigger job losses.

A collective wage bargaining agreement extended to restaurants across South Africa from Monday has prompted warnings about rising costs and possible job losses, while unions say it is needed to protect vulnerable workers from exploitation.

The agreement of the Bargaining Council for the Fast Food, Restaurant, Catering and Allied Trades was extended to non-party employers in a notice gazetted by Labour Minister Nomakhosazana Meth on October 16.

Hospitality industry association Fedhasa estimates that the agreement’s additional employment-related obligations could increase restaurant payroll costs by about 9%.

It warns that smaller, family-run restaurants in particular may struggle to absorb the extra expense.

The obligations include minimum wages for different job categories, employer contributions to the council’s provident fund, funeral scheme contributions, a uniform-cleaning allowance, a minimum annual bonus and bargaining council levies.

The rates reported by Moneyweb range from the national minimum wage of R30.23 an hour to R57.23 for certain chef categories and R40.46 for managers.

The actual requirements depend on the employee category and applicable provisions of the agreement.

Fedhasa national chair Brett Tungay has warned that restaurants already face pressure from rent, electricity, municipal charges and other operating costs.

The association has said it wants to challenge the extension in court, arguing that the agreement does not represent the circumstances of the entire industry.

Wendy Alberts of Restaurant Voice of SA raised questions about the decision-making process, asking: “Who did the government consult with, and what research did they do on the financial impact this would have on restaurants, and on employment?”

The debate centres on how to improve pay and conditions for restaurant workers without placing additional pressure on businesses that may already be operating on tight margins — and what evidence was considered about the potential effects on employment.

The current status of any legal proceedings and whether they affect implementation could not be independently confirmed by the Daily Dispatch at the time of writing.

But the extension has support from organised labour.

Food and Allied Workers Union spokesperson Dominique Martin has argued that hospitality and fast-food workers are vulnerable to underpayment, unlawful deductions and poor employment conditions, and that extending the agreement could help address these practices.

The agreement does provide an exemption route for small employers or employees who can demonstrate that particular provisions restrict entrepreneurial initiative or employment opportunities.

Applications must be made to the bargaining council. — DDR