Labour Relations Act, 1995 (Act No. 66 of 1995)

Guidelines

Guidelines issued in terms of Section 95(8) of the Labour Relations Act

Employers' Organisations

32,33 and 34. Association not for gain
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32.In terms of section 95(5)(a) of the LRA an employers' organisation must state in its constitution that it is an association not for gain. The purpose of this requirement is to prevent employers' organisations from being used as vehicles for enriching individuals or as a cover for profit-making in business. In evaluating whether an employers' organisation is a genuine employers' organisation, it is important to examine its actual financial operation. Among the factors that may indicate that an employers' organisation is in fact operating for the gain of individuals are the following:
(a) Unrealistically high salaries or allowances are paid to the officials, office -bearers or employees of the employers' organisation.
(b) Interest -free or low interest loans are made to officials, officebearers or employees, and those loans are not repaid.
(c) Family members of office -bearers or officials are employed by the employers' organisation.
(d) Income earned by the employers' organisation is not used for the benefit of the organisation and its members but is paid out to officials, office-bearers or employees.

 

33. It must be borne in mind that it is not inappropriate for employers' organisations to pay competitive salaries to competent and qualified officials and employees. Likewise, there may be circumstances in which established employers' organisations may decide to provide loans and favourable terms to their officials, office- bearers or employees.

 

34. Usually the major source of revenue for employers' organisations is likely to be a subscription paid on a regular basis. The financial arrangements made with members of an employers' organisation in respect of litigation, particularly dismissal disputes, may be an indicator whether the employers' organisation is in fact operating for the gain of certain individuals.