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Johannesburg - The labour Court has placed the Metal and Engineering Bargaining Council (MEIBC) under administration and appointed Afzul Soobedaar as its administrator, in a landmark ruling that paves the way for the return of the bargaining council to solvency and stability.

Acting Judge Sean Snyman, said in his judgment on Tuesday that Soobedaar’s appointment was for a period of six months calculated from yesterday and might be extended for further periods as agreed with the MEIBC’s management committee (Manco). 

Soobedaar was a senior commissioner at the Commission for Conciliation, Mediation and Arbitration and acted as mediator between employers and labour following the Marikana massacre.

Snyman also ruled that the administrator had powers to control funds of the MEIBC and operate or close existing bank accounts.

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“The administrator shall develop a plan on the prospects of rehabilitating the MEIBC to solvency and functionality which is to be furnished to Manco and the Department of Labour within a period of four months from the date of granting this order” .

The administrator was also tasked with adopting a budget for 2016/17 within six weeks of the granting of the judgment.

Trade union Solidarity applied for the MEIBC to be placed under administration.

Solidarity deputy general secretary, Marius Croucamp, said yesterday that the order was a necessary step to ensure that the MEIBC was rescued from going under.

“We believe that the appointment of an administrator will ensure that the MEIBC is saved from regress and will be financially sound again. The preservation of the council is crucial for the stability of the steel industry that is already under severe pressure,” said Croucamp.

MEIBC’S general secretary, Thulani Mthiyane, said yesterday: “We are overjoyed by the appointment of the administrator. Our team has managed to keep the council running under very difficult circumstances,” he said.

The judgment is significant for struggling bargaining councils as the Labour Relations Act (LRA) does not make provision for a bargaining council like the MEIBC to be placed under administration.

All that it does is to make provision for the winding up of the bargaining council.

The MEIBC is a dispute resolution resource for the metal industry responsible for enforcing industry collective agreements and has a membership of more than 10000 companies, which employ around 300000 employees. However, it failed in its duties with the situation becoming exacerbated last year amid a severe financial crunch which resulted in monthly expenses going unpaid.

The MEIBC has also been plagued with maladministration, including the failure to produce annual financial statements, and no permanent financial manager.

Snyman said in court papers, that an audit by Deloitte & Touche last year found that the company had contravened the LRA in that its financial statements for 2015 had not been approved.

The auditors also expressed their concerns about the MEIBC being a viable going concern as it had a deficit of R23million and its current liabilities exceeded its assets by R1.1m.

Even more worrying was that the council’s dispute resolution functions had “all but collapsed”. The MEIBC was also unable to fund the Dispute Resolution Centre, said Snyman. It was projected that the council would have to attend to 6500 cases this year which it would be able to do. However, in addition to that, the council had a backlog of 2700 cases.

“The situation is truly dire,” said Snyman.

The judgment is the first of its kind for a bargaining council and can be compared with a business rescue process, often used in the private sector to save a business from failing.