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

Guidelines

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

The Purpose of this Document

18,19,20 and 21. Association not for gain

 

 

18. In terms of section 95(5)(a) of the LRA a trade union must state in its constitution that it is an association not for gain. The purpose of this requirement is to prevent trade unions from being used as vehicles for enriching individuals or as a cover for profit- making businesses. In evaluating whether a trade union is a genuine trade union, it is important to examine the actual financial operation of the trade union. Among the factors that may indicate that á trade union is operating in fact for the gain of certain individuals are the following:
(a) Unrealistically high salaries and allowances are paid to the officials, office -bearers or employees of the trade union.
(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 trade unions.
(d) Income earned by the trade union is not used for the benefit of the organisation and its members but is paid out to officials, office -bearers or employees.

 

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

 

20. Usually the major source of revenue for trade unions is a subscription usually paid on a monthly basis. In general terms this will be a flat rate payment or a payment expressed as a percentage of the members' income. Trade unions may have other sources of income, such as investments.

 

21. The financial arrangements made with members of a trade union on behalf of whom litigation, particularly dismissal disputes, is instituted, is an indication of whether the trade union may not be a genuine trade union or may be operating as an association for gain. Where a trade union charges its purported members a substantial proportion of the settlement reached in disputes, this may be an indication that the trade union is not a genuine trade union. This does not mean that it is not appropriate for genuine trade unions to require members to make realistic contributions to the costs of bringing cases on their behalf. However, the fact that a member is required to pay a substantial percentage of the settlement to the union, would be a strong indication that the organisation is not a genuine trade union.