In the wake of the company’s groundbreaking five-year wage agreement with the Association of Mineworkers and Construction Union (AMCU), Rand Refinery’s HR division sat down with CHRO South Africa managing director Joel Roërig at the 2024 HR Indaba on 8 October to shed light on how the deal came together behind the scenes.
Rand Refinery’s five-year wage agreement, concluded with labour unions at the height of a three-month strike in 2022, was intended to ensure stability within the company. According to the company’s executive head of HR, Unathi Sihlahla, the deal averted a protracted wage negotiation, allowing the company to turn its attention to its core business.
This was unprecedented in an industry where wage agreements are typically shorter. She attributes the success of the negotiations to careful planning.
“What allowed us to achieve this was pure strategy and the courage to make decisions that were not necessarily popular with the union, but served our purpose in terms of what our associates wanted – making and communicating the decisions as opposed to letting the union be the mouthpiece. We were bold enough to engage our associates as negotiations were progressing and agree on what was on the table and what their pain points were. It required good communication at all levels,” Unathi said.
To make sure the union and the organisation were on the same page, Rand Refinery brought AMCU on a site tour of its plant and showed them its equipment. This went a long way in giving the union an understanding of the business and dispelling misconceptions about Rand Refinery’s operations.
“We are not a mine, but we service the mining industry. Our shareholders are the gold mines in South Africa. We also service customers who deposit bullion with our organisation. We refine, smelt and fabricate bullion, and create value-added products that we sell on behalf of bullion banks. This understanding immediately took certain demands off the table,” Unathi said.
The deal was negotiated amid shifting labour relations, with the National Union of Metalworkers of South Africa (NUMSA) playing a bigger role before the negotiations, before eventually leaving, paving way for the Association of Mineworkers and Construction Union (AMCU) to assume a larger part. HR manager Felicity Ramiah narrated how she used a simple spreadsheet to crunch the numbers and model various scenarios and outcomes. This painted a clearer picture of the payroll and allowed the company’s executives to make sense of the figures.
According to industrial relations specialist Siyanda Nombika, establishing healthy relations with stakeholders was key to securing a breakthrough. The organisation conducted relationship building sessions before beginning negotiations, bringing the management on board. This ensured parties understood each other’s roles.
The union had at first proposed a R5,000 increase to each worker’s monthly wage, a position the company found untenable. The board of directors, on the other hand, had mandated a maximum increase of R1,400 over a five-year period. The company eventually offered a R1,300 increase on basic salary. Industrial relations specialist Siyanda Nombika attributes the breakthrough to maintaining open communication channels.
"For us, what was key in our negotiations with the union was to have ongoing dialogue and key touchpoints in-between to make sure parties have a healthy relationship,” he said.
The panel deployed a fascinating strategy during its negotiations, where Felicity played the ‘bad cop’, allowing Siyanda to endear himself to the unions. Unathi revealed that the company was keen to ensure business continuity, as it could not afford to suffer reduced capacity at its site. She credits the company’s management with making decisions that eased the negotiations.
“If depositing customers drop off bullion, we are contractually required to action within a certain timeframe,” she said.
According to the team, external forces in the mining industry also played a part. Market trends in remuneration helped workers put pressure on their unions, eventually resulting in a concession. The team had little wiggle room from management, requiring it to adhere to its budget. The company, however, expects the upcoming wage negotiations in the 2026/2027 financial year to be tougher, as the gold market has been bullish. Unathi therefore anticipated heavier demands from the union.
The company skirted several issues during the negotiations, chief among them the demand for a housing allowance for all workers, which would have required Rand Refinery to provide a larger salary increase. The company usually extends the allowance to workers who have secured a mortgage.
“The union’s demands were not tenable from a business point of view. As it stands, AMCU has lost the majority, as there are more unions with a seat at the table,” Unathi said.
Ultimately, maintaining positive industrial relations, keeping communication channels open, and creating a strategy for the negotiations were cited as the main drivers of a successful wage agreement, which Rand Refinery hopes will smooth over its industrial relations and create a conducive business environment.
