Labour Relations Act 28 of 1956 includes as one of the aims of the Act, the prevention and settlement of disputes between employers and employees. Industrial councils were the primary institution for collective bargaining; generally they were system that involved a form of centralised bargaining in a particular industry or segment of an industry (Alan Rycroft, Barney Jordaan, 1992:146)
Industrial councils consisted of representatives from one or more employer parties and one or more employee parties who as a whole enjoy representation on the council.
Statutory councils were formed as a result of a compromise between government and big unions to satisfy the governments fear that the bargaining council system would not do enough to promote centralised bargaining (Grogan, 2003: 303). Statutory councils are can be registered by a trade union or two or more registered trade unions acting together, these trade union and employers organisations must have 30 percent representation in a sector or area in which there is no bargaining council.
Statutory Councils can also be describe as the “mini-version” of a Bargaining Council, which are much easier to form than a Bargaining council, because less representation is required by the parties. Sectors and areas where no bargaining council exits may be allowed to establish a statutory council. This is based on Legislation in Section 39, of the Labour Relations Act
The main difference between the bargaining council and the statutory councils is that parties, meaning unions or employer can be forced to become members of statutory councils by ministerial order. This can only be done in the absence of an agreement. Statutory councils may be formed by registered trade unions and employers’ organisations to manage labour disputes, schemes and funds, education and training, and to make collective agreements. Statutory Councils can negotiate education and training, benefit funds and dispute resolution in the sector.