Transport Fleet Maintenance (Pty) Ltd and Another v National Union of Metal Workers of South Africa and Others (PA1/02) [2003] ZALAC 10; (2004) 25 ILJ 104 (LAC); [2003] 10 BLLR 975 (LAC) (6 August 2003)

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[2003] ZALAC 10
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Transport Fleet Maintenance (Pty) Ltd and Another v National Union of Metal Workers of South Africa and Others (PA1/02) [2003] ZALAC 10; (2004) 25 ILJ 104 (LAC); [2003] 10 BLLR 975 (LAC) (6 August 2003)

25
IN THE LABOUR
APPEAL COURT OF SOUTH AFRICA
HELD IN
JOHANNESBURG
Case no:
PA1/02
In the matter
between:
TRANSPORT
FLEET MAINTENANCE (PTY) LTD 1
st
Appellant
TFM
CAPE (PTY) LTD 2
nd
Appellant
and
NATIONAL
UNION OF METAL WORKERS
OF
SOUTH AFRICA 1
st
Respondent
ZITSHU
AND 25 OTHERS 2
nd
and
Further Respondents
_____________________________________________________________
JUDGEMENT
_____________________________________________________________
ZONDO
JP
[1] The
first respondent is a registered trade union. The second to the
twenty
seventh respondents are members of the union who were employed by
the second appellant, namely, TFM Cape (Pty) Ltd, until
the 5
th
August 1998 on which date the second appellant dismissed them from
its employ. A dispute then arose between the second appellant,
on
the one hand, and the union and the second and further respondent’s,
on the other, on whether that dismissal was fair and,
if it was
unfair, what relief the second and further respondent’s should be
granted.
[2] On
the 15
th
September 1998 the dispute was referred to the Commission for
Conciliation, Mediation and Arbitration (CCMA) for conciliation.
Ordinarily it would have had to be referred to the Labour Court for
adjudication but the parties agreed that the CCMA arbitrate
it. On
the 4
th
June 1999 the first appellant and the second appellant concluded
and signed a sale agreement in terms of which the second appellant
effectively sold and transferred its business as a going concern to
the first appellant. In terms of the agreement, the first and
second
appellants agreed that the sale and transfer of the second
appellant’s business to the first appellant would be with effect
from the 1
st
November 1998.
[3] The
arbitration proceedings took place on the 22
nd
June and 3
rd
August 1999. The second appellant’s management did not inform the
respondents and the commissioner of the sale and transfer
of the
second appellant’s business to the first appellant. On the 18
th
August 1999 the commissioner handed down his arbitration award. The
arbitration award was to the effect that the second and further
respondents’ dismissal by the second appellant was unfair and that
the second appellant reinstate those of the second and further
respondents who reported for duty within 14 days of the award. The
commissioner decided not to make the reinstatement order
retrospective.
[4] The
second and further respondents reported for duty on the 24
th
August at the premises where the second appellant had conducted
business at the time of their dismissal. Mr Gordon Thompson, who
had
been the second appellant’s general manager in the same premises
prior
to the second and
further
respondents’ dismissal, informed them that the second appellant
was no longer in business. According to the second and
further
respondents it was apparent on the 24
th
August that the undertaking that had been there at the time of
their dismissal was continuing with the normal business operations
in which the second appellant had been engaged prior to their
dismissal and that substantially the same workforce, including the
managers, had been retained.
[5] In due
course the respondents learnt of the sale and transfer of the second
appellant’s business to the first appellant. A
dispute then arose
between them and the appellants on which of the two appellants had
the obligation to give effect to the arbitration
award that had been
made against the second appellant. The respondents brought an
application in the Labour Court for, among others,
an order that the
first appellant give effect to the award which meant that it should
reinstate them with effect from the date
when they had reported for
duty.
[6] The
respondents’ case before the Labour Court was that, when the
second appellant’s business was transferred to the first
appellant
as a going concern, all the rights that they had against the second
appellant at the time of such transfer and all the
obligations which
the second appellant had towards them were transferred by operation
of law to the first appellant. This, they
contended, was because of
the application of sec 197(2)(a) of the Labour Relations Act, 1995
(Act NO 66 of 1995)
(“the Act”).
The
first appellant’s defence was that, although the transfer of the
second appellant’s business to the first appellant was
a transfer
of such
business
as a going concern to
which
sec 197 applied, the rights and obligations which existed between
the second appellant and the individual respondents, if
any, were
not transferred to it because at the time of the transfer of the
business, the second and further respondents were not
employees of
the second appellant as contemplated by sec 197(2)(a) as they had
been dismissed prior to such transfer and their
reinstatement by the
CCMA was not so retrospective as to cover the date of the transfer.
Waglay J, who heard the matter, held that
sec 197 applied to the
second and further respondents even though they had been dismissed
prior to the transfer of the business
and despite the fact that the
award of reinstatement that the CCMA had made was not sufficiently
retrospective to cover the date
of the transfer of the business.
Accordingly, he granted an order to the effect, in regard to this
issue, that the arbitration
award could be made an order of the
Labour Court. Subsequently the appellants sought leave to appeal to
this Court against that
judgement and order. The application for
leave to appeal was refused. The appellants then petitioned this
Court for leave to appeal.
This Court granted such leave; hence this
appeal.
The
Appeal
[7] On
appeal the only issue for determination is whether sec 197(2)(a)
applied to the second and further respondents at the time
of the
transfer of the business of the second appellant to the first
appellant. If it applied, the appeal must fail. If it did
not apply,
the appeal must succeed. Whether or not sec 197(2)(a) applied
depends on whether or not the second and further respondents
can be
said to have been
employees
of the second appellant as
contemplated
by sec 197(2)(a) at the time of the transfer of the business. It is
the provisions of sec 197(2)(a) as they stood in
1999 that fall to
be considered. It is convenient to quote not only sec 197 (2)(a)
but also sec 197 (1) and the whole of ss(2).
Sec 197(1) and (2) read
thus at the time:-
“
197
TRANSFER OF CONTRACT OF EMPLOYMENT.
(1) A
contract of employment may not be transferred from one employer
(referred to as the old employer) to another employer (referred
to
as the new employer) without the
employee’s
consent,
unless-
(a) the
whole or any part of a business, trade or undertaking is transferred
by the old employer as a going concern; or
(b) the
whole or a part of a business, trade or undertaking is transferred
as a going concern-
(i) if the
old employer is insolvent and being wound - up or is being
sequestrated; or
(ii) because
a scheme of arrangement or compromise is being entered into to avoid
winding-up or sequestration for reasons of insolvency.
(2)(a) If
a business, trade or undertaking is transferred in the circumstances
referred to in subsection (1) (a), unless otherwise
agreed, all the
rights and obligations between the old employer and each
employee
at the time of the transfer continue in force as if they had been
rights and obligations between the new employer and each
employee
and, anything done before the transfer by or in relation to the old
employer will be considered to have been done by or in relation
to
the new employer.
(b)
If a business is transferred in the circumstances envisaged by
subsection (1) (b), unless otherwise agreed, the contracts
of all
employees
that were in existence immediately before the old employer’s
winding-up or sequestration transfer automatically to the new

employer, but all the rights and obligations between the old
employer and each
employee
at the time of the transfer remain rights and obligations between
the old employer and each employee and anything done before
the
transfer by the old employer in respect of each
employee
will
be considered to have been done by the old employer”.
[8] Counsel for
the appellants contended that the provisions of sec 197(2)(a)
require that the second and further respondents should
have been
employees of the business transferor at the time of the transfer of
the business before the provisions could be triggered.
He submitted
that the second and further respondents were not employees of the
business transferor at the time of the transfer
of the business
because they had been dismissed from the business transferor’s
employ prior to the transfer of the business.
Section 213 of the Act
defined the word
“employee”
thus
at
time:
“
(a) any
person, excluding an independent contractor, who works for another
person or for the State and who receives, or is entitled
to receive,
any remuneration;
(b) any
other person who in any manner assists in carrying on or conducting
the business of an employer”.
[9] Counsel for
the appellants conceded, however, that the principle established in
the decision of the then Appellate Division
in National Automobile
and Allied Workers Union (now known as the National Union of Metal
Workers of SA) v Borg-Warner SA (Pty)
(1994)15 ILJ509 (A), which was
decided under the now repealed Labour Relations Act, 1956 (Act No28
of 1956)
(‘the
old Act’
),
applied with equal force to the current Act. In Borg-Warner’s
case a trade union had concluded an agreement with an employer
to
the effect that, when suitable vacancies arose in the future, the
employer would fill such vacancies by employing from a pool
of
employees who had previously been dismissed by the employer. A
dispute arose later between the parties when the employer failed
to
appoint from the pool in filling certain vacancies that had arisen.
The trade union brought an unfair labour practice claim
in the
Industrial Court alleging that the employer’s conduct in not
hiring from the pool constituted a breach of the earlier
agreement
and constituted an unfair labour practice as defined in sec 1 of the
old Act.
[10] The
employer took the point that the Industrial Court had no
jurisdiction
in the matter as the persons who formed the pool of employees for
whose benefit the agreement had been concluded were
not employees
within the meaning of that term in the old Act because they had been
dismissed. The Appellate Division rejected
this contention. The
Court referred to the City Council of Cape Town v Union Government
1931 CPD 366
at 380 where, in relation to the Industrial
Conciliation Act 11 of 1924, Gardiner JP had said that
“(i)t does not follow that [a] man dismissed may not be an
employee in terms of the Act. It seems to me that to hold that once
a man is dismissed he ceases to be an employee would defeat the
whole object of the Act, because anyone with knowledge of labour
history knows that such disputes constantly arise and that serious
strikes often take place owing to the fact that a person has
been
dismissed”.
At
518B in Borg-Warner the Court said in relation to the old Act:-
“The
relationship envisaged by the Act between employer and employee is
therefore clearly not one that terminates as it would
at common
law”.
At
516 A in Borg-Warner’s case the Appellate Division said:
“
The
Labour Appeal Court recognized that a termination of the
relationship which would be unassailable under the common law, does
not terminate the applicability of the definitions ‘employer’
and ‘employee’ to the parties to the relationship
for
purposes of the Act”
.
(My
underlining).
At 518 F-H it
went on to say that:
“
...........
(t)he legislature clearly had in mind that once a particular
employment relationship is established, the parties to
it remain
‘employee’ and ‘employer’ as defined , beyond the point of
time at which the relationship would have terminated
under the
common law. Where it includes also former employees seeking
re-employment or reinstatement, it has placed no limitation
suggesting when - or why - a former employee no longer falls within
the definition.
What
is clear, is
that
when both parties so agree
,
or
when
equity permits, the relationship does come to an end”.
(
My
underlining
).
[11] The
principle established in Borg-Warner is, therefore, that an
employment relationship could continue between an employer
and an
employee beyond the termination of the contract of employment by the
employer and, where such a relationship existed, the
dismissed
person was an employee as defined in the old Act. It was said that
such an employment relationship comes to an end when
parties have so
agreed or when equity so demands. That certainly was the case under
the old Act and that remains the position under
the current Act. The
employment relationship was found to have continued to exist in the
Borg-Warner case beyond the termination
of the contract of
employment despite the fact that the employees forming part of the
pool
no longer had any contracts of employment with the company. The
employment relationship certainly continues to exist where
the
dismissed person challenges the fairness of the dismissal and seeks
relief through procedures provided for by the Act.
[12] To
construe the provisions of sec 197(2)(a) on the basis that the word
“employee”
includes a person who has been dismissed but still has an employment
relationship with his former employer because he is still
pursuing
legal remedies in relation to such dismissal would, it seems to me,
accord
with the purpose of EC Council Directive 77/187 of 14 February 1977
of the Council of European Communities. I say this because,
in
P
Bork International A/S (in liq) v Foreningen af Arbejdsledere i
Danmark Case 101/87
[1989] IRLR 41
at
44, the Court of Justice of the European Communities had the
following to say in respect of who may invoke the EC Council
Directive
77/187:-
“
...........
the only workers who may invoke Directive 77/187 are those who have
current
employment relations
or a contract of employment at the date of the transfer.” (
my
underlining
)
Later, on the
same page, the Court said:
“
It
follows that the workers employed by the undertaking whose contracts
of employment or
employment
relationship
has been terminated with effect on a date before that of the
transfer, in breach of Article 4(1) of the Directive must be
considered
as still employed by the undertaking on the date of the
transfer with the consequence, in particular, that the obligations
of an
employer towards them are fully transferred from the
transferor to the transferee, in accordance with article 3(1) of the
Directive....”.
(my
underlining
)
[13] In
Wendelboe v LJ Music Aps ( in liq) Case no 19/83
[1985] ECR 457
at
par 16 of the judgement the Court, inter alia, said that:
“The existence or otherwise of a contract of employment or an
employment relationship on the date of the transfer within the
meaning of Article 3(1) of the directive must be established on the
basis of the rules of national law, subject however to observance
of
the mandatory provisions of the directive and, more particularly,
Article 4(1) thereof, concerning the protection of employees
against
dismissal by the transferor or the transferee by reason of the
transfer”.
The
Court then said that
“(i)t is for the national court to decide, on the basis of those
factors, whether or not, on the date of the transfer, the employees
in question were linked to the undertaking by virtue of a contract
of employment or employment relationship”. In Foreningen af
Arbejdsledere i Danmark v Daddys Dance Hall A/S Case 324/86
[1988]
IRLR 315
at 317
par
14 the Court said, among other things, that
“.......
Directive 77/187 aims at ensuring for workers affected by a transfer
of undertaking the safeguarding of their rights
arising from
the
employment contract or relationship”.
(my
underlining).
[14] It is,
therefore, clear from the decision of the European Court of Justice
in
P Bork International A/S (in liq) v Foreningen af Arbejdsledere i
Danmark
(above)
that the existence of a contract of employment or of an employment
relationship qualifies an employee to claim protection
under the EC
Council Directive 77/187. In other words the absence of a contract
of employment does not disqualify a person from
such protection and
a person who has no contract of employment at the time of the
transfer of the business can seek such protection
if he can show the
existence of an employment relationship. It is clear also from the
decision in Wendelboe’s case referred to
above that it is left to
the domestic courts to decide whether in a particular case there is
an employment relationship or a contract
of employment or not. It is
made clear in
Foreningen
af Arbejdsledere i Danmark v Daddys Dance Hall
that
the Directive
“aims at ensuring for workers affected by a transfer of
undertaking the safeguarding of their rights arising from the
employment
contract or relationship”.
[15] Against
the above background it is appropriate to observe that in
Borg-Warner it was decided that the termination of a contract
of
employment does not terminate the applicability of the definitions
of
“employer”
and
“employee”
to
the relationship of the parties for purposes of the old Act and that
the definition of
“employee
”
in the old Act included a former employee seeking re-employment or
reinstatement. It was also said in Borg-Warner that what
was clear
was that the employment relationship comes to an end when the
parties have so agreed or if
“equity permits”.
If
equity is applied to this case, it seems to me that it cannot be
said that it permits that the matter be dealt with on the basis
that
the employment relationship came to an end when the individual
respondents were dismissed despite the fact that they did not
accept
the dismissal but instead set the statutory machinery in motion to
have their dismissal reversed. On the contrary it seems
to me that
the employment relationship continued beyond the termination of
their contract of employment.
[16] Counsel
for the appellants further submitted that, where, as in this case,
an employee’s dismissal from the business transferor’s
employ
occurred before the transfer of the business and the employee is
still pursuing his legal remedies at the time of such transfer,
the
dismissed employee can only be said to be an employee as
contemplated in sec 197 (2)(a) if he subsequently obtains an order
of reinstatement which is so retrospective that it covers the date
of the transfer of the business. He submitted that, if the employee
does
obtain
a reinstatement order or award but such reinstatement is either not
retrospective at all or is retrospective but not sufficiently
retrospective to cover the date of the transfer of the business, the
dismissed employee cannot be said to have been an employee
within
the contemplation of sec 197(2)(a) at the time of the transfer.
Counsel submitted that in a case where the dismissed employee
is
still pursuing his remedies when the business is transferred, the
question whether or not he is or was an employee as contemplated
by
sec 197(2)(a) at the time of the transfer of the business is
determined by the terms of the award or order that he obtains.
[17] Counsel
for the appellants submitted that, if the result of litigation or
arbitration about a dismissal dispute is a finding
that the
dismissal was fair, this has the result that for purposes of sec
197(2)(a) the dismissed employee is not to be regarded
as having
been an employee of the business transferor at the time of the
transfer of the business. If, however, submitted Counsel
for the
appellants, the dismissal of the employee is found to have been
substantively unfair and sufficiently retrospective reinstatement
is
ordered, the employment relationship is confirmed to have been
present at the time of the transfer of the business and the

dismissed employee is to be regarded as having been an employee as
contemplated by sec 197(2)(a) at the time of the
transfer
of the business.
[18] I am
unable to uphold Mr Pretorius’ argument that whether an employee
who has been dismissed before the transfer of his former
employer’s
business to another as going concern is an employee for the purposes
of sec 197(2)(a) depends on the terms of the
award or order that is
ultimately issued or made at the end of the arbitration or
adjudication of his unfair dismissal claim. If
that argument were
upheld, it would introduce too much uncertainty. I think it is
untenable. In my judgement a person is either
an employee as
contemplated by sec 197(2)(a) at the time of the transfer of the
business or he is not. One should avoid a construction
of the
section that results in a situation where such a person is not
regarded as an employee as contemplated by sec 197(2)(a)
at the time
the business is transferred but is subsequently so regarded.
[19]
On
the basis of the decision in Borg-Warner a person who had
been dismissed from an employer’s employ and who
pursued his legal remedies to seeking re-employment or reinstatement
by utilising
the statutory mechanism fell within the definition of
“employee”
in the
old Act for purposes of that Act. Mr Pretorius has correctly
conceded that that principle finds application in the current
Act.
In my judgement once this is accepted to be the case, there can be
no doubt that the second and further respondents must
be regarded as
having been
“employees
”
as contemplated by sec 197(2)(a) of the current Act and were such
employees
“at the time
of the transfer”
of the business as required by sec 197(2)(a). I, therefore, conclude
that at the time of the transfer of the business the second
and
further respondents were
“employees
”
of the second appellant, the business transferor, within the meaning
of that word
in sec 197(2)(a). In my view, that is the end of the
case save that it
must still be determined what rights and obligations
subsisted at the time between the second and further respondents and
the business
transferor which the business transferee took over. I
turn to deal with that issue shortly.
[20] Mr
Pretorius’ submission also seems to be based on the assumption
that whether or not the first appellant had an obligation
to give
effect to the reinstatement award that was issued by the CCMA
against the second appellant depends on whether the right
which the
second and further respondents had against the second appellant at
the time of the transfer of the business was the right
to
employment.
[21] Mr
Pretorius’ submission also raises the question of what the rights
and
obligations are which exist between an employee who has been
dismissed (but is still pursuing his legal remedies about such
a
dismissal) and the business transferor which would continue after
the transfer of the business as if they were rights and obligations
between him and the business transferee. This is important to
establish because only those rights which existed at that time of
the transfer of the business continue beyond such transfer as if
they were rights and obligations between the employee and the
business transferee. Any rights and obligations between the
dismissed employee and the business transferor which may have
existed
at some stage but no longer existed at the time of the
transfer do not continue after the transfer of the
business.
[22] In
my judgement, that assumption is not justified by the provisions of
sec
197. Sec 197
envisages both the transfer of contracts of
employment as well as the transfer of rights and obligations
existing between the business
transferor and its employees at the
time of the transfer of the business. Subsection 1 precludes the
transfer of an employee’s
contract of employment without his
consent except in circumstances specified therein. Subsection 2(a)
makes no specific reference
to the transfer of contracts of
employment when a business is transferred as a going concern but it
refers to
“all
the rights and obligations between the old employer and each
employee at the time of the transfer”.
It says that those rights and obligations
“continue in force as if they had been rights and obligations
between the new employer and each employee”.
It
further goes on to say that:
“anything
done before the transfer by or in relation to the old employer will
be considered to have been done by or in relation
to the new
employer”.
Subsection
2(b) makes a specific reference both to
“the contracts of all employees that were in existence immediately
before the old employer’s winding-up or sequestration”
being
transferred automatically to the new employer as well as to
“all
the rights and obligations between the old employer and each
employee at the time of the transfer”
remaining
as
“rights and obligations between the old employer and each
employee.....”
[23] In
my view the phrase
“all the rights and obligations”
in subsection (2)(a) is not limited to the right to employment. The
phrase is wide enough to include the right provided for in
sec 34
of the Constitution of the Republic of South Africa NO 108 of 1996
and the right provided for in sec 191(1) and (5) of the
Act. Sec 34
of the Constitution provides the
“(e)very one has the right to have any dispute that can be
resolved by the application of law decided in a fair public hearing
before a court, or, where appropriate, another independent and
impartial tribunal or forum”.
The
CCMA is, on the face of it, such an independent and impartial
tribunal or forum. Sec 191(1) read with ss(5) of the Act provide
in
effect that an employee who has a dispute with his employer about
the fairness of his dismissal has a right to refer such dispute
to
conciliation and, if conciliation fails, to the CCMA or a council
with jurisdiction for arbitration or to the Labour Court for
adjudication.
[24] Where
a person has been dismissed by his employer and resorts to the Act
to challenge the fairness of that dismissal with a
view to securing
his reinstatement but, before the finilisation of the litigation or
arbitration, the business of his former employer
is transferred as
going concern to another person or entity, one of the rights which
the dismissed employee has at the time of
the transfer of the
business is the right to utilise the provisions of the Act against
the business transferor to obtain an award
or order of reinstatement
or compensation or other relief in relation to the dispute about the
fairness of his dismissal. A dispute
about the fairness of the
dismissal is a dispute that can be resolved by the application of
law as contemplated by sec 34 of the
Constitution. If it is accepted
that the word
“employee”
in
sec 197(2)(a) includes a dismissed employee who is pursuing his
legal remedies about such a dismissal, then the right of a dismissed
employee to utilise the Act to challenge the fairness of his
dismissal in order to resolve the dismissal dispute between himself
and the business transferor is one of the rights which he has
against the business transferor which, in the words of sec
197(2)(a),
“continue(s)
in force as if (it) (was a right) between the new employer and each
employee….”.
I,
therefore, conclude that the right which such a dismissed employee
has in terms of sec 34 of the Constitution read with sec 191
of the
Act to have such a dispute arbitrated or adjudicated continues after
the transfer of the business and it becomes a right
between the
dismissed employee and the business transferee. In this case the
dismissal dispute appears to have been pending before
the CCMA when
the business was transferred. The award was actually delivered a few
weeks after the signing of the sale agreement
which was then made
retrospective.
[25] It
can also be said that, because sec 197(2)(a) provides that anything
done by the business transferor in relation to an employee
before
the transfer of the business must be regarded as having been done by
the business transferee, the business transferee is
regarded, after
the transfer of the business, as the one who dismissed the employee
and, is, therefore, the person against whom
the employee is entitled
to pursue arbitration or legal proceedings to enforce his right not
to be dismissed unfairly.
[26] Mr
Pretorius referred us to the case of
Lister
and others v Forth Dry Dock and Engineering Co Ltd
[1989] 1 ALL ER
1134
(HL)
and that of
Thompson
v SCS Consulting Ltd
[2001] IRLR 801
.
In Lister’s case employees had been dismissed one hour before the
transfer of the business. The question arose whether it could
be
said that they had
been
employed
by
the business transferor
“immediately before the transfer”
as
required by English regulations since they had already been
dismissed at the time of the transfer of the business. The House
of
Lords held that, where an employee was unfairly dismissed prior to
the transfer of the business for a reason connected with
the
transfer, the employee should be regarded as having been in the
employ of the business transferor immediately before the transfer.
It did not go on to say the same in respect of an employee whose
dismissal was not because of the transfer but was, for example,
for
operational reasons. Lord Templeman put it
thus
at 1139J:
“Regulation 5(3) must be construed on the footing that it applies
to a person employed immediately before the transfer or who
would
have been so employed if he had not been unfairly dismissed before
the transfer for a reason connected with the transfer.
It would, of
course, still be open for new owner to show that the employee had
been dismissed for an economic, technical or organisational
reason
entailing changes in the workforce”.
In
Thompson’s case the Court held that liability did not transfer to
the business transferee in respect of an employee who is
dismissed
before the transfer of business if the dismissal was not because of
the transfer of the business or if the transfer was
not the
principle reason for the dismissal. In that case it had been found
that Mr Thompson’s dismissal was for an economic,
technical and
organisational
reason and was not connected with the transfer. The Court held that,
because of that, the business transferee was
not liable.
[27] For
two reasons I do not find the decisions in Lister and Thompson
helpful to the appellants case. The one reason is that the
distinction the two cases sought to make between a case where the
reason for dismissal is the transfer of the business and where
the
reason for dismissal is not the transfer of the business but is, for
example, an
“economic, technical or organisational”
reason
is based on specific provisions of the English regulations which
have no equivalent in sec 197. Reg 8(1) provides that
“(w)here
either before or after a relevant transfer, any employee of the
transferor or transferee is dismissed, that employee
shall be
treated as unfairly dismissed if the transfer or a reason connected
with it is reason or principal reason
for
his dismissal”.
Reg 8(2) provides that
“(w)here an economic, technical or
organisational reason entailing changes in the workforce of either
the transferor or the transferee
before or after a relevant transfer
is the reason or principal reason for dismissing an employee (a)
paragraph (1) above shall
not apply to his dismissal”.
The paragraph (1) referred to is, of course, Reg 8 (1) referred to
above. Sec 197 has no similar provision that
draws a distinction between the two situations.
[28] Mr Myburgh, who appeared for the respondents,
relied heavily on the decision of this Court in
Success
Panel Beaters & Service CC v NUMSA & Another
[2000] 6 BLLR
635
(LAC)
in contending that the respondents
were employees for purposes of sec 197 when the business was
transferred. In that case the employee
was employed by a company
known simply as Score but was dismissed on 7 March 1996 – which
was before the Act came into operation.
The employee then referred
a dispute relating to the fairness of his dismissal to the
Industrial Court under sec 46(9) of the
old Act. The current Act
including sec 197 came into operation on 11 November 1996. In
January or early February 1997 Score’s
business was transferred
as a going concern to Success Panel Beaters and Service Centre CC,
(hereinafter referred to as “
Success”),
the appellant in that case, on 19 February 1997. The Industrial
Court found that the dismissal of the employee was unfair and
ordered Score to reinstate the employee and pay him compensation.
[29] The employee and his union subsequently brought an
application in the Labour Court for the order of the Industrial
Court against
Score to be made effective against Success. The
Labour Court granted the application. An appeal to this Court
ensued. This
Court held that sec 197 applied to the case and
referred at 637G-H to that part of sec 197 (2)(a) which says that
“…
anything done before the transfer
by………… the old employer will be considered to have been done
by………. the new employer”
and said
that
“(i)n other words, the unfair
dismissal of the second respondent by Score will be considered to
have been effected by the appellant”.
[30]
Mr Pretorius argued
that the point that he raised in this matter was not argued in
the Success Panel Beater’s matter. It
may be so that the point
was not argued but it is clear from the statement I have quoted at
the end of the preceding paragraph
that one of the reasons given by
this Court for upholding the decision of the Labour Court making the
order of the Industrial Court
effective against Success was that the
dismissal of the employee which Score had effected prior to the
transfer of the business
was considered to have been effected by
Success.
[31] In
the result I conclude that the appeal must fail. The appeal is
dismissed with costs.
___________
Zondo JP
I agree.
___________
Goldstein
AJA
I agree.
___________
Comrie
AJA
Appearances:
For the
Appellants: Adv. P.J. Pretorius SC
Instructed
by: G.B. Liebmann, Behrmann & Co
For the
respondents: Adv A.T. Myburgh
Instructed
by: Wesley Pretorius & Associates
Dated of
Judgement: 6 August 2003