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[2019] ZALCJHB 378
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Dimension Data (PTY) Ltd v Omega Digital Services (PTY) Ltd and Another (J2163/19) [2019] ZALCJHB 378 (13 December 2019)
The
Labour Court of South Africa,
Held
at Johannesburg
Case
No: J2163/19
Reportable
In
the matter between:
DIMENSION DATA (PTY)
LTD
Applicant
and
OMEGA DIGITAL SERVICES
(PTY) LTD
First Respondent
SASOL SOUTH AFRICA
(PTY) LTD
Second Respondent
Heard
:
7 November 2019
Delivered
:
13 December 2019
Summary:
(S 197 transfer – whether replacement of service provider
maintaining and service audio-visual video-conferencing
facilities
belonging to and amounts to a transfer of a business under s 197 –
citation of respondent incorrect – correct
respondent
addressing merits of case against it – amendment of
citation permitted)
Judgment
LAGRANGE
J
Background
[1]
The applicant (‘Dimension’) claims that the
termination/nonrenewal
of the master agreement and signature document
concluded with it and Sasol, in terms of which it maintained and
repaired audio-visual
and videoconferencing facilities of Sasol,
together with the conclusion of an agreement between the second
respondent (‘Sasol’)
and the first respondent (‘ODS’
or ‘Omega Services’) in terms of which Omega Services
would provide the
same services constitutes a transfer of a business
as a going concern in terms of section 197 of the LRA.
[2]
In consequence, it also claims that Dimension’s employees who
were
devoted primarily to providing those services ought to have been
transferred automatically on 30 November 2019 being the date of
transfer. It also seeks an order requiring the first respondent to
conclude an agreement with the applicant in terms of s 197 [7]
of the
LRA within two weeks of the court order.
Points in limine-
[3]
Omega raised two
in limine
issues. Firstly, since
Dimension had not cited its employees who were part of the dedicated
team working on the Sasol facilities
this amounted to non-joinder of
legally interested parties whose employment status is inextricably
linked to the outcome of this
application. I agree that ordinarily
they ought to have been joined as they have a legal interest in the
outcome of the proceedings.
However, the fourteen affected
employees all assigned affidavits confirming that they had sight of
the urgent application
but chose not to intervene and to abide by the
decision of the court. They also acknowledged that the purpose of the
application
was to determine if their employment had been transferred
in terms of section 197. In the circumstances I am satisfied that no
purpose would be served joining the affected employees.
[4]
Secondly, the applicants had incorrectly cited Omega Digital
Technologies
(Pty) Ltd instead of Omega Digital Services (Pty) Ltd as
the company to which it claimed that the services rendered at Sasol
had
been transferred to under section 197. Dimension sought to
correct this by filing a notice to amend the citation of the first
respondent.
Strictly speaking, the citation of the incorrect party
required an application to substitute Omega Digital Services (Pty)
Ltd (‘Omega
Services’) for Omega Digital technologies
(Pty) Ltd (‘Omega Technologies’).
[5]
Omega Services cited a number of authorities including
Solenta
Aviation (Pty) Ltd v Aviation @ Work (Pty) Ltd
2014 (2) SA 106
(SCA),
Associated Paint & Chemical Industries (Pty) Ltd
T/A Albestra Paint And Lacquers v Smit
2000 (2) SA 789
(SCA) in
which the courts have declined to accept the correction of the
citation of the party, when the correction in fact identifies
a
different juristic entity from the first cited entity. However, in
those cases it was the identity of the plaintiff, which the
relevant
party sought to vary. Accordingly, the initiating pleadings did not
correctly describe the true creditor, and could not
avail the true
creditor when a plea of prescription was raised by the debtor party,
even if the debtor acknowledged the true creditor’s
identity.
In each of those cases, the correction of the creditor’s
identity was not accepted as a variation of the identity
of the
plaintiff, and a plea of prescription was upheld.
[6]
However, in this instance it is the citation of the respondent which
the
applicant sought to change. The answering affidavit was deposed
to by the Chief Operating Officer of Omega Services. While correctly
pointing out that Omega Technologies had been incorrectly cited as
the company assuming responsibility for the audio-visual services,
the answering affidavit addressed Dimension’s factual averments
on the basis that Omega Services was the true respondent,
whereas it
could have simply pointed out the error and not filed any answering
affidavit. In the circumstances, I am satisfied
that Omega Digital
services became a respondent party to the application when it joined
issue with the applicants in filing the
answering affidavit opposing
the merits of the application.
[7]
Accordingly, the citation of Omega Digital technologies should be
amended
to recognize the true respondent as Omega Digital Services.
Urgency
[8]
Omega does not contest the issue of urgency, but points out that
nothing
prevented Dimension from approaching the court after 2
October 2019 when it formed its final opinion of the matter, instead
of
6 November 2019. The date of termination of Dimension’s
contract with Sasol was extended to 30 November 2019. While the
matter
could have been moved with more expedition, I am satisfied
that Dimension acted with sufficient celerity given the timing of the
critical event to bring the matter to court.
Merits:
Brief
summary of material facts:
[9]
In February 2016, Dimension concluded a so-called Master Agreement
and
a Signature Document to service, support and maintain the audio
visual and video conferencing facilities of Sasol, in particular,
at
what was then its new head office in Sandton. The service provided
falls into three broad subdivisions namely: video helpdesk;
first
line support and time support and maintenance. The Dimension
employees performed the work at the Sasol premises just like
any
other Sasol staff. The nature of these component parts of the
whole service can be described, in brief, as follows:
9.1
The video helpdesk service entails ensuring that the numerous meeting
and conference
rooms have properly functioning audio and visual
support, as well as updating software and maintaining hardware used
by Sasol.
All the hardware and software used belongs to Sasol and was
licensed to Sasol. The helpdesk responds to approximately 600 calls
or email notifications per month. A certain amount of analysis of
those calls is conducted by Dimension.
9.2
The first line support function essentially refers to Dimension staff
responding
to reports reaching the helpdesk. Initially, the Dimension
technician will try and ‘walk’ the Sasol employee through
the steps to resolve the problem, but if that fails then a support
engineer is notified to go to the relevant venue to resolve
the issue
and a report is logged on the system.
9.3
The uptime support and maintenance function principally involves the
replacement
of vital equipment that cannot be repaired or restored to
a functional state onsite.
[10]
This year, a new tender was issued by Sasol to provide the same
services. Both Dimension
and Omega tendered for the contract and it
was awarded to Omega. The scope of work in the new contract is
slightly wider than that
in the original one, as it requires Omega to
render similar services at Sasol sites.
[11]
Dimension utilizes the infrastructure tools and equipment, software
and methodologies of
Sasol in rendering its services relating to
audio-visual and videoconferencing. Dimension maintains that the
rights to use such
infrastructure is an essential component of
providing the services and will transfer to Omega on termination of
Dimension’s
contract.
[12]
While admitting that the audio-visual and videoconferencing
facilities at Sasol’s
head office are part of the
infrastructure used by Sasol and its employees, Omega disputes that
the provision of such facilities
is part of Sasol’s business
per se
.
[13]
Omega did record its willingness to allow affected employees at
Dimension to apply for
positions at Omega and resign from Dimension
if they were successful.
[14]
Sasol has never engaged its own employees to provide these services
which were first provided
by Dimension when it won the three-year
contract. Thus, this is not a case where an existing in-house service
was outsourced to
third-party contractors. However, Dimension
contends that the fact that it provided the services as third party
to Sasol from inception
is immaterial in determining whether a s 197
transfer is taking place. Consequently, it is also irrelevant whether
or not employees
of Sasol were initially transferred to it when it
undertook to provide the services in question.
[15]
Dimension concedes that Omega might deliver these services to Sasol
using a different
modus operandi
to the one it uses in
rendering the service but the service outcomes are essentially the
same and the difference in
modus operandi
does not alter the
section 197 character of the changeover, which it submits amounts to
a transfer in terms of that section.
[16]
It is not common cause that a certain number of Dimension’s
personnel are permanently
deployed to render the service presently,
however Omega contends this is simply a reflection of the way
Dimension chose to provide
the service and is not a distinguishing
feature of the service itself.
Material issues in
dispute
[17]
Omega contends that when it commences rendering the services under
the new tender this
will amount to nothing more than a change of
service provider after Dimension’s three-year contract expires
through the effluxion
of time.
[18]
Omega disputes that Dimension permanently engaged personnel to fulfil
its obligations under
the Sasol contract. To refute this, Dimension
provided contracts of employment of the affected employees.
[19]
Omega further denies that giving the affected employees of
Dimension an opportunity
to apply for vacancies was an attempt to
cherry pick staff for the Sasol contract. Omega insists that it has
no need for any Dimension
resources to fulfil its obligations under
the contract but it could have other vacancies for such skilled
personnel.
[20]
Dimension contends that the existence of a transition date supports
its argument that the
new contract awarded to Omega amounts to a
section 197 transfer. Dimension also sought in its replying affidavit
to reinforce this
argument by referring to an email sent to it by
Sasol when it requested its personnel to be temporarily withdrawn to
attend hearing
of this application. Dimension had arranged for a
standby team to release the onsite engineers. In response to this
request, Sasol
sent the following email to Dimension:
“
Hi Corrie,
Are the guys really
required at the court proceedings on Thursday?,
We cannot risk having a
complete new team on site, our customers are used to a certain level
and way of service, a new team will
not work for us…”
Dimension
cites this as evidence of the dedicated and discrete nature of the
service it provides to Sasol, which cannot be readily
substituted at
short notice.
[21]
Dimension further contends that the 197 transfer is not dependent on
whether or not there
was a physical transfer of assets because the
courts have recognized that a comprehensive right to the
use
of assets and infrastructure and the assumption of control over those
assets may trigger a s 197 transfer. Omega argues that the
service it
is contracted to provide is not to use the assets of Sasol to provide
the service but rather to support, service, maintain
and repair those
assets, equipment, tools and infrastructure of Sasol comprising its
audio-visual and video-conferencing facilities.
[22]
Further, Omega contends that the work it renders is not delivered
through the mechanism
of a discrete entity but is a service which
Dimension can render at other clients’ premises. Omega denies
that it needs any
of the tools, equipment, personnel, know-how or
expertise of Dimension to provide the services in its contract with
Sasol. Accordingly,
it cannot be said that a discrete business entity
comprising a going concern is simply changing hands.
Evaluation
[23]
What
distinguishes this case from the
TMS
Group Industrial Services (Pty) Ltd t/a Vericon v Unitrans Supply
Chain Solutions (Pty) Ltd & others
[1]
case, which Dimension claims is closely comparable to the facts in
this matter, is that, in that matter the warehousing function,
which
was outsourced but was fulfilled using the assets of the client
(Nampak) was described as an economic entity or an organized
grouping
of resources namely the provision of warehousing services. TMS took
over Nampak’s warehousing operation using the
same
infrastructure Nampak previously used to discharge those obligations
by Unitrans. The LAC characterised the situation, and
cited the
judgement of Van Niekerk J in the court
a
quo
,
thus:
“
[9]…he
services that the appellant [TMS] was contracted to perform could
only have been performed at the production facility
of third
respondent [Nampak], at the same site and within the same premises as
first respondent [Unitrans] had previously discharged
its obligations
under its contract with third respondent. Absent any averment to the
contrary, it was also reasonable to conclude
that appellant would
make use of the same equipment and IT systems that had been employed
by first respondent, including forklifts,
furniture and a computer
system that was driven by the software of third respondent, enabling
the movement of stock to be tracked.
All of the assets were and
remained the property of third respondent and had been employed by
the first respondent and, in all
probability, by the appellant in the
discharge of its obligations to third respondent.
[10] On this basis Van
Niekerk J concluded:
'The warehousing service
provided by the first applicant to Nampak constituted an economic
entity, or, put another way, an organised
grouping of resources. This
comprises, at least, the contractual right to perform the services,
[with?] the assets owned by Nampak
but used by the affected
employees, the specific activities performed by the affected
employees and the employees themselves. This
economic entity
constitutes a service for the purposes of s 197(1).'
[11] Van Niekerk J went
further to hold that, to the extent that a contractual right to
provide warehousing services now vested
in appellant, the very same
assets which were used to provide the same services by first
respondent to third respondent were now
employed by the appellant;
hence the infrastructure that was used to discharge the obligations
of appellant passed from first respondent,
upon the assumption of its
obligations pursuant to the contract to third respondent and upon the
conclusion of the initial contract.
They were then made over to
[the] appellant after appellant had entered into its relationship
with third respondent.”
[2]
[24]
Dimension argues that: the scope of work to be performed by Omega is
virtually identical
to that performed by it; Sasol retains ownership
of the IT and physical infrastructure necessary to provide the
services and the
right of control and use of the necessary Sasol IT
and physical infrastructure will pass from Dimension to Omega
Services on the
effective date. Although no assets will transfer from
Dimension or Sasol to Omega Services, that is not decisive. What is
crucial
is that Omega Services will assume the comprehensive
right
of use
of Sasol’s IT infrastructure,
in order to
continue to provide the same service
to Sasol as previously
provided by Dimension.
[25]
To
reinforce its argument, Dimension placed much emphasis on the
importance attached to the European jurisprudence and directives
applicable to business transfers in that jurisdiction, after citing
dicta
in the LAC decisions in City Power (Pty) Ltd v Grinpal Energy
Management Services (Pty) Ltd & others
[3]
and
Unitrans
. For
convenience the relevant extracts are reproduced below:
After
citing section 197, the LAC in
Grinpal
stated:
“
[16] This
provision was subjected to a careful and definitive scrutiny by the
Constitutional Court in Aviation Union of SA &
another v SA
Airways (Pty) Ltd & others
2012 (1) SA 321
(CC); (2011) 32 ILJ
2861 (CC). As the facts of Aviation are relevant to the present
dispute they require recitation.
[17] In 2000, South
African Airways (SAA) took a decision to outsource certain of its
non-core business in order to reduce its maintenance
costs which were
in excess of R130 million per annum. It put its facilities management
operation out to tender. The tender was
awarded to LGM. Following the
award of the tender, LGM and SAA concluded an outsourcing agreement
in terms of which the facilities
management operations were
transferred from SAA to LGM. The agreement was to endure for ten
years, terminating on 31 March E 2010.
In terms of the agreement, LGM
would provide services for a fee. The assets and inventory relating
to these services were sold
to LGM, but on termination of the
agreement, SAA would be entitled to repurchase these assets, LGM
would be afforded the use of
office space, workshops, airport,
aprons, computers and the SAA network at all designated airports.
Upon termination of the agreement,
SAA would be entitled to have the
services transferred back to it or to a third party and to obtain
assignment of all third party
contracts of the LGM. Employees of SAA,
who were engaged in the performance of these services, were
automatically transferred to
LGM in terms of s 197 of LRA.
[18] In June 2007 SAA
terminated the agreement, owing to a breach committed by LGM. Two
months later it put out to tender certain
of the services performed
by LGM. According to LGM, employees who had been employed by LGM,
pursuant to its obligations under the
outsourcing agreement with SAA,
were now to be retrenched. The appellant sought assurance from SAA
that, upon termination of the
outsourcing agreement, LGM's employees
would be retransferred to SAA. SAA's stance was that there was no
legal obligation requiring
it to take the workers back. It was within
this context that appellant launched an application for declaratory
relief against SAA
and LGM I pursuant to s 197 of LRA.
[19] The dispute was
heard in the Labour Court, this court and the Supreme Court of
Appeal. Suffice to note that it finally reached
the Constitutional
Court where two judgments were delivered, one by Jafta J, on behalf
of a minority, and one by Yacoob J, on behalf
of the majority of the
court. Of particular relevance is the approach adopted by Yacoob J
(at para 113) to the proper enquiry to
be conducted to determine
whether the transaction in issue contemplates a transfer of business
by an old employer to a new employer:
'Does the transaction
concerned create rights and obligations that require one entity to
transfer something in favour or for the
benefit of another or to
another? If so, does the obligation imposed within a transaction,
fairly read, contemplate a transferor
who has the obligation to
effect a transfer or allow a transfer to happen, and a transferee who
receives the transfer? If the answer
to both these questions is in
the affirmative, then the transaction contemplates transfer by the
transferor to the transferee.
Provided that this transfer is that of
a business as a going concern, for purposes of s 197, the transferee
is the new employer
and the transferor the old. The transaction
attracts the section and the workers will enjoy its protection.'
[20] Applying this
approach to the facts of SAA, Yacoob J found that LGM had received
the transfer of fixed assets, inventory, the
use of space at
airports, SAA computers, computer network service and lease of
property all of which was necessary to conduct the
services to be
supplied by LGM. Thus (at para 120) —
'[a]s the agreement
rightly states LGM acquired the whole of the infrastructure necessary
for the conduct of the business. It did
not have to secure a property
or computers or network services or anything of the kind'.
The question that vexed
the Constitutional Court concerned the effect of the termination of
the outsourcing agreement between LGM
and SAA. This required the
court to examine the so-called second generation transfer, that is,
one from the original outsourcee
to the outsourcer. Yacoob J found
that the answer to whether s 197 of LRA applies in this case, to a
large extent, depended on
whether once the contract was cancelled LGM
would be entitled to continue to use the computers, airport space,
lease the property
and return the fixed assets and inventory. Thus
(at para 121) —
'if the assets necessary
to operate the business stay with LGM, then the business would not be
transferred. If they do not stay
with LGM but go back to SAA, or to
another service provider, there is a transfer of business'.
[21] On the basis of this
conclusion, the majority of the court found that the effected
termination of the agreement contemplated
a transfer of the business
as a going concern. The only question remained as to whether the
business as a going concern was to
be transferred to SAA or to an
interim service provider. So long as there was a transferor, the
identity of that entity or person
was of no material significance to
the issuing of the declarator sought by the appellant.
[22] Given that the
difference of approach between the minority and majority judgments
turned essentially on the appropriate remedy,
it is significant for
the purposes of this dispute that Jafta J reiterated the test for
determining whether a business was transferred
as a going concern, as
being that which had been adopted by the Constitutional Court in
National Education Health & Allied
Workers Union v UCT &
others
2003 (3) SA 1
(CC); (2003) 24 ILJ 95 (CC) at para 56:
'In deciding whether a
business has been transferred as a going concern, regard must be had
to the substance and not the form of
the transaction. number of
factors will be relevant to the question whether a transfer of a
business as a going concern has
occurred, such as the transfer or
otherwise of assets both tangible and intangible, whether or not
workers are taken over by the
new employer, whether customers are
transferred and whether or not the same business is being carried on
by the new employer. What
must be stressed is that this list of
factors is not exhaustive and that none of them is decisive
individually.'
[23] All of these factors
indicate that a court is required to examine the substance of the
agreement to terminate the outsourcing,
in this case between
appellant and first respondent
. In essence, the approach adopted
in NEHAWU follows that of the European Court of Justice in the
application of the Business Transfers
Directive (2001/23/EC)
which is applicable in the European Union, and dictates that a
transfer must relate to an autonomous economic entity (defined to
mean an organized group of persons and assets facilitating the
pursuit of an economic activity that promotes a specific objective).
In turn this involves a determination whether that entity retains its
identity after the transfer; that is,
the transferor must carry on
the same or similar activities with the personnel and/or the business
assets without substantial interruption
. See in this connection
Spijkers v Gebroeders Benedik Abattoir CV
[1986] 2 CMLR 296
(ECJ) and
the instructive E judgment of Van Niekerk J in Unitrans Supply Chain
Solutions (Pty) Ltd & others v Nampak Glass
(Pty) Ltd &
others [2014] ZALCJHB 61 at para 15 [reported at (2014) 35 ILJ 2888
(LC) – Eds].
[24] The transfer of a
going concern does not mean that, upon the termination of a service
contract by one party and a subsequent
appointment of another service
provider, a transfer of the contract sufficient to satisfy the
requirements of s 197 has been effected.
The question is whether the
activities conducted by a party, such as first respondent, constitute
a defined set of activities which
represents an identifiable business
undertaking so that when a termination of an agreement between first
respondent and appellant
takes place, it can be said that this set of
activities, which constitutes a discrete business undertaking, has
now been taken
over by another party. “
(Dimension’s
emphasis)
Further,
Dimension emphasized the importance of the transfer of an activity
from one entity to another, citing the following extract
from
Unitrans
:
“
[30] In this case,
the service which was provided was that of warehousing. It was
initially provided to third respondent by first
respondent.
As in
the case of Sodexho, the warehouse operation services constituted a
discrete business. At the date of the inception of its
agreement with
third respondent, appellant assumed the right to use third
respondent's assets and infrastructure in order to continue
to
provide the same service to third respondent as it had previously
been provided by first respondent
. As Mr van Esch said in his
answering affidavit, the warehouse services, which were presently
performed by the appellant can only
be performed at the production
facility of third respondent. Thus,
the services are 'performed at
the very same site and fixed premises as the services that were
performed by Unitrans in terms of
the warehousing agreement'.
Appellant was required to make use of the same equipment and IT
systems that were previously employed
by first respondent
including forklifts, computers, printers, a computer system as well
as other assets such as furniture.
[31]
This uncontested
evidence provided the basis by which to determine whether there has
been a transfer of business as a going concern
by an old employer to
a new employer
. The concept of a going concern is not a novel
concept within South African law. For example, s 11(1)(e) of the
Value Added Tax
Act 89 of 1991 refers to an enterprise 'which is
disposed as a going concern'.
The term 'going concern' is well
known in comparative value added tax jurisprudence
. The New
Zealand High Court, in interpreting the equivalent concept in New
Zealand legislation, which legislation formed the basis
of the South
African Value Added Tax Act, said the following about the meaning of
going concern:
'The activity must be one which is handed over to
the transferee in such a state that it may be carried on by the
transferee if
he so wishes.
' CIR v Smith's City Group Ltd
1992
(14) NZTC 9
,140 at 9,143.
[32] This dictum is
particularly illuminating in the present case.
The
activity which was carried on by first respondent flowed from the
relationship entered into between appellant and third respondent.
The necessary facilities were handed over to the appellant in a state
in which appellant was able to carry on the very same activity
which
had previously been conducted by first respondent. It performed these
services on the premises of third respondent. It employed
third
respondent's computer systems and other equipment and carried on the
same activity of warehousing
described in the evidence provided by virtue of third respondent's Mr
van Esch. This evidence justifies the conclusion that there
was a
transfer of a business as a going concern from the old employer to a
new employer.”
[4]
(Dimension’s
emphasis)
[26]
Lastly, Dimension contended that South African law on transfers is
largely congruent with
European law under the Business Transfers
Directive (2001/23/EC) and the British law on the TUPE Regulations.
Following this argument,
Dimension submits that the TUPE regulation
which specifically defines a particular form of a transfer of an
undertaking, namely
a service provision change (‘SPC’) is
consistent with the concept of a transfer of a service under section
197 of the
LRA.
[27]
According
to Wynne-Jones, the author of
The
law of TUPE Transfers
[5]
,
referred to by Dimension’s counsel:
“
An SPC occurs on a
change (other than on a one-off or short-term basis or in relation to
the supply of goods) to the identity of
the person who has the
conduct of activities to which an organized grouping of employees has
principally been dedicated …
For there to be an SPC
certain other requirements must be satisfied:
·
there must be an organized grouping of employees principally
dedicated to that contract or activity prior to the transfer;
·
the activities in question must remain fundamentally the
same after
the putative transfer;
·
the new service provider must be retained on an ongoing
basis rather
than on a one-of and short-term basis; and
·
the activities must not relate to the supply of goods.”
[28]
While it is
true that South African courts have drawn on European jurisprudence
on transfers of undertakings in the task of interpreting
section 197,
care must be taken not to simply incorporate
holus
bolus
specific
statute instruments promulgated under European or British
legislation, into our law. Froneman J in
Rural
Maintenance (Pty) Ltd & another v Maluti-A-Phofung Local
Municipality
[6]
cautioned against such a
tendency:
“
[25] In
NEHAWU support was found for the court's reasoning on the purpose of
s 197 in 'comparable foreign instruments and foreign
case law
construing these instruments'. But this was done with acknowledgment
of possible differences in language and context.
This court has on
many occasions warned that the use of comparative law should be
treated with due regard to different contexts
and language. NEHAWU is
no authority for the wholesale and uncritical adoption of
jurisprudence under the Acquired Rights Directive
adopted by the
European Commission or the British TUPE Regulations.
[26] The inclusion of
'service' in the definition of 'business' in the LRA was enacted in
2002. It precedes the 2006 TUPE Regulations
and differs in both
wording and context from the latter. It is difficult to see on what
basis the mere adoption of the TUPE Regulations
in Britain and the
jurisprudence in relation to it necessitates a reformulation or
development of our existing law to incorporate
a separate approach to
so-called service provision changes.”
[7]
[29]
In this
regard, it is important not to neglect the requirement that for a
transfer to take place under section 197, the court must
be satisfied
that what has taken place entailed the transfer of a business by one
employer to another employer as a going concern.
In
Imvula
Quality Protection (Pty) Ltd & others v University of South
Africa
[8]
,
the LAC held:
“
To constitute a
transfer of a business as a going concern, not all the assets of the
business need to be transferred, nor do all
the relevant employees.
But what must be transferred are those assets and personnel that are
essential to the business as it was
operated by the transferor. The
transfer allows the actual business or a clearly demarcated portion
thereof to operate seamlessly
after the transfer.”
[9]
[30]
Omega identifies a number of factors in the master agreement which
Dimension concluded
which militate against the conclusion that a
transfer of a service entity is under consideration in this case.
Thus, Sasol does
not provide any equipment, tools, materials or
personnel to assist Dimension in performing its contractual
obligations. Also, Dimension
must determine the characteristics,
quality, requirements and quantity of the service it delivers and
remains the owner of all
the work it delivers and intellectual
property provided. Sasol may also reject work provided and appoint a
third party to fulfil
the work at Dimension’s expense if it
fails in its obligations.
[31]
While considerations like these might be relevant, it is the type of
service provided and
the way in which the service rendered by
Dimension and by Omega is reliant on equipment and infrastructure
belonging to Sasol,
which is a crucial consideration. In this
instance, the work to be performed by Dimension’s successor,
Omega Services, is
the maintenance and servicing of existing
audio-visual infrastructure of Sasol. Merely because Omega Services
will be working on
the same infrastructure and ensuring its effective
functioning does not imply such infrastructure is part of the
means
by which
it renders the service it provides. Rather it is the
maintenance of that very infrastructure itself which is the service
rendered.
To my mind this is little different conceptually from a
property company contracting with a different lift service company to
maintain
the proper functioning of its lifts, even if the former lift
service company had a dedicated team of technicians devoted to the
lift servicing needs of that company. It would stretch the concept of
a business as a going concern to consider the lifts which
are to be
serviced and maintained as the infrastructure of the business which
is transferred. Merely because a dedicated team might
be used to
render the service is not, in my view, sufficient to describe the
service as an economic entity that can be transferred
as a going
concern.
[32]
In light of the reasoning above, I am satisfied that the awarding of
the new contract to
service and maintain Sasol’s audio-visual
and conferencing facilities to Omega Services after terminating
Dimension’s
contract did not give rise to a transfer of a
service under section 197 of the LRA.
[33]
There are no employee parties that have incurred any legal costs in
this application, and
there is no reason in my mind why costs should
not follow the cause as they would in a normal commercial dispute
between private
companies.
Order
[1]
The citation of the respondent is amended to read Omega Digital
Services (Pty) Ltd instead of Omega Digital Technologies (Pty) Ltd.
[2]
The matter is dealt with as one of urgency and any noncompliance
with
the requirements of the Rules of the Labour Court pertaining to
service and time periods is condoned.
[3]
The application is dismissed.
[4]
The applicant must pay the respondent’s costs.
Robert
G Lagrange
Judge
of the Labour Court of South Africa
APPEARANCES
For
the Applicant:
G
A Fourie assisted by M Lennox instructed by
Eversheds
Sutherland (SA) Inc.
For
the Respondent:
S
Snyman of Snyman Attorneys
[1]
(2015) 36 ILJ 197 (LAC)
[2]
At
202-203
[3]
(2014) 35
ILJ
2757 (LAC)
[4]
At
208-209
[5]
2nd edition
[6]
(2017) 38
ILJ
295 (CC)
[7]
At 305.
[8]
(2019) 40 ILJ 104 (LAC)
[9]
At
111, para [21].