THE LABOUR APPEAL COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable
Case No: JA01/24

In the matter between:
ZEDA CAR LEASING (PTY) LTD T/A AVIS FLEET First Appellant
BARLOWORLD LTD Second Appellant
DEALERSBID (PTY) LT D (T/A DEALERSONLINE) Third Appellant
DEALERSONLINE (PTY) LTD (INTERVENING PARTY) Fourth Appellant
and

BELINDA PERLEE AND NINE OTHERS Respondent s

Heard: 7 November 2024
Delivered: 10 February 2025
Coram: Savage ADJP, Van Niekerk et Nkutha- Nkontwana JJA


JUDGMENT

2

NKUTHA -NKONTWANA, JA

Introduction

[1] This is an appeal , with the leave of the Labour Court, against the judgment
and order it delivered on 3 November 2023 which found the dismissal of the
respondents automatically unfair in terms of section 187(1)(g) of the Labour
Relations Act1 (LRA). The dispute between the parties pertained to the question of
whether the dismissal o f the respondents ensued from the first respondent’s (Avis
Fleet) operational requirements or a transfer of business by Avis Fleet to the third
respondent ( Dealersbid) in terms of section 197 of LRA.
[2] The Labour Court held that there had been a transfer and ordered Dealersbid
to reinstate the respondents with full backpay. The respondents are cross- appealing
this order. They seek an order to the effect that Barloworld and Dealersbid are jointly
and severally liable to reinstate them with no loss of benefits .
[3] I propose to deal first with the corporate structure of the appellants and the
citation of Dealersbid as a party in this litigation, a controvers ial tangled web t hat
became apparent during the first hearing of the matter on 15 August 2024. As a
result , the matter was postponed at Dealersbid’s instance. Dealersbid was granted
leave to take necessary steps to prosecute the appeal on its own behalf .

Appellants ’ corporate structure
[4] The second appellant (Barloworld) is a 100% shareholder of Barloworld South
Africa (Pty) Ltd (Barloworld SA) , which in turn, wholly owned Avis Fleet. Barloworld
SA owned a 51% stake in Crownmill Trading (Pty) L td (Crownmill) trading as
DealersOnline. The other shareholder s of Crownmill were Dealersbid and Rokewood
Technology (P ty) Ltd (Rokewood). With Barloworld having a majority stake,
Crownmill was part of its conglomerate. Barloworld had three distinct operating

1 Act 66 of 1995, as amended.
3

segments (Barloworld Logistics, Barloworld Equipment, and Barloworld Automotive) .
Barloworld Automotive was constituted of (i) Avis Fleet; (ii) Avis Budget Rent -a-Car;
(iii) Barloworld Motor Retail; and (iv) Digital Disposal Solutions (DDS). Crownmill was
part of DDS.
[5] The respondents were employed by Avis Fleet and held various positions
under the unit called Car Mall or Trade and Auction Centre (Car Mall) which was
responsible for the termination and disposal of vehicles at the end of the lease terms .
Avis Fleet was also licenced to utilise Crownmil l’s online Auction Portal to terminate
and dispose of its fleet. The controversy in this matter was brought about by the
decision by Barloworld to close Car Mall and to contract Crownmill to take over the
services rendered by the respondents under Avis Fleet’s Car Mall . I will return to this
issue later in the judgment, suffice it to say that the closure of Car Mall led to the
retrenchment of the respondents .
[6] Barloworld undertook major structural changes after the respondents'
retrenchment. Through an unbundling exercise, Barloworld dispos ed of Avis Fleet .
Furthermore, in April 2023, Dealers bid and Rokewood bought Barloworld's stake in
Crownm ill and changed its name to DealersOnline (Pty) Ltd (DealersOnline) .
[7] Dealersbid, therefore, contends that it was mistakenly cited as a party in this
litigation as it was a shareholder of Crownmill . That being the case and as a result, it
is not in a position to comply with the order of the Labour Court to reinstate the
respondents. It further contends that it was kept in the dark about this litigation hence
it could not object to its citation during the Labour Court proceedings . It refutes that it
author ised Avis Fleet or Barloworld to represent its interests in this litigation ,
particularly in this Court.
[8] On the other hand, Crownhill's successor in title, DealersOnline, seeks leave
to be joined as a party in this appeal even though it was not cited in the proceedings
before the Labour Court. Likewise, DealersOnline contends that it was not aware of
this litigation hence it could not have intervened in the proceedings before the Labour Court. Furthermore, it seeks leave to lead new evidence that was not before
the Labour Court which pertains to the nature of the business transaction it had with
4

Avis Fleet , including the copies of the relevant service level agreements it concluded
with DDS and Avis Fleet .

[9] Both these applications are not opposed, prudently so. It is apparent that
DealersOnline has a direct and substantial interest in this litigation and is a
necessary party as Dealersbid is just a shareholder and not a trading company
capable of effecting the impugned order of the Labour Court or the order this Court
might make.2 In addition, I am satisfied that the further evidence at stake is weighty
and material to a determination of the pertinent issue in this appeal .3
[10] Accordingly , both applications are granted. DealersOnline, the intervening
party, shall be cited as the fourth appellant .

Factual background
[11] Car Mall had two core functions, which entailed collecting and disposing of
vehicles at the end of the lease terms. To do so, it utilised an online platform called TradersOnline, which was open only to Avis Fleet. Even so, Avis Flee t also utilised
the online Auction Portal owned by DealersOnline to dispose of its vehicles .
DealersOnline services were open to other service user s, including the banks.
[12] In 2020, Barloworld undertook a rationalisation process which was triggered
by, inter alia, the adverse effects of the COVID- 19 pandemic . On 3 July 2020, the
Avis Fleet ’s Board of Directors resol ved to embark on a restructuring process and to
commence with a section 189A
4 consultation process . The employees were duly

2 See: Absa Bank Limited v Naude N.O and Others [2015] ZASCA 97; 2016 (6) SA 540 (SCA) at para
9; Gordon v Department of Health, Kwa Zulu-Natal [2008] ZASCA 99; 2008 (6) SA 522; para 9.
3 See: De Aguiar v Real People Housing (Pty) Ltd [2010] ZASCA 67; 2011 (1) SA 16 (SCA) at para 11;
Asla Construction (Pty) Ltd v Buffalo City Metropolitan Municipality and Another [2017] ZASCA 23;
2017 (6) SA 360 (SCA) at para 23.
4 A section 189A process is triggered when dismissals based on operational requirements by
employers with more than 50 employees
5

served with a section 189(3)5 notice to commence the consultation process. Three
consultation sessions were held in June 2020 and were facilitated by the CCMA . All
Avis Fleet departments , including Car Mall, were respectively represented by
nominated employees during the CCMA facilitation sessions.

[13] It was the evidence of Avis Fleets that Barloworld decided to close Car Mall
because two of its subsidiaries , Avis Fleet through Car Mall and DealersOnline, were
dealing with vehicle disposal. The business model of DealersOnline was found to be
more cost- effective as it was based on a variable cost structure . Unlike the fixed cost
structure associated with Car Mall , a variable cost structure meant that there would
be no fixed costs but that Avis Fleet would pay a rand value per unit if terminated.
However, if there was no termination, there would be no payment due and payable .
DealersOnline was already set up to do terminations and was providing this service
to other service users in the market. Avis Fleet and DealersOnline concluded a
service level agreement .
[14] The service that had been rendered by Car Mall was taken over by
DealersOnline. As a result , all the Car Mall staff members, including the
respondents, were retrenched on 31 July 2020 and 31 August 2020, respectively. It
is not in dispute that the decision to close Car Mall was a subject matter during the
section 189A consultation sessions . The respondent s only took issue with the fact
that the closure of Car Mall was only introduced during the last session of the section
189A consultation process.
The Labour Court p roceedings


5 Section 189(3) provide s: “The employer must issue a written notice inviting the other consulting
party to consult with it and disclose in writing all relevant information, including, but not limited to… the reasons for the proposed dismissals … the alternatives that the employer considered before proposing
the dismissals, and the reasons for rejecting each of those alternatives … the number of employees
likely to be affected and the job categories in which they are employed… the proposed method for
selecting which employees to dismiss …”.
6

[15] Displeased with their retrenchment, the respondent s instituted the action that
served before the Labour Court. T he nub of their case was that the closure of Car
Mall and transfer of its activities by DealersOnline triggered a section 197 transfer
which , in turn, rendered their dismissal automatically unfair in terms of section
187(1)(g) .

[16] To support their claim that there was a transfer , it was the respondents’
evidence that DealersOnline took over the functions that had been rendered by Car
Mall; took possession of Avis Fleet’s vehicles ; was granted access to the AS400
system , a leasing management tool that records the entire life of a vehicle; and
employed six out of 53 retrenched employees.
[17] The appellants refuted the respondents’ assertion that there was a transfer as
contemplated in section 197. They were adamant that the respondents were
retrenched consequent to a section 189A process. They further disavowed any
transfer of assets to DealersOnline as a result of the closure of Car Mall. They
asserted that the furniture and laptops were distributed throughout Avis Fleet .
DealersOnline was only granted access AS400 software system ; Avis Fleet
remained the title holder and owner of the vehicles in possession of DealersOnline;
the site that was occupied by Car Mall closedown.
[18] The Labour Court found, inter alia , that:
‘[63] In my view, there was such a discrete, identifiable economic entity
within Avis Fleet, in the form of Car Mall. Car Mall performed the collection, inspection, termination, and vehicle disposal functions for Avis Fleet. That Car Mall was an economic entity is apparent from the reasons given by Barloworld
for the decision to close down Car Mall, which is that there was a duplication
of functions within the Barloworld Group of companies, by Car Mall and by
DOL.
[64] The definition of 'business' includes a part of a business . Car Mall was
definitely a part of Avis Fleet and constituted an organised grouping of 53
persons and assets facilitating the ex ercise of the terminations and disposal of
economic activity. It was an identifiable and discrete part of the Avis Fleet
business. As Strydom testified, Car Mall was an integral part of the Avis Fleet
7

and Avis Budget Rent business , as car leasing and fleet management could
not be conducted without the terminations and disposal business. This version
was not seriously disputed, other than to say that terminations and disposals
were now being performed elsewhere. That may be so because Avis Fleet
chose to pay a fee to DOL for a function that still forms an integral part of its
leasing and fleet management business. That function constituted an
economic activity capable of being transferred. … [66] Car Mall did not own any assets but had possession of and managed
Avis Fleet assets. Therefore, the fact that no assets were transferred from Avis Fleet to DOL is of no consequence as those assets were never the assets of Car Mall to begin with. Car Mall had possession and benefit of Avis
Fleet property, and this was transferred to DOL. In my view that is sufficient to satisfy the transfer requirement, bearing in mind that ownership is not a prerequisite for this court to find that there has been a transfer of a business. We know from Aviation Union that transfer of the benefit (and not necessarily ownership) is sufficient to trigger the application of section 197. ’

In this C ourt
[19] The appellants contend that the Labour Court erred in finding that Car Mall
was a district economic activity capable of being transferred. Mr Boda SC, counsel
for Avis Fleet and Barloworld, submitted that the DealersOnline and Car Mall were
conducting the same functions before the closure of Car Mall. The differences were
that DealersOnline used a variable cost structure and its platform was open to all
dealers ; while Car Mall used a fixed cost structure and its online platform was not
open to the market. Consequent to the closure of Car Mall, the fixed cost structure
was done away with and the disposal of the vehicles via the online platform was open to any car dealer to bid on and purchase.
[20] While Mr Stelzner SC, counsel for Dealersbid and DearlersOnline, submitted
that what was transferred was a service and not a business that supplied services.
While it is true that before the retrenchment of the respondents , DearlersOnline
provided Avis Fleet with a limited service , it was already providing wide -ranging
8

service to other client s, such as banks, who, for a variety of reasons , require vehicles
to be sold and are charged a fee per vehicle on a transactional basis .

[21] Mr Stelzner SC further submitted that, when Avis Fleet decided to rationalise
its operations , DearlersOnline was appointed to provide the same type of services it
was providing its other clients to Avis Fleet . As such, the causa was the service level
agreement DealersOnline and Avis Fleet concluded. At no stage did DealersOnline
acquire the business of Avis or any part thereof, let alone do so as a going concern.
Avis Fleet vehicles were made available to DearlersOnline as its agent to sell the
vehicles on behalf of Avis. Once sold, DearlersOnline would account to Avis for the
proceeds of the sale.
[22] On the other hand, Mr Carratu , appearing for the respondents, submitted that
Barloworld’s decision to move the services that were provided by Car M all from a
fixed cost structure to a variable cost structure was the causa for the transfer and not
a restructuring process due to economic constraints. That is so because the decision
to implement a variable costing structure was intended to outsource an insourced
business function to a third party and accordingly triggered the application of section
197, even if no transfer of assets took place, so he further submitted.

Discussion
Section 197 [23] Section 197(1) of the LRA provides :
‘In this section and in section 197A — (a) “business” includes the whole or part of any business, trade,
undertaking or service; and (b) “transfer” means the transfer of a business by one employer (“the old
employer”) to another employer (“the new employer”) as a going concern.’
[24] Where there is a transfer of a business as a going concern, the consequences
listed in section 197(2) automatically follow by operation of law which provides, inter
alia, that “ the new employer is automatically substituted in the place of the old
9

employer in respect of all contracts of employment in existence immediately before
the date of transfer …”.
What was the causa? [25] The Constitutional Court has, on several occasions , underscored the
importance of a causa or legal cause in determining whether the jurisdictional facts
for the application of section 197 are present .
6 This notion was niftily expounded in
Rural Maintenance (Pty) Ltd v Maluti -A-Phofung Local Municipality7 (Rural
Maintenance) , per Froneman J, as follows:
‘This prov ides a useful illustration of what role the causa, or legal cause, of
any transfer of a business may play in the application of section 197 of the LRA. It is settled that the enquiry to determine whether the business is
transferred as a going concern is a factual one. But the parameters of the
factual enquiry are determined by the legal cause from which the transfer stems from. The legal cause may be the invalidity of the underlying contract. ’
[26] In this case, it is not in dispute that Avis Fleet embarked on a restructuring
process due to economic constraints as a result of the COVID -19 pandemic. The
decision to migrate to a variable cost structure and sourcing the services of
DealersOnline was implemented within the context of the restructuring process that
was undertaken in terms of section 189A . To my mind, that was the causa which
marked the confines within which the factual enquiry on the applications of section
197 had to be undertaken. T he respondents' attempt to divorce the restructuring
process , which was undertaken in terms of section 189A , from Barloworld’s decision
to adopt a variable business structure is accordingly untenable.


6 See: Road Traffic Management Corporation v Tasima (Pty) Limited; Tasima (Pty) Limited v Road
Traffic Management Corporation [2020] ZACC 21; (2020) 41 ILJ 2349 (CC) (Tasima) at paras 34-49;
Rural Maintenance (Pty) Ltd and Another v Maluti -A-Phofung Local Municipality [2016] ZACC 37;
(2017) 38 ILJ 295 (CC) (Rural Maintenance) at para 39; Aviation Union of SA and Another v SA
Airways (Pty) Ltd and Others [2011] ZACC 31; (2011) 32 ILJ 2861 (CC) (Aviation Union ) at para 113.
7 Rural Maintenance supra fn 7 at para 39.
10

Transfer of a business as a going concern

[27] In Mobile Telephone Networks (Pty) Ltd & others v CCI SA (Umhlanga) (Pty)
Ltd and Others8, this Court , per Sutherland JA , tersely expounded the test applicable
in section 197 enquiry as follows:
‘[13] …Notable is the fact that, unlike the procedural regulatory mechanics
for unfair dismissal for alleged misconduct in ss 185 to 188 and for unfair operational dismissals in ss 189 to 189A, the job protection element in s 197 is qualitatively different. The protection against the risk of job loss is rooted, not in a procedural straitjacket imposed on the employer, but rather, is located in the objective existence of a commercial reality, ie, a business as a going concern having been transferred. This means, in concrete terms:
13.1 a discrete business unit in the hands of the former owner (ie a business
which performs a service, not the service itself, the unit being discernible by a grouping of workers set about a common objective);
13.2 which business is, as a fact, transferred from one owner to another;
13.3 and which business is a going concern at the time of transfer (ie it has
intrinsic productive capacity);
13.4 which is recognisable as that going concern in the hands of the
subsequent owner (ie it retains the character of the initial business unit).
[14] What this means is that the judicial investigation into the entrails of
such circumstances alleged to result in s 197 being properly triggered, is an endeavour to determine whether or not that commercial phenomenon exists. This exercise is not the imposition of a moral construct on the circumstances. The job protection objective hangs wholly by the thread of the banal concrete elements of s 197 being proven to exist. ’
[28] Whether a business has been transferred as a going concern is an enquiry
undertaken based on the test provided by the Constitutional Court in National
Education Health and Allied Workers Union v University of Cape Town and Others
9
where it was said:

8 [2023] ZALAC 10; (2023) 44 ILJ 1906 (LAC) (MTN ) at para 13.
9 [2002] ZACC 27; (2003) 24 ILJ 95 (CC) at para 56.
11

‘The phrase “going concern” is not defined in the LRA. It must therefore be
given its ordinary meaning unless the context indicates otherwise. What is transferred must be a business in operation “so that the business remains the same but in different hands.” Whether that has occurred is a matter of fact which must be determined objectively in the light of the circumstances of each transaction. 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. A 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. They must all be considered in the overall assessment and therefore should not be considered in isolation.’
10
[29] It is therefore not enough to consider the fact that the execution of the same
services would continue, albeit under different hands alone. Something more is
required.
11 Whether a transfer of business as a going concern occurred must be
determined within the whole context of what transpired.
[30] An immediate point to make in this regard pertains to the dictum in Food and
Allied Workers Union v Cold Chain (Pty) Ltd and Another
12, copiously referred to by
the Labour Court, where the outsourcing of a warehouse was found to constitute a
section 197 transfer . I do not think the court intended to create an inflexible principle
that every outsourcing transaction would automatically trigger the application of
section 197 despite the prevailing factual circumstances that could militate against
such a conclusion.


10 Id.
11 See: Aviation Union supra fn 6 at para 75, an observation by the minority judgment.
12 [2009] ZALC 109; (2009) 30 ILJ 2919 (LC) (Cold Chain).
12

[31] What transpired in this cas e is simply that a function that was performed by
Car Mall to dispose of Avis Fleet vehicles at the end of the applicable lease period
was contracted out to Dealers Online. No assets were transferred to DearlersOnline.
DearlersOnline used its own online Auction Portal to dispose of Avis Fleet vehicles, a
system used to service other clients such as banks. The AS400 software was never
transferred to DearlersOnline. It was not seriously disputed that DearlersOnline had
its infrastructure and manpower, hence there was no transfer of tangible or intangible
assets like operating systems, employees, furniture, laptops and premises.
[32] Mr Currata was invited to direct us to the evidence of what was precisely
transferred from Avis Fleet to DearlersOnline. In response, other than a sweeping submission that it was the service that was rendered by Car Mall, he could only refer to the six Car Mall employees that were recruited by DearlersOnline. This evidence
alone cannot justify a conclusion that there was a section 197 if regard is had to all
the circumstances .
[33] The fact that there were no assets transferred from Avis Fleet to
DearlersOnline was obviously acknowledged by the Labour Court but took a view
that it was inconsequential as “those assets were never the assets of Car Mall to
begin with” . This finding is untenable as Car Mall was a mere unit comprised of the
employees of Avis Fleet . Thus, the Labour Court erred in treating Car Mall as a
business entity independent from Avis Fleet .
[34] I accordingly accept the respondents’ submission that Avis Fleet continued as
an economic entity leasing and selling fleet cars at the end of the lease period. What
transferred to DealersOnline is an activity or service . To find otherwise, would
essentially relegate Avis Fleet to its activity .
13 This case is distinguishable from
Aviation Union14 and Tasima15 where the transfer of tangible and intangible assets
was found to have occurred and accordingly , the business transfer red was a going

13 See: Kruger and Others v Aciel Geomatics (Pty) Ltd [2016] ZALAC 92; (2016) 37 ILJ 2567 (LAC) at
paras 42 - 43.
14 Aviation Union supra fn 6 at para s 53 and 120.
15 Tasima supra fn 6 at para 75.
13

concern. As well, the dictum in Cold Chain16 is distinguishable as the overall factual
matrix in this case evinces a transfer of a service and nothing more.

[35] In sum, it is my view that what transpired, viewed holistically and in the
context of restructuring, was not a transfer of the business as contemplated in
section 197.

The main, dominant and proximate cause of the dismissal

[36] Even if the Labour Court was correct in its finding that there was a transfer, it
still had to embark on enquiry to determine the main, dominant and proximate cause of the dismissal , a well- accepted test .
17 Sadly, that enquiry was not undertaken. For
completeness sake , I will make a few observations as I have already found that the
causa for the transfer was the decision by Barloworld to restructure its business due
to the CO VID-19 pandemic. This decision was implemented by Avis Fleet.
[37] The proposed business structure and the r ationale for closing the Car Mall
were explained during the section 189A consultation process. The need to
restructure Barloworld and, in turn, the Avis Fleet , was not seriously challenged. It
was further shown that the restructuring process affected about 2000 employees
within the Barloworld group.
[38] It follows that the dominant cause of the dismissal of the respondents was
Avis Fleet ’s operational requirements . As such , section 187(1)(g) finds no
application. That being that case, it do es not mean respondents are hung out to dry
as “the protection of workers is not solely governed by section 197 in these kinds of
situations. Employees are also protected by the retrenchment provisions in

16 Cold Chain supra fn 12 at para 28.
17 See: SA Chemical Workers Union and Others v Afrox Ltd [1999] ZALAC 8 ; (1999) 20 ILJ 1718
(LAC) at para s 46 - 49, referred to with approval in National Union of Metalworkers of SA and Others
v Aveng Trident Steel (A Division of Aveng Africa (Pty) Ltd) and Another [2020] ZACC 23; (2021) 42
ILJ 67 (CC) at paras 75 - 76. Long v Prism Holdings Ltd and Another [2012] ZALAC 5; (2012) 33 ILJ
1402 (LAC) at paras 34 - 37.
14

section 189. The choice here is which employer should be responsible for the
workers affected by the change in circumstance”.18

[39] Nonetheless, t he respondents nailed their colours on the m ast of section
187(1)(g) . With no alternative claim in terms of section 189, the finding that there
was no transfer is dispositive of this matter.

Conclusion
[40] In all the circumstances, the labour Court erred in finding that there was a
transfer of a business as contemplated in section 197 which trigger ed the application
section 187(1)(g). Because of this finding, the respondents ’ cross- appeal has
become superfluous .
Costs

[41] The is no reason to depart from the general rule that costs do not follow the
result in labour matters ; save for the costs occasioned by the postponement of the
matter on 15 August 2024. Given the fact that the postponement was caused by the
appellants' internal strife , they should pay the respondents ’ wasted costs , jointly and
severally , the one paying the other to be absolved.
[42] In the result , the following order is made:

Order
1. The application brought by DearlersOnline for leave to intervene as a
party and to lead further evidence is granted.
2. The appeal is upheld and the order of the Labour Court is substituted
as follows: “The applicants' claim is dismissed with no order as to costs.”

18 See: Rural Maintenance supra fn 7 at para 36; see also Aviation Union supra fn 6 at para 189.
15

3. The appellants shall pay the respondents’ wasted costs occasioned by
the postponement of the matter on 15 August 2024, jointly and severally the
one paying the other to be absolved.
Nkutha- Nkontwana JA
Savage AD JP et Van Niekerk JA concur.

Appearances:
For the first and second appellant ’s: Adv Feroze Boda SC
Instructed by Cliffe Dekker Hofmeyr Inc
For the third and fourth appellant’s : R G L Stelzner SC
Instructed by Bernadt Vukic Potash & Getz Attorneys
For the respondent : Adv Roberto Carratu