THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG
Not Reportable
Case no: JS 292/2023
In the matter between:
MICHELLE VENETA EPHRAIM AND 2 OTHERS Applicants
and
DRG OUTSOURCING (PTY) LTD Respondent
Heard: 03 November 2025
Delivered: 04 November 2025
Territorial jurisdiction: applicants employed by a South African entity to render
services to a USA employer in the USA and Nigeria . On the principle established by
the LAC in Sorrell v Petroplan Sub-Saharan Africa (Pty) Ltd (2025) 46 ILJ 128 (LAC)
this Court lacks jurisdiction to determine their unfair dismissal claim. Matter removed
from the roll.
JUDGMENT
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HARVEY AJ
Introduction
[1] This matter was enrolled as a 3- day trial. However, what I have before me are
two special pleas belatedly raised by the respondent, DRG Outsourcing (Pty)
Ltd (DRG).
[2] The three applicant employees were all dismissed on 19 January 2023
pursuant to a retrenchment process. They referred an unfair dismissal dispute
to the CCMA, which remained unresolved, and subsequently instituted
proceedings in this Court alleging that their dismissals for operational
requirements were both substantively and procedurally unfair. They seek
reinstatement or maximum compensation.
[3] It appears that DRG initially elected to represent itself , and only instructed the
employer’s organisation, NEASA, to act on its behalf at a late stage. A few
weeks before the matter was due to be heard, DRG applied for a postponement
in order to amend its statement of response so as to introduce the special
pleas. The applicants, who have been awaiting the hearing for almost three
years since their dismissals, agreed that the amendments would not be
opposed and that the matter should proceed on the allocated date, with the
special pleas to be argued and determined. Both representatives confirmed that
the Court should regard the statement of response as having been amended
accordingly.
[4] The first special plea is that this Court lacks territorial jurisdiction; the second is
one of non-joinder of the entity to whom the employees’ services were provided
by the respondent, which is a company called 54Gene Inc. (54Gene).
[5] The parties agreed that no witnesses would be called and that the facts
relevant to the preliminary issues appear from the jointly compiled and filed trial
bundle. That bundle, prepared by agreement, contains the employment
contracts, correspondence, and documentation relating to the retrenchment
process, and it serves as the evidentiary foundation for determining the
preliminary issues.
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The jurisdictional plea
[6] DRG contends that although the applicants were recruited and paid by a South
African entity (themselves), they in fact performed work for its client, 54Gene,
reporting to its personnel in the United States and Nigeria.
[7] The issue is accordingly whether, on the facts, this Court has territorial
jurisdiction to determine the unfair dismissal dispute.
[8] If the Court has jurisdiction , I must also determine whether 54Gene has a
material interest in the matter requiring it to be joined.
The governing principles
[9] Jurisdiction is a question of law and fact. The Labour Appeal Court in Sorrell v
Petroplan Sub-Saharan Africa (Pty) Ltd 1 noted that whether the Labour Court
has territorial jurisdiction in any matter referred to it is a factual issue and must
be determined with reference to the location of the physical workplace of the
employee, not the place where the contract is concluded. Where employees
are placed through a recruiter or TES, i t is the loca tion of the undertaking for
which the employee is contracted to provide services, as opposed to the
location of the (intermediary) undertaking that recruits personnel or administers
or manages the contract on behalf of its client.
[10] The LAC in Sorrell further held that t he fact that s ection 198 of the LRA
stipulates that an employee employed by a TES is employed by the TES , and
not by the client , does not alter this conclusion. That is so, the court held,
because the undertaking of an entity that recruits, manages or pays personnel
who work not for it, but for a client, is an undertaking distinct from the
undertakings of the clients to which such personnel are provided.
The facts
[11] The applicants' employment contracts assigned them to DRG's client 54Gene
in either Washington D.C. or Lagos, Nigeria, and recorded that 'this written
agreement will constitute your contract of employment with the Client'.
agreement will constitute your contract of employment with the Client'.
1 Sorrell v Petroplan Sub-Saharan Africa (Pty) Ltd (2025) 46 ILJ 128 (LAC) (Sorrell).
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[12] 54Gene is a biotechnology company engaged in genetic research. It is the
undertaking for which the employees were contracted to provide services . By
contrast, the business of DRG is the provision of human- resources, payroll and
compliance services.
[13] The retrenchment process was facilitated by DRG, which refers to itself as an
'employer of record' responsible for ensuring compliance with South African
labour law. It clearly saw itself as duty-bound to assume the responsibilities of a
retrenching employer for the purposes of procedure under the Labour Relations
Act.
Arguments and evaluation
[14] Against that factual background, the competing submissions and the Court's
assessment of them are as follows.
[15] Mr Hayward, for DRG, argued that the applicants' work was carried out for
54Gene's undertakings in Washington D.C. and Nigeria, and that these
undertakings were entirely distinct from any South African business. He
submitted that, applying the reasoning in Sorrell, the Labour Relations Act
cannot apply because the undertakings to which the employees' services were
rendered were located outside South Africa.
[16] Mr Goldberg, for the applicants, advanced several arguments in support of this
Court's jurisdiction. He submitted that the employment contracts were signed in
South Africa under South African law; that payslips were issued by DRG
Outsourcing; that DRG facilitated the section 189 process; and that DRG
described itself as the 'employer of record'. He argued that, in substance, DRG
was the true employer, and that the applicants' work was accordingly
performed for a South African undertaking.
[17] Those submissions cannot be sustained. Even if DRG regarded itself as
obliged to comply with South African labour law in effecting the retrenchments ,
jurisdiction is a matter of fact and law, not self -characterisation. DRG describes
itself on the court papers as an intermediary or 'employer of record' whose
itself on the court papers as an intermediary or 'employer of record' whose
business it is to align HR strategies with business strategies for its clients. It
does not itself conduct, or have any commercial interest in, the biotechnology
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and genetic research enterprise carried on by 54Gene Inc., which is the
undertaking to which the applicants rendered services.
[18] Under the principle affirmed in Sorrell the Labour Court lacks territorial
jurisdiction to adjudicate the dispute. The proper course, as canvassed with
both representatives, is to remove the matter from the roll.
[19] In light of the Court’s conclusion that it lacks jurisdiction, it is unnecessary to
determine the separate plea of non- joinder, even though the parties advanced
argument on it.
Costs
[20] The applicants pressed for an order of costs on the basis that the jurisdictional
and non-joinder objections were raised late, after they had already prepared for
a three- day trial. Their frustration is understandable: the preliminary points
could and should have been raised earlier, and their late timing resulted in
wasted effort and expense. Nonetheless, jurisdiction is a threshold question
that cannot be resolved by considerations of fairness or convenience. The
respondent has succeeded on that point, and the Court is not persuaded that it
acted unreasonably or in bad faith in doing so. Having regard to the
requirements of law and fairness , and in terms of section 162 of the Labour
Relations Act, the appropriate course is to make no order as to costs.
Order
[21] The matter is removed from the roll for lack of jurisdiction.
[22] There is no order as to costs.
_______________________
SJ Harvey
Acting Judge of the Labour Court of South Africa
Appearances:
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For the Applicant: Mr A Goldberg, attorney
For the Respondent: Mr K Hayward, NEASA official