IN THE LABOUR COURT OF SOUTH AFRICA
HELD AT JOHANNESBURG
CASE NO. JS 52/05
In the matter between:
ROGER LOTZ Applicant
And
ANGLO OFFICE SUPPLIES Respondent
JUDGMENT
MUSI AJ
[1] This is a judgement on a point in limine raised by the respondent
to the effect that the applicant has brought a wrong party to court.
The essence of the point in limine , as I see it, is that where an
employee has been dismissed by his\her employer (the old
employer) for a reason related to a transfer of the employer’s
business or part thereof as set out in section 197 of the Labour
Relations Act 66 of 1995 (the LRA), any action that the employee
takes in connection with the dismissal can only be brought against
the person or entity to whom/which the business has been
transferred (the new employer). Put otherwise, it is contended that
under no circumstances can the employee have recourse against
the old employer. The issue concerns the interpretation of section
197.
[2] The factual background to the dispute is based on facts that are not
disputed (save in one respect which I shall indicate) and is briefly
as set out hereunder. The respondent is a company duly
incorporated in terms of the company laws of the Republic of
South Africa and which conducts the business of supplying paper
and stationery products with wholesale and retail components. The
applicant was employed by the respondent in its retail division as a
sale representative. During August 2004 the respondent made
known its intention to sell its retail division to a company called
Makulu Time Office Products (Pty) Ltd (Makulu). Discussions
were held between the applicant and a representative of the
respondent in connection with the contemplated sale with a view to
the applicant’s employment contract being transferred to Makulu.
The applicant objected to what he perceived as less favourable
terms and conditions of employment offered by Makulu and the
move to transfer the applicant appears to have been abandoned.
Now this is not a proven fact or common cause but I make this
conclusion on the basis of the fact that the negotiations in that
direction were not pursued but instead alternative proposals were
made to the applicant. When the negotiations around these failed to
bear fruit, the respondent simply dismissed the applicant. The
applicant then declared a dispute with the CCMA and conciliation
having failed, he instituted action in this court seeking
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compensation on the basis that this was an automatically unfair
dismissal as set out in section 187 (1) (g) of the LRA.
[3] The dismissal took place on 1 September 2004. Subsequently, and
on 8 September 2004, the respondent and Makulu concluded an
agreement in terms of which the respondent’s retail unit was sold
and transferred to Makulu as a going concern, which agreement
took effect on 1 October 2004.
[4] The gist of the respondent’s case is that since the applicant avers
that his dismissal was for a reason related to the transfer and therefore
automatically unfair, he has triggered the provisions of the entire section
197. It is pointed out that in terms of subsection
2 (a) Makulu has been substituted for the respondent and emphasis
is placed on the provision of subsection 2 (c) which stipulates:
“anything done before the transfer by or in relation to the old
employer, including the dismissal of an employee or the commission
of an unfair labour practice or act of unfair discrimination, is
considered to have been done by or in relation to the new employer”.
It is contended that the applicant could have recourse only against
Makulu, the new employer.
[5] Mr. Graham for the respondent referred to Transport Fleet
Maintenance (Pty) Ltd and Another v National Union of Metal
Workers of South Africa and Others (2004) 25 ILJ 104 (LAC) ,
especially the passage in paragraph 25 where Zondo JP stated the
following in relation to the old section 197:
“ It can also be said that because 197 (2) (a) provides that anything
done by the business transferor in relation to an employee before the
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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 rights not to be
dismissed unfairly”
Counsel submitted that this statement clearly indicates that Makulu
is the entity that the applicant should have sued and not the
respondent.
[6] Mr. Lennox, for the applicant, submitted in essence that the instant
case is distinguishable from the situation that obtained in cases like
Transport Fleet Maintenance where the entire business was sold
as a going concern and that that is a typical case for which section
197 was meant. In such cases, an employee dismissed prior to the
transfer will be remediless if he/she could not proceed against the
new employer and that is precisely the sort of hardship that the
section was meant to prevent, so counsel submitted. He went on to
say that the instant matter is complicated by the fact that where
only a portion of the business is transferred, the employees to be
transferred should be identified as not necessarily all the people
who worked in the particular unit would be transferred. Mr.
Lennox pointed out that in fact the respondent and Makulu
identified the employees to be transferred by way of a list annexed
to the contract. Significantly, the applicant is not one of those.
Counsel referred to NEHAWU v University of Cape Town and
Others (2002) 23 ILJ 306 (LAC) at 338F where Zondo JP stated
the following:
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“Accordingly, each transaction must, in my view, be
considered on its own merits in the light of all the
surrounding circumstances of the transaction before a
determination can be made whether they constitute the
transfer of a business as a going concern”
Counsel pointed out that this approach was approved in a further
appeal to the Constitutional Court in NEHAWU v University of
Cape Town and Others (2003) 24 ILJ 95 (CC) , paragraph [7].
[7] As both counsel pointed out in argument, there is no direct
authority on the point in issue. However, in my view, there are
sufficient indications in the reported cases that not in every case of
a transfer in terms of section 197 would an employee be obliged to
have recourse against the new employer. It is clearly a matter to be
determined with reference to the particular facts of each case, as
was indeed stated in the two cases of NEHAWU v University of
Cape Town (supra).
[8] In my view, an aspect that is critical and renders the instant case
distinguishable is that, on the papers, the applicant appears to have
been withdrawn from the transfer process as I have already
indicated. That this is so further confirmed by the fact that he was
not included in the list of the employees to be transferred.
Significantly, one particular employee, McCann, who had been
transferred and in respect of whom there appears to have been a
pending dispute, was singled out and provision made in the
contract for the handling of his case, whereas no such provision
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was made in respect of the applicant.
[9] The Constitutional Court in the NEHAWU v University of Cape
Town case, endorsed the view expressed by Zondo JP in his
minority judgement in the LAC, that it is not a sine qua non that
the employment contracts of employees be transferred as well for a
transaction to qualify as a transfer of a business as a going concern
within the meaning of section 197. Cf SA Municipal Workers
Union and Others v Rand Airport Management Co (Pty) Ltd and
Others (2005) 26 ILJ 67 (LAC), paragraphs (22) to (24);
NEHAWU v University of Cape Town and Others (2000) 21 ILJ
1618(LC).
[10] Mr. Graham also suggested that the applicant cannot claim that his
dismissal was for a reason related to the transfer and therefore
automatically unfair within the meaning of section 189 (1) (g) if he
was not part of the transfer. In my view, the test in this regard is
not whether he was ultimately transferred or not but whether his
dismissal was for a reason related to the contemplated transfer. A
contemplated transfer may fail to materialise but if an employee is
dismissed for a reason related thereto, such dismissal would be an
automatically unfair one. Compare SA Municipal Workers Union
and Others (supra), especially at 83FJ. In this case it was held
that transfer in terms of section 197 had not taken place, yet the
dismissal of the employees was held to have been automatically
unfair as the reason therefor related to the contemplated transfer.
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[11] I should indicate that I am not hereby making any finding that the
dismissal in casu was an automatically unfair one within the
context of section 187 (1) (g). That is an issue to be decided at the
trial.
[12] In conclusion, I should point out that the larger part of the day of
hearing was devoted to oral argument on the point, the parties having
previously arranged to set aside the 8 th November 2005 for same, as it
had been thought that its determination might dispose of the entire case. It
is therefore only proper that the respondent should carry the costs of the
day.
[13] In the result, the point in limine is dismissed with costs.
______________________________
H. M. MUSI
Acting Judge of the Labour Court
For the Applicant Advocate M A Lennox
Instructed by Natasha Moni
For the Respondents Advocate D G Graham
Instructed by Marshall Attorneys
Date of Hearing 08 November 2005
Date of Judgment 01 December 2005
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