CONSTITUTIONAL COURT OF SOUTH AFRICA


Case CCT 15/25

In the matter between:


KING CETSHWAYO DISTRICT MUNICIPALITY Applicant

and

WATER AND SANITATION SERVICES
SOUTH AFRICA (PTY) LIMITED First Respondent

MUNICIPAL AND ALLIED TRADE
UNION OF SOUTH AFRICA Second Respondent

SOUTH AFRICAN MUNICIPAL
WORKERS’ UNION Third Respondent

EMPLOYEES LISTED IN ANNEXURE “A”
TO THE NOTICE OF MOTION 4th to 666th Respondents

UMGENI WATER 667th Respondent



Neutral citation: King Cetshwayo District Municipality v Water and Sanitation
Services South Africa (Pty) Ltd and Others [2026] ZACC 14

Coram: Kollapen J, Ma jiedt J, Mathopo J, Mhlantla J, Musi AJ,
Savage AJ, Theron J and Tshiqi J


Judgment: Majiedt J (unanimous)

Heard on: 18 November 2025

Decided on: 22 April 2026

2
Summary: Labour Relations Act 66 of 1995 — section 197 — transfer of
business as a going concern — leave to appeal — interests of
justice



ORDER



On application for leave to appeal from the Labour Appeal Court:
Leave to appeal is refused with costs, including the costs of two counsel.


JUDGMENT




MAJIEDT J (Kollapen J, Mathopo J, Mhlantla J, Musi AJ, Savage AJ, Theron J and
Tshiqi J concurring):


[1] This is an application for leave to appeal the whole judgment and order handed
down by the Labour Appeal Court on 10 January 2025, which dismissed the applicant’s
appeal against the judgment of the Labour Court delivered on 3 September 2020. In
that judgment, the Labour Court declared that the provisions of s ection 197 of the
Labour Relations Act1 (LRA) were triggered upon the non-renewal or termination of a
service level agreement (SLA) entered into between the applicant, the King Cetshwayo
District Municipality (Municipality ), and the first respondent, Water and Sanitation
Services South Africa (Pty) Ltd (WSSA).

[2] The applicant is a local government entity, a district municipality constituted in
terms of the Loc al Government: Municipal Structures Act. 2 The first respondent,
WSSA, is a private company with limited liability duly incorporated and registered

1 66 of 1995.
2 117 of 1998.

MAJIEDT J
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according to the company laws of the Republic of South Africa. WSSA forms part of
the holding group Mea Aqu a, a Luxembourg-based company. The second respondent
is the Municipal and Allied Trade Union of South Africa, a trade union registered in
accordance with sections 95 and 96 of the LRA. The third respondent is the South
African Municipal Workers’ Union, a similarly registered trade union.

[3] The fourth to 666th respondents are the employees listed in annexure A to the
notice of motion, who are alleged to have been employed by WSSA as at 30 June 2020
in rendering services to the Municipality. The 667th respondent is Umgeni Water, a
state-owned entity involved, amongst others, in water management. Only WSSA
participated in the proceedings in this Court and in the two preceding courts.

[4] In 2003, the Municipality entered into an SLA with WSSA in terms of w hich
WSSA would provide various services related to the supply of water to the residents of
the Municipality. This SLA was to terminate on 30 June 2008, but was extended to
30 June 2012. Thereafter the Municipality and WSSA concluded a second SLA. On
12 September 2013, the Municipality and WSSA concluded a third SLA. Although the
third SLA was to expire on 30 June 2015, the Municipality periodically extended it.

[5] In terms of the third SLA, WSSA provided four categories of services in
supplying water : namely, operational, maintenance, monitoring and general asset
management services. On 12 September 2013 , the parties agreed that WSSA would
also set up and manage a call centre on behalf of the Municipality.

[6] In November 2019, the Municipality advised WSSA that the latest extension of
the SLA would terminate on 31 January 2020. Notwithstanding this, the Municipality
extended the SLA with WSSA to 30 June 2020, at which point the SLA was terminated.
The Municipality avers that Umgeni Water then took over these services on an interim

The Municipality avers that Umgeni Water then took over these services on an interim
basis, an allegation strongly denied by Umgeni Water . This dispute is not relevant to
the issues before us.

MAJIEDT J
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[7] In terms of the SLA, WSSA was granted the right to use the Municipality’s
infrastructure, comprising four of the Municipality’s fixed assets , when performing its
contractual duties while simultaneously being responsible for providing a variety of its
own assets, tools, software and employees. These municipal assets are municipal
boreholes, it s water treatment facility, pumps and pipes which are linked to and
transport water retained in reservoirs. Upon non-renewal of the SLA in 2020, WSSA’s
right to use the Municipality’s fixed assets terminated. It is common cause that WSSA
was granted non-exclusive access or right to use these fixed assets during the contract
term.

[8] Upon conclusion of its last SLA with the Municipality, as recorded by WSSA,
the latter was obliged to perform the following five services:
(a) Operational services, with WSSA assuming the function of operating the
Municipality’s water and wastewater infrastructure, which involve “water
treatment, water distribution and storage, wastewater treatment, and water
conservation and water demand management”.
(b) Maintenance services, which involve “maintaining plant, equipment and
associated infrastructure”.
(c) Monitoring services, which involve “the efficient management and
monitoring of the infrastructure to ensure uninterrupted service ” and
include “ensuring that the mechanical and electrical plant and equipment
operate properly, as well as conducting laboratory analysis of water and
effluent to ensure water quality”.
(d) General asset management services.
(e) From September 2013, provision and operation of a call centre on a
turnkey basis, operated by WSSA employees using WSSA assets.

[9] WSSA was responsible for providing its own workforce. It was also responsible
for providing its own or leased tools, facilities and equipment such as vehicles which
transported teams into the field to perform services ; office space; workshop facilities;

transported teams into the field to perform services ; office space; workshop facilities;
laboratory equipment to monitor and ensure water quality ; and computers and office

MAJIEDT J
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equipment in order to manage the logistics involved in the provision of the operations
and maintenance services. WSSA employed 666 employees to perform the services it
was contractually obliged to fulfil, of which 591 employees were deployed in the
operational and maintenance services.

[10] Importantly, before the final extension of the tender to 30 June 2020, WSSA
raised concerns with the Municipality about section 197 of the LRA, 3 claiming this
provision required the transfer of 66 6 employees to the Municipality upon the
termination of the SLA. WSSA also took the view, which it conveyed to the
Municipality, that in terms of clause 2.2.3.2.1 of the third tender’s SLA, if the
employees were not transferred to the Municipality, then they should be transferred to
the new service provider. The Municipality, however, saw matters differently and
disputed the section 197 tr ansfer, arguing that WSSA was attempting to avoid its
financial obligations by transferring the employees to it instead of undertaking a
retrenchment process.


3 Section 197 reads:
“(1) In this section and in section 197A—
(a) ‘business’ includes the whole or a 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.
(2) If a transfer of a business takes place, unless otherwise agreed in terms of
subsection (6)—
(a) the new employer is automatically substituted in the place of the old employer
in respect of all contracts of employment in existence immediately before the
date of transfer;
(b) all the rights and obligations between the old employer and an employee at
the time of the transfer continue in force as if they had been rights and
obligations between the new employer and the employee;
(c) anything done before the transfer by or in relation to the old employer,

(c) 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; and
(d) the transfer does not interrupt an employee’s continuity of employment, and
an employee’s contract of employment continues with the new employer as if
with the old employer.” (Emphasis in original.)

MAJIEDT J
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[11] As a result of these divergent views, WSSA approached the Labour Court on an
urgent basis for a declarator that the termination of the SLA and subsequent insourcing
of the services by the Municipality triggered the provisions of section 197 together with
its legal consequences. The urgent application was set down for hearing on
6 August 2020. On 3 September 2020, the Labour Court granted an order in favour of
WSSA. The Labour Court declared that the termination of the SLA concluded between
WSSA and the Municipality constituted a transfer in terms of section 197 of the LRA.
It further declared that the contracts of employment of the employees were transferred
to the Municipality in terms of section 197(2) with effect from 1 July 2020, and that all
rights and obligations between the first respondent and the employees continued in force
as if they had been rights and obligations between the Municipality and such employees.

[12] On 14 January 2021, the Labour Court granted the Municipality leave to app eal
its judgment and order. On 5 March 2024 , the Labour Appeal Court heard the merits
of the appeal. The main issue before the Labour Appeal Court was whether the return
of assets owned by the Municipality to it by WSSA constituted a transfer for the
purposes of section 197. The secondary issue was whether, assuming the return of
assets did amount to a transfer, all the necessary assets were, in fact, returned, as it was
common cause that WSSA did not return its own assets which it had used in providing
the bulk water services. This latter consideration related to whether the retained assets
were core assets required for the provision of bulk water services.

[13] The Labour Appeal Court held that the L abour Court correctly found that th e
assets did not chang e the fact that one sees the same business but in different hands.
Thus, the Labour Appeal Court held, the requirements for a section 197 transfer to the

Thus, the Labour Appeal Court held, the requirements for a section 197 transfer to the
Municipality were met and there was a transfer of the business as a going concern from
WSSA to the Municipality. The Labour Appeal Court concluded that section 197 was
clearly implicated as the business of providing bulk water supply was transferred to the
Municipality when the service agreement was terminated. Accordingly, the Labour
Appeal Court dismissed the appeal, and made no order as to costs.

MAJIEDT J
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[14] The central issue on appeal is whether the Labour Court and Labour Appeal
Court were correct in concluding that the termination of the SLA , pursuant to which
WSSA rendered bulk water services to the Munici pality, constitutes a transfer of the
whole or part of the undertaking or services provided to the Municipality as
contemplated in section 197 of the LRA. That, in turn, requires a determination whether
the well-established three-part test under section 197 has been met:
(a) that there is a business or service;
(b) which has been transferred from one employer to another; and
(c) the transfer occurred as a “going concern”.
But before we get there, jurisdiction and leave to appeal bear consideration.

[15] This Court is clothed with jurisdiction only in certain circumscribed instances.
They are constitutional issues (constitutional jurisdiction) and where a matter raises an
arguable point of law of general public importance which ought to be considered by this
Court (general jurisdiction). 4 The Municipality argues that this case engages our
jurisdiction because it concerns the proper interpretation and application of section 197
of the LRA, a statute enacted to give effect to the constitutional right to fair la bour
practices.5 It contends that the prospective appeal raises issues of constitutional
importance, including whether a service provider’s use of municipal infrastructure
forms part of the “business” capable of transfer under section 197, whether the Labour
Appeal Court introduced a novel or incorrect test for determining “going concern” and
whether the established jurisprudence in NEHAWU,6 Aviation Union7 and Tasima8 has
been properly applied.


4 Section 167(3)(b)(i) and (ii) of the Constitution.
5 Section 23 of the Constitution.
6 National Education Health and Allied Workers Union v University of Cape Town [2002] ZACC 27; 2003 (2)
BCLR 154; 2003 (3) SA 1 (CC); (2003) 24 ILJ 95 (CC).

BCLR 154; 2003 (3) SA 1 (CC); (2003) 24 ILJ 95 (CC).
7 Aviation Union of South Africa v S outh African Airways (Pty) Ltd [2011] ZACC 31; (2011) 32 ILJ 2861 (CC) ;
2012 (1) SA 321 (CC); 2012 (2) BCLR 117 (CC); [2012] 3 BLLR 211 (CC).
8 Road Traffic Management Corporation v Tasima (Pty) Ltd [2020] ZACC 21; 2020 (10) BCLR 1227 (CC);
[2020] 12 BLLR 1173 (CC); (2020) 41 ILJ 2349 (CC); 2021 (1) SA 589 (CC).

MAJIEDT J
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[16] The Municipality submits further that the issues transcend these parties because
changes of service providers are common across the public and private sectors, and that
this matter therefore presents an, as yet, undecided question warranting this Court’s
intervention. In addition, the Municipality contends that there are reasonable prospects
of success because both the Labour Court and the Labour Appeal Court failed to accord
proper weight to key facts and allegedly misapplied the legal test for a transfer of a
business as a going concern. It argues that th ose Courts erred by treating municipal
fixed assets as if they formed part of WSSA’s business, and by concluding that the
return of those assets constituted a transfer for purposes of section 197.

[17] As part of its contentions regarding jurisdiction, the Municipal ity states that our
jurisdiction is engaged because the Labour Court and the Labour Appeal Court
misapplied established legal principles. That stance was persisted with, even in the face
of searching questions at the hearing where it was pointed out that our well -settled
jurisprudence points the other way. This submission can be disposed of forthwith. This
Court has on a number of occasions held that the misapplication of settled legal
principles does not engage this Court’s constitutional or general jur isdiction.9 It will
also not decide pure factual issues or the incorrect application of the law by lower
courts.10

[18] WSSA, on the other hand, disputes that there are any prospects of success in this
matter, and contends that the matter does not fall within this Court’s jurisdiction.
Self-evidently, not every matter that touches on the interpretation of a statutory
provision will engage this Court’s jurisdiction. That axiom applies to section 197 as
well. There have been a number of judgments of this Court which considered the
meaning and ambit of that section.11

meaning and ambit of that section.11

9 University of Johannesburg v Auckland Park Theological Seminary [2021] ZACC 13; 2021 (6) SA 1 (CC); 2021
(8) BCLR 807 (CC) at para 49.
10 Mankayi v AngloGold Ashanti Ltd [2011] ZACC 3; 2011 (3) SA 237 (CC); 2011 (5) BCLR 453 (CC) ; [2011]
6 BLLR 527 (CC); (2011) 32 ILJ 545 (CC) at para 12.
11 See NEHAWU above n 6; CUSA v Tao Ying Metal Industries [2008] ZACC 15; (2008) 29 ILJ 2461 (CC);
[2009] 1 BLLR 1 (CC); 2009 (1) BCLR 1 (CC); 2009 (2) SA 204 (CC) (CUSA); Aviation Union above n 7; City
Power (Pty) Ltd v Grinpal Energy Management Services (Pty) Ltd [2015] ZACC 8; 2015 (6) BCLR 660 (CC) ;

MAJIEDT J
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[19] This Court’s jurisprudence in relation to jurisdiction in labour matters is
well-settled. Generally speaking, disputes about labour rights will often implicate
section 23 of the Constitution. NEHAWU made plain that the interpretation of a
provision of the LRA will almost always engage this Court’s constitutional jurisdiction.
This Court held:

“What must be stressed here is the point already made, namely that we are dealing with a statute
enacted to give effect to section 23 of the Constitution and , as such, it must be purposively
construed. If the effect of this requirement is that this Court will have jurisdiction in all labour
matters that is a consequence of our constitutional democracy.”12

[20] In NEHAWU, this Court made a clear distinction between (a) whether a
constitutional issue is raised (jurisdiction) and (b) whether it is in the interests of justice
to grant leave (discretion). Th is Court stated that the decision to grant or refuse leave
is a discretion based on the interests of justice, and it identifies prospects of success and
the importance of the constitutional questions for labour jurisprudence as central
factors. It stresses that, although all labour matters are under “constitutional control” in
a constitutional democracy, this does not mean that every labour dispute should reach
this Court; rather, labour appeals will usually only be entertained where they raise
questions of principle about the interpretation or constitutionality of the LRA or the
scope of constitutional labour rights, not mere misapplication of settled rules to facts.
That is an interests of justice consideration which pe rforms an important ga tekeeping
function – this Court will not become a general labour appeal court merely because the
LRA is implicated.

[21] This Court in NEWAHU explained the principle thus:


[2015] 8 BLLR 757 (CC) ; (2015) 36 ILJ 1423 (CC) ; Rural Maintenance (Pty) Ltd v Maluti -A-Phofung Local

Municipality [2016] ZACC 37; 2017 (1) BCLR 64 ( CC); [2017] 3 BLLR 258 (CC) ; (2017) 38 ILJ 295 (CC)
(Rural Maintenance); and Tasima above n 8.
12 NEHAWU id at para 16.

MAJIEDT J
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“In the first place, this is the first occasion on which this Court has had to consider and
define the approach it will take to the interpretation of a provision which is part of
legislation aimed at giving effect to a constitutional right. We have held in this
judgment that the correct approach is one in which the Legislature and the Courts have
a tandem duty to give full effect to the Constitution. And it is necessary for this Court
to apply this approach in the present matter. Secondly, the application affects some
267 workers who have lost their employment. And, thirdly, the application also raises
important questions in relation to appeals from the Labour Appeal Court, in particular,
whether such appeals lie to the Supreme Court of Appeal, the procedure to be followed
from the L abour Appeal Court to this Court, and the circumstances when this Court
will hear such appeals.”13

[22] Later, in CUSA,14 this Court found it to be in the interests of justice to grant leave
because the case raised important and systemic constitutional questions about the
respective jurisdictional roles of the Commission for Conciliation, Mediation and
Arbitration commissioners and the courts in resolving labour disputes and reviewing
arbitral awards. Th is Court noted that these issues went well beyond the facts of the
particular exemption dispute: they implicated the structure of collective bargaining, the
enforcement of bargaining council agreements and the constitutional rights in
sections 23(1) and 23(5). This Court emphasised that compliance with collective
agreements is central to industrial peace, the rule of law and the protection of workers
who cannot individually bargain over wages and conditions. The matter thus had
significant public-interest dimensions, affecting not only the employer and 250 workers
but the broader integrity of collective bargaining mechanisms and labour dispute
resolution.

resolution.

[23] In addition, th is Court noted that credible judicial disagreement in the Labour
Appeal Court and the Supreme Court of Appeal indicated real prospects of success,
reinforcing the need for this Court to clarify the governing legal principles. Those

13 Id at para 28.
14 CUSA above n 11.

MAJIEDT J
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prospects, combined with the importance and systemic reach of the issues, justified the
conclusion that the interests of justice favoured granting leave to appeal. It held:

“The question whether leave to appeal should be granted depends on whether: (a) the
application raises a constitutional matter; and (b) whether it is in the interests of justice
to grant leave to appeal. The interests of justice require this court to consider, among
other issues, the importance of the questions raised and the prospects of success of the
application.”15

[24] It bears emphasis that jurisdiction is a threshold enquiry.16 If the Court does not
have either constitutional or general jurisdiction, that is the end of the enquiry. If it
does, the second important, and often n eglected, enquiry is whether leave to appeal
should be granted, a question where the interests of justice criterion is critical .
Jurisdiction in and by itself does not grant a litigant access to this Court to pursue an
appeal. This Court, may, in the exe rcise of its discretion, refuse leave to appeal if it is
of the view that, even though the case engages either or both its constitutional and
general jurisdiction, it is not in the interests of justice to grant leave.

[25] In Boesak,17 this Court enunciated the principle thus:

“A finding that a matter is a constitutional issue is not decisive. Leave may be refused
if it is not in the interests of justice that the Court should hear the appeal. The decision
to grant or refuse leave is a matter for the discretio n of the Court and , in deciding
whether or not to grant leave, the interests of justice remain fundamental. In
considering the interests of justice, prospects of success, although not the only factor,
are obviously an important aspect of the enquiry.”18


15 Id at para 53.
16 Fraser v ABSA Bank Ltd [2006] ZACC 24; 2007 (3) BCLR 219 (CC); 2007 (3) SA 484 (CC) at para 35.

17 S v Boesak [2000] ZACC 25; 2001 (1) BCLR 36 (CC); 2001 (1) SA 912 (CC); 2001 (1) SACR 1 (CC).
18 Id at para 12. The reference to “a constitutional issue” must of course be understood in the context that the case
was decided before the 2013 amendment of the Constitution which added general jurisdiction to this Court’s
power to hear cases.

MAJIEDT J
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[26] This was reiterated later in Ingledew,19 where this Court held that “a finding that
the application raises a constitutional issue is not decisive. Leave to appeal may be
refused if it is not in the interests of justice to hear the case.”20 Meeting the jurisdiction
threshold merely establishes that the matter falls within the Court’s remit; it does not
entitle a litigant to an appeal as of right. In the important second stage, an applicant for
leave to appeal must show that it is in the interests of jus tice that leave to appeal be
granted. More recently, in Rural Maintenance, under the rubric of leave to appeal, this
Court held:

“The proper interpretation of the LRA will raise a constitutional issue that clothes this
Court with jurisdiction, but this does not mean that this Court will hear all appeals from
the Labour Appeal Court. It will only do so if the appeal raises ‘important issues of
principle’.”21

[27] In Gcaba,22 this Court wrestled with the diverging jurisprudence that emanated
from this Court’s decisions in Fredericks23 and Chirwa24 regarding the correct
interpretation and application of overlapping constitutional, administrative and labour
law provisions and principles, especially with regard to disputes between public sector
employees and their employers .25 I hasten to point out that, of course, Gcaba was
decided before this Court’s jurisdiction was extended to include general jurisdiction in
201326 and was confined to constitutional issues.

19 Ingledew v Financial Services Board: In re Financial Services Board v Van der Merwe [2003] ZACC 8; 2003
(4) SA 584 (CC) 2003 (8) BCLR 825.
20 Id at para 13. See also NEHAWU above n 6 at para 25:
“The decision to grant or refuse leave to appeal is a matter for the discretion of this Court. In
deciding that question, the interests of justice are crucial. Whether it is in the interests of justice

to grant leave to appeal is the function of a number of factors.” (Emphasis added.)
21 Rural Maintenance above n 11 at para 17.
22 Gcaba v Minister for Safety and Security [2009] ZACC 26; 2010 (1) BCLR 35 (CC); 2010 (1) SA 238 (CC).
23 Fredericks v MEC for Education and Training, Eastern Cape [2001] ZACC 6; 2002 (2) BCLR 113 (CC); [2002]
2 BLLR 119 (CC); 2002 (2) SA 693 (CC); (2002) 23 ILJ 81 (CC).
24 Chirwa v Transnet Ltd [2007] ZACC 23; [2008] 2 BLLR 97 (CC); 2008 (3) BCLR 251 (CC); 2008 (4) SA 367
(CC); (2008) 29 ILJ 73 (CC).
25 Gcaba above n 22 at para 3.
26 By virtue of the Constitution Seventeenth Amendment Act 72 of 2012.

MAJIEDT J
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[28] This Court emphasised that the second stage of the enquiry , leave to appeal,
entails a litigant persuading this Court that there is a legal principle in labour law that
warrants the attention of this Court, as t he apex court. This Court embarked on an
extensive analysis of what the true issues were in the case to determine whether there
was a legal principle that justif ies this Court ’s attention. The central question was
whether there was a divergence in the jurisprudence regarding section 157 of the LRA.
That related to the seemingly divergent jurisprudence emanating from Fredericks and
Chirwa.27

[29] It is important that the interests of justice criterion be afforded proper recognition
when it comes to leave to appeal considerations. Jurisdiction is but the first step in the
dual enquiry. The interests of justice criterion are essential to guard against this Court’s
assuming the role of a general super appellate body for labour disputes merely because
a matter engages its jurisdiction. The essential enquiry remains whether leave to appeal
should be granted, even where a labour matter involves the interpretation of a provision
in the LRA.28

[30] Reverting then to the issue before us, namely whether this section 197 question
engages our jurisdiction. Based on this Court’s settled jurisprudence it does. But, as
stated, that is not the end of the enquiry since we must be satisfied that it is in the
interests of justice to grant leave to appeal. No new legal principles in relation to the
interpretation and application of section 197 are being raised here; on the contrary, the
Municipality’s three-pronged challenge on the merits appear s to be heavily fact-laden.
The three grounds on which it seeks to impugn the jud gments of the Labour Court and
the Labour Appeal Court are:

27 Gcaba above n 22 at paras 3, 5 and 70-5.

27 Gcaba above n 22 at paras 3, 5 and 70-5.
28 See further, in respect of labour matters: National Union of M etalworkers of South Africa v Bader Bop (Pty)
Ltd [2002] ZACC 30; [2003] 2 BLLR 103 (CC); 2003 (2) BCLR 182 (CC); 2003 (3) SA 513 (CC); (2003) 24 ILJ
305 (CC) at paras 15-17; Billiton Aluminium SA Ltd t/a Hillside Aluminium v Khanyile [2010] ZACC 3; 2010 (5)
BCLR 422 (CC) ; [2010] 5 BLLR 465 (CC) ; (2010) 31 ILJ 273 (CC ) at para 15; and Booi v Amathole District
Municipality [2021] ZACC 36; [2022] 1 BLLR 1 (CC); 2022 (3) BCLR 265 (CC); (2022) 43 ILJ 91 (CC) at para
25.

MAJIEDT J
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(a) Firstly, a factual error, insofar as it is averred that both the Labour Court
and the Labour Appeal Court mistakenly relied on the fact that the fixed
assets owned by the Municipality and used by WSSA fell within the scope
of WSSA’s business offerings, and reverting of the right of use of these
to the Municipality constituted a transfer in terms of section 197(1)(b) of
the LRA.
(b) Secondly, the Municipality contends that both Courts did not ap ply the
“going concern” test when applying section 197 of the LRA . Instead, it
is submitted the Courts applied a “new and incorrect” test, which is
referred to as the “flexible approach” to determine whether the going
concern requirement had been met. This is nothing but a factual dispute,
dressed up as a law point. At best for the Municipality, the law on this
aspect is settled and need not be revisited.29
(c) Lastly, another factual dispute, that both the Labour Court and the Labour
Appeal Court are submitted to have erred in finding that there was an
agreement between the Municipality and WSSA that on the termination
of the SLA , the employees of WSSA would be transferred to the
Municipality or to a new service provider in terms of section 197(2).

[31] It is plain then, on a conspectus of all the arguments advanced by the
Municipality, that, while this Court’s jurisdiction is engaged, it is not in the interests of
justice that we grant leave to appeal as no new legal principles are being raised here.
The law regarding the transfer of a business as contemplated in section 197 is trite. 30
No new principles in relation to that issue are advanced by the Municipality. There is
no new legal argument submitted that can persuade this Court to interfere with
well-reasoned factual findings made by the two specialist labour courts. Leave to
appeal must therefore be refused. What remains is the matter of costs.

29 See NEHAWU above n 6 at para 56 ; Tasima above n 8 at para 60; and Rural Maint enance above n 11 at
paras 142-50.
30 See the cases cited in n 11 above. See also Carlito Abler v Sodexho MM Catering Gesellschaft GmbH [2004]
IRLR 168, cited in Rural Maintenance above n 11 at para 34 and Mobile Telephone Networks (Pty) Ltd v CCI SA
(Umhlanga) (Pty) Ltd [2023] ZALAC 10; (2023) 4 ILJ 1906 (LAC) at para 11.

MAJIEDT J
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[32] Conventionally, no costs orders are made in labour matters, in order not to stifle
access to courts.31 In Union for Police Security ,32 this Court explicated the rationale
behind this convention. It stated:

“[W]hen costs orders are too readily made against those who seek to vindicate their
constitutionally entrenched labour rights in the specialist institutions created by the
LRA, employers and employees alike may be left with no option but to resort to
industrial action to remedy disputes that the LRA places beyond the purview of
protected industrial action. That would cultivate unlawfulness and be inimical to the
foundational value of the rule of law underpinning our democratic order.
It is therefore imperative for our democracy that the doors of labour dispute-resolution
institutions be kept wide open for litigants to air their grievances, so that unlawful
industrial action, and all its potential consequences, is generally avoided. That accords
with the scheme of the LRA, which contemplates industrial action only where no other
avenues are readily available. The rule against automatic costs order s is an integral
part of that scheme in that it ensures access to labour dispute-resolution institutions and
no doubt enlarges the width by which the doors of those institutions are kept open.
The principles set out above form the bedrock of how the questi on of costs should be
understood in labour matters in the context of our democracy. These principles find
expression in section 162 of the LRA, which rejects the ordinary rule of litigation that
costs should follow the result in favour of an approach based on ‘law and fairness ’.
When we pay heed to this fairness standard, we do so because we are obliged by the
LRA and the above constitutional imperatives. Hence, I repeat: when making costs
orders in labour matters, courts are enjoined to apply the fairness standard in the LRA
as a matter of constitutional and statutory obligation.”33 (Footnotes omitted.)

as a matter of constitutional and statutory obligation.”33 (Footnotes omitted.)


31 Zungu v Premier of the Province of KwaZulu-Natal [2018] ZACC 1; 2018 (6) BCLR 686 (CC); (2018) 39 ILJ
523 (CC). See also South African Commercial, Catering and Allied Workers Union v Woolworths (Pty) Ltd [2018]
ZACC 44; 2019 (3) BCLR 412 (CC); 2019 (3) SA 362 (CC); [2019] 4 BLLR 323 (CC).
32 Union for Police Security & Corrections Organisation v SA Custodial Management (Pty) Ltd [2021] ZACC 26;
2021 (11) BCLR 1249 (CC); (2021) 42 ILJ 2371 (CC).
33 Id at paras 31-3. See also Solidarity obo Members v Barloworld Equipment Southern Africa [2022] ZACC 15;
[2022] 9 BLLR 779 (CC); (2022) 43 ILJ 1757 (CC); 2023 (1) BCLR 51 (CC) at para 79.

MAJIEDT J
16
[33] The present matter, however, is not a purely labour matter. Instead, it is in
essence a commercial dispute between an organ of state and a private company. The
section 197 question involving the workforce is an incidental part of that dispute. In
suitable cases, there is no bar against a costs order. 34 Moreover, the Municipality’s
conduct in this case has been far from exemplary. The Labour Court correctly alluded
to the fact that the Municipality’s version that it had outsourced the water tanker
services and call centre function from WSSA to Umgeni Water after the termination of
the last SLA (a version strenuously denied by Umgeni Water) , was either false or
grossly ignorant of the true state of affairs.

[34] Furthermore, as appears from the litigation history, 35 evidently more than three
years elapsed between the gra nting of leave to appeal by the Labour Court and the
hearing of the appeal in the Labour Appeal Court. This was claimed to be the result of
the Municipality’s obstructionist approach to the matter, a claim which was not denied
by the Municipality. This d elay plainly had a deleterious effect on the affected
workforce (the 600 -odd employees previously employed by WSSA) regarding their
security of employment. That, in turn , is inimical to the constitutional and statutory
objective of efficient dispute resolution in labour matters.36

[35] For these reasons, costs must follow the outcome. The matter warranted the
employment of two counsel and the costs order should include this.

[36] The following order is made:
Leave to appeal is refused with costs, including the costs of two counsel.


34 Zungu above n 31 at para 24.
35 See [12].
36 Compare NEHAWU above n 6 at para 31.

For the Applicant:



For the First Respondent:


M Naidoo SC, M Naidoo and
S Tshangana instructed by
Ngwanase-Tembe Incorporated.

A Redding SC and P Maharaj-Pillay
instructed by Fairbridges Wertheim
Becker Attorneys.