EOH Mthombo (Pty) Ltd v Naude and Others (JR1676/16) [2018] ZALCJHB 125 (20 March 2018)

EOH Mthombo (Pty) Ltd v Naude and Others (JR1676/16) [2018] ZALCJHB 125 (20 March 2018)

The court found that the arbitrator misapplied section 197 of the LRA by requiring a written agreement for the employment contract to revert to the second respondent after cancellation of the sale of business. The default legal position is that, upon cancellation and reverse transfer of the business as a going concern, the employment contracts automatically revert to the seller (second respondent) unless a written agreement provides otherwise. The evidence showed that the first respondent continued to render services to the second respondent and was remunerated by it after cancellation. Therefore, the applicant was not the employer at the time of the alleged dismissal, and the arbitration...

Citation
[2018] ZALCJHB 125
Parties
Applicant: EOH Mthombo (Pty) Ltd; First Respondent: Adriaan Mathys Naude; Second Respondent: Fontanella Consulting (Pty) Ltd; Third Respondent: Commission for Conciliation, Mediation & Arbitration; Fourth Respondent: Bongani Khumalo N.O.
Court
Labour Court Johannesburg
Jurisdiction
South Africa
Judgment Date
20 March 2018
Case Number
JR1676/16
Procedural Posture
Review Application / Judgment Delivered After Unopposed Review of Arbitration Award
Outcome
Arbitration award set aside and substituted; matter remitted for fresh arbitration on fairness of dismissal; no order as to costs.
Judges
LJ Lekale
Legal Topics
Transfer of Business, Automatic Transfer of Employment, Section 197 Lra, Review of Arbitration Award, Unfair Dismissal
Labour Law Civil Procedure Transfer of Business Automatic Transfer of Employment Section 197 Lra Review of Arbitration Award Unfair Dismissal

Case Brief

Summary, issues, holding and outcome

More case intelligence is available

Unlock the full research layer for this judgment.

Full judgment text Downloadable case file Legal principles 4 Authorities cited 4 Party arguments 2
Sign in to unlock

Parties

EOH Mthombo (Pty) Ltd

Applicant

Adriaan Mathys Naude

First Respondent

Fontanella Consulting (Pty) Ltd

Second Respondent

Commission for Conciliation, Mediation & Arbitration

Third Respondent

Bongani Khumalo N.O.

Fourth Respondent

Procedural Posture

Review Application / Judgment Delivered After Unopposed Review of Arbitration Award

Legal Issues

  1. 1 Whether the applicant was the employer of the first respondent at the time of the alleged dismissal.
  2. 2 Whether the arbitration award could reasonably have been made on the material before the arbitrator.
  3. 3 Whether the cancellation of the sale of business agreement resulted in a reverse transfer of employment contracts.

Ratio Decidendi

The court found that the arbitrator misapplied section 197 of the LRA by requiring a written agreement for the employment contract to revert to the second respondent after cancellation of the sale of business. The default legal position is that, upon cancellation and reverse transfer of the business as a going concern, the employment contracts automatically revert to the seller (second respondent) unless a written agreement provides otherwise. The evidence showed that the first respondent continued to render services to the second respondent and was remunerated by it after cancellation. Therefore, the applicant was not the employer at the time of the alleged dismissal, and the arbitration...

Court Disposition

Arbitration award set aside and substituted; matter remitted for fresh arbitration on fairness of dismissal; no order as to costs.

Orders

  • The arbitration award issued by the fourth respondent under case number GAEK 9755/2015 and dated 01 August 2016 is reviewed and set aside.
  • The arbitration award is substituted with a finding that the second respondent was the employer of the first respondent at all times material to the alleged dismissal.