Franmann Services (Pty) Ltd v Simba (Pty) Ltd and Another (J 1978/12) [2012] ZALCJHB 86; [2012] 12 BLLR 1293 (LC); (2013) 34 ILJ 897 (LC) (30 August 2012)

Franmann Services (Pty) Ltd v Simba (Pty) Ltd and Another (J 1978/12) [2012] ZALCJHB 86; [2012] 12 BLLR 1293 (LC); (2013) 34 ILJ 897 (LC) (30 August 2012)

The court held that section 197 of the Labour Relations Act is not triggered solely by the termination of a contract between a client and a service provider and the subsequent appointment of a new service provider to perform similar activities. The applicant's business, as a labour broker, was not transferred as a going concern because there was no transfer of assets, goodwill, or infrastructure, nor any evidence that the second respondent intended to acquire any part of the applicant's business or employ its staff. The court found that the applicant's business would terminate and not continue under the new provider, and that the mere provision of similar services by the second respondent...

Citation
[2012] ZALCJHB 86
Parties
Applicant: Franmann Services (Pty) Ltd; Respondent: Simba (Pty) Ltd; Respondent: Capital Outsourcing Group (Pty) Ltd
Court
Labour Court Johannesburg
Jurisdiction
South Africa
Judgment Date
30 August 2012
Case Number
J 1978/12
Procedural Posture
Urgent Application / Final Judgment on Urgent Application
Outcome
Application dismissed; costs awarded against the applicant.
Judges
Van Niekerk
Legal Topics
Section 197 Transfer, Outsourcing Arrangements, Transfer of Business as Going Concern, Employment Continuity, Costs Award
Labour Law Civil Procedure Section 197 Transfer Outsourcing Arrangements Transfer of Business as Going Concern Employment Continuity Costs Award

Case Brief

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Parties

Franmann Services (Pty) Ltd

Applicant

Simba (Pty) Ltd

Respondent

Capital Outsourcing Group (Pty) Ltd

Respondent

Procedural Posture

Urgent Application / Final Judgment on Urgent Application

Legal Issues

  1. 1 Whether the termination of the contract between the applicant and the first respondent, and the appointment of a new service provider, triggers section 197 of the Labour Relations Act.
  2. 2 Whether there is a transfer of a business as a going concern under section 197 in the circumstances of this case.
  3. 3 Whether the applicant's employees' contracts are automatically transferred to the new service provider.

Ratio Decidendi

The court held that section 197 of the Labour Relations Act is not triggered solely by the termination of a contract between a client and a service provider and the subsequent appointment of a new service provider to perform similar activities. The applicant's business, as a labour broker, was not transferred as a going concern because there was no transfer of assets, goodwill, or infrastructure, nor any evidence that the second respondent intended to acquire any part of the applicant's business or employ its staff. The court found that the applicant's business would terminate and not continue under the new provider, and that the mere provision of similar services by the second respondent...

Court Disposition

Application dismissed; costs awarded against the applicant.

Orders

  • The application is dismissed.
  • The applicant is to pay the costs of these proceedings, including the wasted costs of the postponement on 16 August 2012, but excluding the costs of the postponement on 23 August 2012, such costs to include the costs of two counsel.