National Union of Metal Workers of South Africa obo Mabongwane and Others v EET Personnel CC and Others (J2356/12) [2014] ZALCJHB 449 (8 July 2014)

REPUBLIC OF SOUTH AFRICA

THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

JUDGMENT

Not reportable

CASE NO J 2356/12

In the matter between:

NATIONAL UNION OF METAL WORKERS OF SOUTH

AFRICA obo C M MABONGWANE & OTHERS

Applicant

and

EET PERSONNEL CC

First Respondent

EET MAGNETS PERSONNEL CC

Second Respondent

VITHIWE PERSONNEL (PTY) LTD Third Respondent

Date heard: 5 June 2014

Judgment delivered: 5 June 2014

Date edited: 8 July 2014

EX-TEMPORE JUDGMENT

CELE J

[1] The application before me has been brought in terms of Section 158(1)(a) of the Labour Relations Act 66 of 1995 hereafter referred to as the Act where the applicant seeks an order which is framed in the following terms:

1. Declaring the intended transfer of the contracts of employment of the second to further applicants from the first and second respondents to the third respondent unlawful;

2. Interdicting the first and second respondents from transferring the contracts of employment of the second and further applicants to the third respondent;

3. Costs of suit against the first and second applicant;

4. Further and/or alternative relief.

[2] It is common cause that according to the respondents a transfer has taken place. Therefore I should read into the order sought a plea for an order as is prayed for in paragraph 158(1)(a)(iii). It was initially (ii), an interdict. Clearly, it must now follow that the order or the relief sought falls under (iii).

[3] It would appear essentially common cause that on 3 January 2012 the first and second respondents addressed a memo to NUMSA in which they informed NUMSA of the prospective transfer of the contracts of employment of all their employees, the individual applicants whose names have been listed in ANNEXURE A, to the third respondent in terms of Section 197 of the Act and this was to take effect initially from 1 March 2012. Then NUMSA contacted its attorneys and a letter was addressed to the first and second respondents on 28 February 2012 advising them that the intended transfer of the employees’ contracts of service was unlawful and asked that they provide the confirmation that such transfer would not take place by close of business on 29 February 2012 as intended. Failing that, NUMSA would then approach this court for an order declaring such transfer as being unlawful.

[4] According to the applicant the first and second respondents failed to provide the required confirmation and instead the attorneys of the applicant received a letter from Jacobs Attorneys dated 6 March 2012 in which the attorneys of the applicant asked to be informed by the respondents what portion of the sale agreement and subsequent transfer of the employees was unlawful.

[5] By means of a letter dated 7 March 2012 a request was again made by the attorneys of the applicant for clarity in the matter. There are further written exchanges that took place. Of importance is a letter dated 31 January 2012 written by the first and second respondents. It reads as follows:

“This letter is addressed to you in terms of Section 197 of the Labour Relations Act (as amended).

Please take note that with effect from 1 March 2012 all employees shall be transferred to Vithiwe Personnel (Pty) Ltd. The reason for this change is to streamline the operation of the business. We have in the past been running four payroll facilities which we have discovered is of no benefit to the company.

We would like to assure you that there shall be no change to terms and conditions of employment, apart from the much needed updating of current HR Policies and Procedures which is a requirement in terms of the Employment Equity.

All other benefits/contributions shall be transferred over to Vithiwe Personnel (Pty) Ltd and the relevant statutory bodies shall be notified of such changes.

If you have any queries please do not hesitate to contact myself or the HR Department.”

[6] As I have indicated there are various exchanges that include a further letter in the form of an e-mail dated 3 August 2012 because the transfer did not take place as envisaged at that time. Even in August a transfer was still pending. That letter comes from Charmaine Ferreira. It is sent to various people including NUMSA.

The fourth paragraph reads:

“We would like to reiterate that Vithiwe is not a labour broker but an administrative function that is being established to best suit the needs of employees.”

[7] According to the applicants the intended transfer was unlawful in its nature. The respondents on the other hand contended that the applicants have failed to show in what respect the transfer would be unlawful. When one looks at the answering affidavit the respondents raised certain points in limine. Paragraphs 15 and 16 of the answering affidavit read:

“15. The transfer of employment was given that the First and Second Respondents were to cease trading and the Third Respondent obtained the business of the First and Second respondent as going concern.

16. The purpose for the acquisition of the personnel and labour brokering entities is to service various companies in the mining sector, some employee however have permanent appointments with previously the First and Second Respondents and now the Third Respondent.”

Paragraph 21 reads:

“ I believe it pertinent at the outset to briefly set out the purpose of the entities’ roles and purpose, I am the sole member of the close corporation known as the First and Second respondent in this application.

22. The First and Second Respondents render the “administrative services” of a labour broker to various groups of companies such as EET (Pty) Limited. And have done so for many years.

23. In an attempt to consolidate processes and costs, and with the essence of a Black Economic empowerment share incentive which has been considered within the labour brokering company, we decided to “sell” as a going concern the business, clients and staff on the same terms as were previously provided for to a new entity.”

[7] My reading of the papers indicates that there has been a shift of position by the first and second respondents from transferring the contracts of employment per se to transferring the business of a labour broker as a going concern. The two letters I referred to written by the respondents clearly indicated that the transfer was unlawful. That transfer fell foul of the provisions of Section 197 to which the parties have indeed referred me and I need not revisit that section, because in the way that they have addressed me they clearly show that they understand it. But if one reads the decision in NUMSA v Staman Automatic CC and Another [2003] 24 ILJ 2162 (LC) it is clear that a mere transfer of the contract of employment without much is or amounts to an unlawful transfer. There should be a transfer of a business which is in operation. We should be speaking of a business or part thereof as a going concern. But when one looks at the initial developments of this so-called transfer it was a transfer that was contrary to the provisions of Section 197.

[8] Once the pleadings commenced and the lawyers were engaged it seems that a different position was taken by the respondents that this was a transfer of a business as a going concern. There are these two contradictions. It is clear to me that as at the intended time of the transfer and the transfer itself, the transfer was a prohibited one. The fact that it has been done by the respondents does not lend itself to legality, if it was done wrongly, it remains unlawful and this court has the powers to intervene in favour of the applicant.

[9] I am told that the first and second respondents were anticipating that they might be liquidated, but today as we are here I have been informed that they are still alive and kicking. They have not been liquidated, hence the fact that counsel appearing has been duly instructed by the respondent.

[10] The application sought by the applicant is meritorious and in my view, it ought to be granted and it is therefore declared that:

1. the transfer was unlawful. The position is reverted to that which existed prior to that transfer.

2. I think it is fair in the circumstances that here I should award the costs in favour of the applicants as prayed for in the notice of motion.

______

JUDGE OF THE LABOUR COURT

APPEARANCES

For the Applicant: Ruth Edmonds, Ruth Edmonds Attorneys

For the Respondent: Adv. B Edwards instructed by Jacobs Attorneys