Numsa obo Members and Others v AIH Logistics (Pty) Ltd and Another (D 1112/19) [2023] ZALCD 2; (2023) 44 ILJ 1099 (LC); [2023] 5 BLLR 459 (LC) (27 January 2023)

Numsa obo Members and Others v AIH Logistics (Pty) Ltd and Another (D 1112/19) [2023] ZALCD 2; (2023) 44 ILJ 1099 (LC); [2023] 5 BLLR 459 (LC) (27 January 2023)

The court found that the transfer from the first respondent to the second respondent did not constitute a transfer of business as a going concern under section 197 of the Labour Relations Act. The evidence showed that no assets, premises, equipment, or customer relationships were transferred, and the first respondent retained operational control over the employees. The second respondent did not operate as an autonomous economic entity but merely provided HR and labour management services. The transaction was a mechanism to shift unionised employees rather than a bona fide transfer of business. Consequently, section 197 was not engaged, and the applicants' contracts did not automatically...

Citation
[2023] ZALCD 2
Parties
Applicant: NUMSA obo Members; Applicant: N Mngambi; Applicant: X Mahova; Applicant: L Mthembu; Applicant: S Pharoe; Applicant: B Mthembu; Applicant: B Gumede; Respondent: AIH Logistics (Pty) Ltd; Respondent: Blacksuits (Pty) Ltd
Court
Labour Court Durban
Jurisdiction
South Africa
Judgment Date
27 January 2023
Case Number
D 1112/19
Procedural Posture
Labour Application / Judgment After Trial
Outcome
The court declared that the transfer did not fall within section 197 of the Labour Relations Act and ordered restoration of the employment status between the applicants and the first respondent as at 14 March 2019.
Judges
B Whitcher
Legal Topics
Transfer of Business, Section 197 Lra, Continuity of Employment, Sham Transfer, Restoration of Status Quo
Labour Law Transfer of Business Section 197 Lra Continuity of Employment Sham Transfer Restoration of Status Quo

Case Brief

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Parties

NUMSA obo Members

Applicant

N Mngambi

Applicant

X Mahova

Applicant

L Mthembu

Applicant

S Pharoe

Applicant

B Mthembu

Applicant

B Gumede

Applicant

AIH Logistics (Pty) Ltd

Respondent

Blacksuits (Pty) Ltd

Respondent

Procedural Posture

Labour Application / Judgment After Trial

Legal Issues

  1. 1 Whether the transfer of employees from the first respondent to the second respondent constituted a transfer of business as a going concern under section 197 of the Labour Relations Act.
  2. 2 Whether the applicants' employment contracts automatically transferred to the second respondent.
  3. 3 Whether the transaction was a bona fide transfer or a sham designed to rid the first respondent of unionised employees.

Ratio Decidendi

The court found that the transfer from the first respondent to the second respondent did not constitute a transfer of business as a going concern under section 197 of the Labour Relations Act. The evidence showed that no assets, premises, equipment, or customer relationships were transferred, and the first respondent retained operational control over the employees. The second respondent did not operate as an autonomous economic entity but merely provided HR and labour management services. The transaction was a mechanism to shift unionised employees rather than a bona fide transfer of business. Consequently, section 197 was not engaged, and the applicants' contracts did not automatically...

Court Disposition

The court declared that the transfer did not fall within section 197 of the Labour Relations Act and ordered restoration of the employment status between the applicants and the first respondent as at 14 March 2019.

Orders

  • The transfer of a business from the first to the second respondent on 15 March 2019 is not one that falls within the prescripts of section 197 of the Labour Relations Act, 1995.
  • The position between the first respondent and the further applicants as at 14 March 2019 must be restored.