PE Pack 4100 CC v Sanders and Others (PA 08/10) [2013] ZALAC 1; [2013] 4 BLLR 348 (LAC); (2013) 34 ILJ 1477 (LAC) (22 January 2013)

PE Pack 4100 CC v Sanders and Others (PA 08/10) [2013] ZALAC 1; [2013] 4 BLLR 348 (LAC); (2013) 34 ILJ 1477 (LAC) (22 January 2013)

The majority held that section 197 of the Labour Relations Act does not apply to the termination and replacement of franchise agreements. The appellant did not acquire the business as a going concern from the previous franchisees; rather, the franchisor terminated the old franchise agreements and entered into new ones with the appellant. The franchisor retained ownership of the core assets and infrastructure, and there was no transfer of business components from the old franchisees to the new franchisee. The franchise relationship is fundamentally different from outsourcing arrangements, as the franchisee operates for its own account under the franchisor's control, and the assets remain...

Citation
[2013] ZALAC 1
Parties
Appellant: PE Pack 4100CC; Respondent: Adam Sanders; Respondent: Cell C Provider Company (Pty) Ltd; Respondent: Advance Worx 119 (Pty) Limited; Respondent: C Worx 12 (Pty) Limited
Court
Labour Appeal Court
Jurisdiction
South Africa
Judgment Date
22 January 2013
Case Number
PA 08/10
Procedural Posture
Civil Appeal / Appeal From Labour Court Decision; Leave to Appeal Granted
Outcome
Appeal upheld; application dismissed with costs.
Judges
Davis JA, Hlophe AJA, Landman AJA
Legal Topics
Transfer of Business, Section 197 Lra, Franchise Agreements, Automatic Transfer of Employment, Outsourcing Jurisprudence
Labour Law Commercial and Corporate Transfer of Business Section 197 Lra Franchise Agreements Automatic Transfer of Employment Outsourcing Jurisprudence

Case Brief

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Parties

PE Pack 4100CC

Appellant

Adam Sanders

Respondent

Cell C Provider Company (Pty) Ltd

Respondent

Advance Worx 119 (Pty) Limited

Respondent

C Worx 12 (Pty) Limited

Respondent

Procedural Posture

Civil Appeal / Appeal From Labour Court Decision; Leave to Appeal Granted

Legal Issues

  1. 1 Does section 197 of the Labour Relations Act apply to the termination and replacement of franchise agreements?
  2. 2 Was there a transfer of a business as a going concern from the old franchisee to the new franchisee under section 197?
  3. 3 Do franchise agreements fall within the scope of section 197 of the LRA?

Ratio Decidendi

The majority held that section 197 of the Labour Relations Act does not apply to the termination and replacement of franchise agreements. The appellant did not acquire the business as a going concern from the previous franchisees; rather, the franchisor terminated the old franchise agreements and entered into new ones with the appellant. The franchisor retained ownership of the core assets and infrastructure, and there was no transfer of business components from the old franchisees to the new franchisee. The franchise relationship is fundamentally different from outsourcing arrangements, as the franchisee operates for its own account under the franchisor's control, and the assets remain...

Court Disposition

Appeal upheld; application dismissed with costs.

Orders

  • The judgment of the court a quo is set aside and substituted with an order dismissing the application with costs.
  • The first respondent is ordered to pay the appellant's costs of the appeal.