Tollink SA (Pty) Ltd v Africa Technology Operations and Maintenance Limited and Others (J287/23) [2023] ZALCJHB 195 (30 June 2023)

IN THE LABOUR COURT OF SOUTH AFRICA, JOHANNESBURG

Not Reportable

Case No: J287/23

In the matter between:

TOLLINK SA (PTY) LTD Applicant and AFRICA TECHNOLOGY OPERATIONS & MAINTENANCE LIMITED First Respondent EMPLOYEES OF ARFICA TECHNOLOGY OPERATIONS & MAINTENANCE (PTY) LTD LISTED IN ANNEXURE “A” OF THE NOTICE OF MOTION Second to Fortieth Respondent SOLIDARITY obo MEMBERS Forty-first Respondent

Heard: 10 March 2023

Delivered: 30 June 2023

JUDGMENT

PHEHANE, J

Introduction and background

[1] The applicant (Tollink) is a private company that creates and implements intelligent transport systems and support engineering for South Africa’s tolling industry. It creates, manufacturers and maintains software and hardware for its clients and generates income from the projects of the South African National Roads Agency Limited (SANRAL) and the Trans-African Concession (Pty) Ltd, which projects include the supply, support and maintenance to the SANRAL tolling system on national roads, including the Maputo corridor. Such projects have been ongoing since October 2011.

[2] In 2011, Tollink created the first respondent (ATOM SA), which is a technology solutions and service provider, in order to improve Tollink’s broad-based black economic empowerment status. The services of ATOM SA include consulting, sales, installations, maintenance and managed service solutions.

[3] In August 2018, Tollink and ATOM SA concluded a service level agreement (SLA) in terms of which ATOM SA took over part of Tollink’s business pertaining to system development, integration and support. ATOM SA provided services to Tollink at the toll operations on the aforementioned national roads and projects. These services are termed ‘operational service period services’ (OSP services) and include the procurement, supply, installation and maintenance of equipment and systems at various toll plazas.

[4] As a result of the SLA, on 1 September 2018, approximately 50 employees were transferred from Tollink to ATOM SA in terms of the provisions of section 197 of the Labour Relations Act[1] (LRA).

[5] On 12 January 2023, ATOM SA gave notice to Tollink to terminate its services in terms of the SLA, with effect from 28 February 2023 and indicated that its staff would transfer to Tollink in terms of the provisions of section 197 of the LRA. Negotiations in terms of this section ensued.

[6] However, in February 2023, ATOM SA notified Tollink that a transfer in terms of section 197 of the LRA was inapplicable and that it had, out of caution, concluded agreements in terms of the provisions of section 197(6) of the LRA with three employees, namely, Messrs. Malope and Chakavarika and Ms. Steyn (the three employees). Further, that a certain Mr. Mandava (who formed part of the 50 emloyees that had transferred to ATOM SA during the first section 197 transfer in 2018), had since 2022, been promoted to and is currently employed by ATOM Mozambique, a separate legal entity from ATOM SA, with the consequence that he would not be transferring

to Tollink pursuant to the termination of the SLA.

[7] According to Tollink, annexure “A”[2] to the notice of motion contains a list of 39 employees who were employed by ATOM SA that were to transfer to Tollink. Some of these

employees are stationed at the toll plazas, with the exception of key staff who are stationed at ATOM’s head office and provide the OSP services as they possess individualised skills. It is common cause that 35 of the 39 employees, with the exception of the three employees and Mr. Mandava, transferred to Tollink with effect from 1 March 2023 in terms of section 197 of the LRA. Solidarity, a registered trade union and the forty–first respondent, represents one employee, namely Mr. Mandla Mbungela, who forms part

of the 35 employees. As Mr. Mbungela formed part of the 35, this puts to bed the issue regarding Mr. Mbungela’s employment status. To dispel confusion, Mr. Mbungela transferred to Tollink in terms of section 197 of the LRA on 1 March 2023.

[8] The dispute that Tollink brings to this Court is for a declaratory order as to whether the termination of the SLA on 28 February 2023 constitutes a transfer of a business as a going concern as contemplated in section 197 of the LRA and whether the three employees and Mr. Mandava are employees of Tollink with effect from 1 March 2023.

Urgency

[9] The parties do not dispute urgency. I am satisfied that Tollink has made out a case for urgent relief.

Argument on the merits and evaluation

[10] Tollink takes issue with the conclusion of the section 197(6) agreements with the three employees and asks this Court to determine whether the agreements comply with the provisions of that section, and if not, the three employees transferred automatically to Tollink as contemplated in section 197(2) of the LRA.

[11] Tollink and ATCOM SA are in direct competition. The bulk of the OSP services have been transferred to Tollink. However, Tollink contends that the services rendered by one individual, Mr. Mandava are critical to its business and have a direct impact on its loss of profit.

[12] As stated above, and as shown in annexure “A”, some employees are stationed at the toll plazas. Mr. Mandava is based in Mozambique. The dispute before this Court is, according to Tollink, that Mr. Mandava is a de facto employee of ATOM SA and that his promotion or employment with ATOM Mozambique with effect from 1 March 2022 as alleged by ATOM SA is to evade the consequences of a section 197 transfer.

[13] ATOM SA contends that, given that it had, before Tollink launched these proceedings, accepted, on Tollink’s version, that the 35 employees had transferred to Tollink in terms of section 197 of the LRA with effect from 1 March 2023, the issue of the applicability of a section 197 transfer is moot. In the circumstances, declaratory relief cannot be made by this Court.

[14] In the premises, ATOM SA contends that the only live dispute before this Court is the enforceability of the section 197(6) agreement pertaining to the three employees and whether Mr. Mandava is an employee of ATOM SA and is subject to the automatic transfer from ATOM SA to Tollink in terms of the provisions of section 197(2) of the LRA.

Section 197 of the LRA

[15] It is apposite at this juncture to set out the provisions of section 197 of the LRA in full. They are as follows:

‘197. Transfer of contract of employment:

(1) In this section and in section 197A –

(a) “business” includes the whole or a part of any business, trade, undertaking or service; and

(b) “transfer” means the transfer of a business by one employer (“the old employer”) to another employer (“the new employer”) as a going concern.

(2) If a transfer of a business takes place, unless otherwise agreed in terms of subsection (6) –

(a) the new employer is automatically substituted in the place of the old employer in respect of all contracts of employment in existence immediately before the date of transfer;

(b) all the rights and obligations between the old employer and an employee at the time of the transfer continue in force as if they had been rights and obligations between the new employer and the employee;

(c) anything done before the transfer by or in relation to the old employer, including the dismissal of an employee or the commission of an unfair labour practice or act of unfair discrimination, is considered to have been done by or in relation to the new employer; and

(d) the transfer does not interrupt an employee’s continuity of employment, and an employee’s contract of employment continues with the new employer as if with the old employer.

(3) (a) The new employer complies with subsection (2) if that employer employs transferred employees on terms and conditions that are on the whole not less favourable to the employees than those on which they were employed by the old employer.

(b) Paragraph (a) does not apply to employees if any of their conditions of employment are determined by a collective agreement.

(4) Subsection (2) does not prevent an employee from being transferred to a pension, provident, retirement or similar fund other than the fund to which the employee belonged prior to the transfer, if the criteria in section 14 (1) (c) of the Pension Funds Act, 1956 (Act No. 24 of 1956), are satisfied.

(5) (a) For the purposes of this subsection, the collective agreements and arbitration awards referred to in paragraph (b) are agreements and awards that bound the old employer in respect of the employees to be transferred, immediately before the date of transfer.

(b) Unless otherwise agreed in terms of subsection (6), the new employer is bound by –

(i) any arbitration award made in terms of this Act, the common law or any other law;

(ii) any collective agreement binding in terms of section 23; and

(iii) any collective agreement binding in terms of section 32 unless a commissioner acting in terms of section 62 decides otherwise.

(6)(a) An agreement contemplated in subsection (2) must be in writing and concluded between—

(i) either the old employer, the new employer, or the old and new employers acting jointly, on the one hand; and

(ii) the appropriate person or body referred to in section 189 (1), on the other.

(b) In any negotiations to conclude an agreement contemplated by paragraph (a), the employer or employers contemplated in subparagraph (i), must disclose to the person or body contemplated in subparagraph (ii), all relevant information that will allow it to engage effectively in the negotiations.

(c) Section 16 (4) to (14) applies, read with the changes required by the context, to the disclosure of information in terms of paragraph (b).

(7) The old employer must –

(a) agree with the new employer to a valuation as at the date of transfer of—

(i) the leave pay accrued to the transferred employees of the old employer;

(ii) the severance pay that would have been payable to the transferred employees of the old employer in the event of a dismissal by reason of the employer’s operational requirements; and

(iii) any other payments that have accrued to the transferred employees but have not been paid to employees of the old employer;

(b) conclude a written agreement that specifies—

(i) which employer is liable for paying any amount referred to in paragraph (a), and in the case of the apportionment of liability between them, the terms of that apportionment; and

(ii) what provision has been made for any payment contemplated in paragraph (a) if any employee becomes entitled to receive a payment;

(c) disclose the terms of the agreement contemplated in paragraph (b) to each employee who after the transfer becomes employed by the new employer; and

(d) take any other measure that may be reasonable in the circumstances to ensure that adequate provision is made for any obligation on the new employer that may arise in terms of paragraph (a).

(8) For a period of 12 months after the date of the transfer, the old employer is jointly and severally liable with the new employer to any employee who becomes entitled to receive a payment contemplated in subsection (7) (a) as a result of the employee’s dismissal for a reason relating to the employer’s operational requirements or the employer’s liquidation or sequestration, unless the old employer is able to show that it has complied with the provisions of this section.

(9) The old and new employer are jointly and severally liable in respect of any claim concerning any term or condition of employment that arose prior to the transfer.

(10) This section does not affect the liability of any person to be prosecuted for, convicted of, and sentenced for, any offence.’ (Emphasis added)

Is the section 197(6) agreement concluded between ATOM SA and the three employees valid and enforceable?

[16] In casu, one section 197(6) agreement was concluded between the three employees and Mr. Irshad Valojee, the Chief Executive Officer of ATOM SA on 28 Februay 2023.[3] On this score, the section 197(6) agreement complies with the provisions of section 197(6)(a)(i) and (ii) of the LRA, in that it is concluded between the new employer and the affected employees (the three employees). Tollink does not dispute this.

[17] What Tollink contends however, as I understand the argument, is that ATOM SA was obliged to negotiate with Solidarity as contemplated in section 197(6)(a)(ii) and 197(6)(b) read with section 189(1) of the LRA even where Solidarity only had one member, as the principle of majoritarianism plays no role in dismissals in terms of section 189 of the LRA. Tollink relies, in this regard, on Association of Mineworkers and Construction Union and others v Royal Bafokeng Platinum Ltd and others[4] (AMCU v Royal Bafokeng) and Association of Mineworkers and Construction Union and others v Sibanye Gold Ltd t/a Sibanye Stillwater and others,[5] (AMCU v Sibanye) and contends that there was an obligation for ATOM SA to negotiate, as contemplated in section 197(6)(a) and (b) of the LRA, with the minority union, Solidarity, in concluding section the 197(6) agreement and ATOM SA’s failure to do so renders the agreement

invalid and unenforceable with the result that the three employees automatically transferred to Tollink on 1 March 2023.[6]

[18] Tollink further contends that the negotiations between ATOM SA and the three employees did not comply with the provisions of section 197(6)(b) in that ATOM SA did not disclose all relevant information to the three employees to enable them to make an informed decision as to whether or not they wanted to be employed by Tollink.

[19] I regrettably cannot agree with Tollink’s contention that ATOM SA was obliged to negotiate with Solidarity in concluding the section 197(6) agreement. Firstly, no member of Solidarity concluded the section 197(6) agreement. Mr. Mbungela’s name does not appear on the face of the agreement nor the areas designated for signing. Secondly, on a purposive interpretation of section 197(6) read with section 189(1) of the LRA, the parties to an agreement that contracts out of the automatic transfer as contemplated in section 197(2) are, on the one hand, either the old or new employer or the old and new employer acting jointly and on the other hand, the appropriate person or body referred to in the

hierarchical structure of section 189(1) of the LRA. The fundamental reason that obliges an employer to consult with the persons or bodies in the ‘wall of hierarchy’ in section 189(1) is because those persons or bodies act in a representative capacity of their members who are affected employees (affected by the dismissal for operational requirements in terms of section 189, or as in the present case, affected by a transfer in terms of section 197 of the LRA). The wording of section 189(1)(b)(ii) is that the employer must consult with “any registered trade union whose members are likely to be affected by the proposed dismissals”. The hierarchical structure of section 189(1) is such that in the absence of representative persons or bodies, the affected employees

themselves are to be consulted.

[20] The word ‘or’ in sections 197(6)(a)(ii) and 197(6)(b) of the LRA is instructive – the agreement contracting out of the automatic consequences of a transfer in terms of section 197 is concluded between either old or new employer jointly, or both old and new employer as the first party (employer party) to the agreement and the appropriate person or body as the second party (employee party) to the agreement, and negotiations to conclude such agreement are between the new and old, or new or old employer as the case may be, and the person or body. The word ‘or’ as opposed to the word ‘and’, in my view, is purposefully utilized by the legislature to denote two parties to the section 197 agreement (that is, the employer and employee party), and these two parties negotiate the conclusion of such agreement. Several decisions have ousted individualism in consulations in terms of section189(1) of the LRA. This is not the point made by Tollink – Tollink contends that Solidarity ought to have been a party to negotiations that in my view, had nothing to do with Solidarity or its member. For what reason would Solidarity be the second party to a section 197(6) agreement when its member transferred automatically to Tollink? It would be absurd to require negotiation with Solidarity to conclude an agreement in terms of section 197(6) when none of its members are party to such agreement and its sole member had transferred to Tollink in terms of section 197(2) of the LRA.

[21] Tollink’s reliance on the decisions in AMCU v Royal Bafokeng and AMCU v Sibanye is therefore, misplaced. AMCU v Royal Bafokeng dealt with a constitutional challenge to sections 189 and 23(1) of the LRA. While it is so that the Court in AMCU v Sibanye stated that a consultation process in terms of section 189A of the LRA is not dependent on majoritarianism, it was not in dispute that AMCU, despite its minority status, participated in the consultation process – the nub of the dispute concerned AMCU alleging the retrenchment process was procedurally unfair as it did not have access to each of its members in order to meaningfully consult with the employer. The Court found against AMCU.

[22] That being said, I find that in the present case, there was no obligation on ATOM SA and Solidarity to negotiate an agreement in terms of section 197(6) when its member was not seeking to contract out of the consequences of a section 197 transfer. Just the opposite transpired – its member transferred to Tollink on 1 March 2023. A trade union as Solidarity no doubt, on its own accord and on behalf of its member, if it chose to challenge the transfer for any legitimate reason, would have done so.

[23] ATOM SA’s lamentation that it was precluded from placing information before the three employees to enable them to make an informed decision relating to their transfer or not, is just that – a lamentation and one without merit. The three employees have communicated a clear message to Tollink that they do not want to be employed by Tollink and have voluntarily entered into the section 197(6) agreement with ATOM SA.

[24] The section 197(6) agreement is negotiated and concluded between the parties to that agreement – ATOM SA, the employer party on the one hand and the three employees, the employee party on the other hand. Tollink is not a party to this agreement and neither is Solidarity. This does not offend against the provisions of section 197(6) as the section permits the new employer and the affected employees, as contemplated in section 189(1)(d) of the LRA, to conclude such agreement.

[25] In view of the aforegoing, I find that the section agreement concluded between the three employees and ATOM SA complies with the provisions of section 197(6) of the LRA and is, therefore, valid and enforceable.

Joinder of ATOM Mozambique and the de facto employer of Mr. Mandava

[26] When this matter was heard, Tollink submitted that an application to join ATOM Mozambique to these proceedings was launched on 10 March 2023, and the application was served on ATOM Mozambique by e-mail.

[27] Ms. Withaar for Tollink submitted that in the case of South African Railways and Harbours v Chairman, Bophuthatswana Central Road Transportation Board and Another; South African Transport Services v Chairman, Bophuthatswana Central Road Transportation Board and Another,[7] an entity, a perigrinus with direct and substantial interest in the matter was joined to the proceedings and the papers were served on it by edictal citation. Ms. Withaar submitted that ATOM Mozambique is aware of the application to join it to these proceedings as it the application was served on it by email and given its election not to participate in these proceedings, it would be futile for this Court to order that the pleadings be served on it in any other manner.

[28] I deem it unnecessary to decide the issue of the joinder of ATOM Mozambique, as I am of the view that Mr. Mandava is a de facto employee of ATOM SA. My view is informed by the following:

28.1 Mr. Mandava’s promotional letter annexed at annexure “FA13”[8] ostensibly from ATOM Mozambique, is drafted on the same letterhead that ATOM SA uses (see: “FA15”)[9], with the same (South African) telephone and facsilime numbers and the same board of directors comprising of a South African Board,

including Mr. Varojee, deponent to ATOM SA’s answering affidavit.

28.2 Mr. Mandava was employed as a Route Technical Leader for the N4 Toll Route in Mozambique and was based in Mozambique. This is a senior position. Mr. Varojee does not take this Court into confidence to explain what position Mr. Mandava was employed in ATOM Mozambique on 1 March 2022, before he was promoted to Team Leader in August 2022.

This information is within ATOM SA’s knowledge and that of Mr. Mandava.

28.3 Likewise, in his confirmatory affidavit,[10] apart from generally averring that he confirms the content of Mr. Varojee’s affidavit, Mr. Mandava does not take this Court into confidence by explaining in what capacity he was appointed in ATOM Mozambique in March 2022, neither does he place any evidence of this contract before this Court.

28.4 In Wightman t/a JW Construction v Headfour (Pty) Ltd and another,[11] the Supreme Court of Appeal stated the following about raising a bona fide dispute of fact:

‘A real, genuine and bona fide dispute of fact can exist only where the court is satisfied that the party who purports to raise the dispute has in his affidavit

seriously and unambiguously addressed the fact said to be disputed. There will of course be instances where a bare denial meets the requirement because there is no other way open to the disputing party and nothing more can therefore be expected of him. But even that may not be sufficient if the fact averred lies purely within the knowledge of the averring party and no basis is laid for disputing the veracity or accuracy of the averment. When the facts averred are such that the disputing party must necessarily possess knowledge of them and be able to provide an answer (or countervailing evidence) if they be not true or accurate but, instead of doing so, rests his case on a bare or ambiguous denial the court will generally have difficulty in finding that the test is satisfied. I say "generally" because factual averments seldom stand apart from a broader matrix of circumstances all of which needs to be borne in mind when arriving at a decision. A litigant may not necessarily recognise or understand the nuances of a bare or general denial as against a real attempt to grapple with all relevant factual allegations made by the other party. But when he signs the answering affidavit, he commits himself to its contents, inadequate as they may be, and will only in exceptional circumstances be permitted to disavow them. There is thus a serious duty imposed upon a legal adviser who settles an answering affidavit to ascertain and engage with facts which his client disputes and to reflect such disputes fully and accurately in the

answering affidavit. If that does not happen it should come as no surprise that the court takes a robust view of the matter.’

28.5 In the circumstances, I find that ATOM SA has not raised a bona fide dispute of fact, and on the Plascon-Evans[12] principle, I accordingly find that Mr. Mandava is an employee of ATOM SA.

[29] Mr. Mandava states that he does not wish to be transferred to Tollink, yet, ATOM SA failed to take the same “cautionary steps” as it did with the three employees to conclude a section 197(6) agreement with Mr. Mandava. The result is that Mr. Mandava does not escape the automatic consequence of a transfer in terms of section 197 of the LRA. Mr. Mandava was located in Mozambique when he was employed by ATOM SA. The automatic consequence of his transfer to Tollink in terms of section 197(2) does not result in a change of his location to render services to Tollink.

Conclusion

[30] In light of the common cause fact that the 35 employees transferred to Tollink on 1 March 2023 in terms of section 197 of the LRA pursuant to the termination of the SLA and in light of section 197(6) agreements being concluded between ATOM SA and the three employees, the issue of whether the termination of the SLA constituted a transfer of a business in terms of section 197 of the LRA is moot.

[31] In view of the afore-going, the following order is made:

Order

1. The matter is heard as urgent in terms of Rule 8 of the Labour Court Rules.

2. The agreement in terms of section 197(6) of the Labour Relations Act, 66 of 1995, as amended as concluded on 28 February 2023 between ATOM SA and Messrs. Gift Malope and Samuel Chakavarika and Ms. Sintiche Steyn is valid and enforceable.

3. Mr. Antonio Mandava is an employee of Tollink SA (Pty) Lt with effect from 1 March 2023 as a consequence of the transfer of the business of ATOM SA to Tollink SA (Pty) Ltd as conteplated in section 197 (2) of the Labour Relations Act, 66 of 1995, as amended.

4. There is no order as to costs.

M. T. M. Phehane

Judge of the Labour Court of South Africa

Appearances: For the Applicant: Adv. J. Withaar (Ms.) Instructed by: Cowan Harper Madikizela Inc. For the first respondents: Adv. H. Nieuwoudt Instructed by: Norton Rose Fulbright Attorneys

[1] Act 66 of 1995, as amended.

[2] pp 5 to 6.

[3] The section 197(6) agreement appears at pp 101 to 105.

[4] [2020] 5 BLLR 441 (CC).

[5] [2019] 8 BLLR 802 (LC).

[6] Applicant’s heads of argument, paras 50, 51, 54 and 60 and 61.

[7] [1982] 3 All SA 627 (B).

[8] p 97.

[9] p 106.

[10] At para 5 on p 159.

[11] [2008] ZASCA 6; [2008] 2 All SA 512 (SCA) at para [13].

[12] Plascon-Evans Paints Ltd v van Riebeeck Paints (Pty) Ltd [1984] ZASCA 51; [1984] 2 All SA 366 (A).