The Constitutional Court has delivered judgment in Road Traffic Management Corporation vs Tasima; which involved a dispute relating to the application of section 197 of the Labour Relations Act to organs of state. Section 197 regulates the consequences of transfers of business as a going concern, and provides for employees’ contracts of employment to automatically transfer with the business to the transferee, when the section is triggered.
The matter involved the the transfer to the RTMC of the eNATIS system which Tasima had operated. The RTMC argued that because it was an organ of state and a regulatory body, section 197 was not capable of applying to it. The Constitutional Court rejected this argument and found that the only qualifying criterion for section 197 to potentially apply, is that the transferee must be capable of being an employer:
“[82] In any event, the character of the entity receiving the business as a going concern is of no relevance to section 197. Instead, the only qualification is that it must be capable of being an employer. Section 20(1) of the RTMC Act provides for the appointment of employees that are necessary to enable the RTMC to properly carry out its functions. It is thus clearly an employer for purposes of section 197(1)(b) of the LRA.”
The court also found that the causa (legal basis) for the transaction is an important consideration in determining whether or not section 197 of the LRA is triggered, and that the inquiry is not purely a factual one:
“[34] The legal causa of a transfer is of critical importance in determining whether there was a transfer of a business as envisaged in section 197…
[39] A legal causa is a prerequisite for the application of section 197. It follows that only once the source of the respective rights and obligations to effect and receive transfer has been identified, can it be determined whether the jurisdictional facts for the application of section 197 are present. Once the legal causa is identified, the factual enquiry outlined in NEHAWU can be conducted. Thus, an inquiry as to the causa must be conducted before applying the test in section 197 to the facts. Otherwise one is looking at facts without the legal parameters being in place.”
A complete copy of the Road Traffic Management Corporation vs Tasima judgment can be viewed here:
Road Traffic Management Corporation vs Tasima
