Employment law update – May 2024 – Section 197 transfer

May 1st, 2024

In Katiso Transport and Logistics CC and Another v Eagle Liner Transport (Pty) Ltd and Others [2024] 3 BLLR 255 (LAC) the Labour Appeal Court (LAC) had to determine whether there was a transfer of a business as a going concern when a logistics company purchased buses from two other companies for use in cross border travel.

In this case, Katiso operated cross-border transport and held about 102 licences in this regard to carry out bus services to neighbouring countries, particularly Zimbabwe. Katiso purchased vehicles from Eagle Liner and Cream Magenta and made use of the licences previously used by these companies to conduct cross-border travel. Eagle Liner had conducted inter-provincial travel, as well as cross-border travel but ceased to perform cross-border travel after Katiso acquired the 13 vehicles. About 88 employees referred a dispute on the basis that their cross-border services had been terminated without notice. This dispute was referred to arbitration and was still pending at the time of the appeal.

Both Katiso and Eagle Liner denied that they were the employer of these employees. Eagle Liner approached the Labour Court (LC) for a declaratory order that the bus drivers transferred to Katiso in terms of s 197 of the Labour Relations Act 66 of 1995. The LC per Van Niekerk J held that the former Eagle Liner drivers did in fact transfer to Katiso by virtue of s 197. The transfer of assets was a relevant factor that was considered to determine whether or not s 197 applied. It was found that the transfer of the buses and trailers, together with the use of the operating licences, enabled Katiso to continue with the cross-border transportation services, which was a part of Eagle Liner’s business.

On appeal, Katiso argued that it had taken over only 13 buses and trailers from Eagle Liner. There were significant assets, which remained in the possession of Eagle Liner such as infrastructure, management, operational resources, mechanics, workshops, and the remaining buses. Eagle Liner used this infrastructure to continue to conduct a business by carrying out inter-provincial trips.

The LAC found that those drivers who were employed by Eagle Liner for inter-provincial trips should be excluded from the declaratory order issued by the LC as their employment contracts remained with Eagle Liner. It was held that the inter-provincial travel was a separate part of the business, which did not require cross-border operating licences. The LC’s order was accordingly set aside and substituted with an order that only those Eagle Liner employees who were employed exclusively for cross-border trips be transferred to Katiso. This was important otherwise those drivers involved in inter-provincial services would be precluded from the pending arbitration proceedings on the basis of res judicata if they were covered by the declaratory order.

Equal pay for work of equal value

In Association of Mineworkers and Construction Union obo Members v Aberdare Cables (Pty) Ltd and Others [2024] 3 BLLR 276 (LC) the Labour Court per Prinsloo J had to consider an equal pay for equal work dispute.

In this case, the employees alleged unfair discrimination on the basis of an arbitrary ground in that employees employed on rates in terms of bargaining council wage scales were paid less than employees who had been employed before the council rates were introduced. This had arisen in the context of a retrenchment consultation process in 2013 in which the majority union, National Union of Metal Workers of South Africa (NUMSA), had agreed that all new employees employed in the future would be employed on the rates in terms of the bargaining council whereas existing employees would continue to receive the higher wages. This was a way to achieve cost-savings going forward and address the employer’s operational requirements. Accordingly, from 2014 new employees were employed on the prescribed Metal and Engineering Industries Bargaining Council (MEIBC) minimum wage although they performed the same work as existing employees who were paid at a higher rate.

It was held that where an employee alleges unfair discrimination on an arbitrary ground the applicant must identify the actual ground alleged and demonstrate that it is akin to the listed grounds in that it impacts human dignity. It was held that this claim failed because the employees did not plead that their dignity was affected. Furthermore, it was found that relying on seniority to differentiate wages did not constitute unfair discrimination as it is accepted as a rational basis for differentiation.

It was found that the arbitrator had correctly found that aligning wages to the agreed MEIBC rates was a rational way to meet the employer’s operational needs. The appeal was accordingly dismissed.

Monique Jefferson BA (Wits) LLB (Rhodes) is a legal practitioner at DLA Piper in Johannesburg.

This article was first published in De Rebus in 2024 (May) DR 51.

De Rebus