Section 197 Transfer Agreement

In 2009, the Labour Appeal Court contradicted Bassson J. and adopted a broader interpretation of the word “von”. The LAC considered that the word “of” could be interpreted as meaning “of”. That would mean that, within the meaning of the agreement between SAA and LGM, a transfer within the meaning of Article 197 will take place after the expiry of the outsourcing agreement between them. However, the articles are not sufficiently clear to tell the parties whether or not the new entity must comply with Section 197 of the LRA. We have therefore set out below our assessment of the circumstances which could characterise a merger or acquisition as a transfer of a continuous group. The LRA specifically provides for the transfer of a business and/or employee services, and this article will refer to Article 197 transfer of employment and business contract. Turning to the Labour Court, UASA requested, inter alia, that the court declare that the appointment of a new service provider to SAA would constitute a transfer of LGM`s business and that, as such, the staff initially transferred should be transferred to the new service provider. Saa rejected the so-called “second generation,” arguing that a transfer within the meaning of Section 197 means “from one employer to another employer,” emphasizing the word “of.” SAA was no longer the employer and LGM was not the party that would relocate, so LGM had the freedom to fire its employees on the basis of its corporate requirements. When part of an undertaking is transferred, it could, under certain conditions, be regarded as the takeover of a business maintenance undertaking. In the case of Crossroads Distribution (Pty) Ltd t/a Jowell`s Transport vs Clover SA (2008.6 BLLR 565), Clover had entered into a contract for the provision of transportation and logistics services to Woodlands Dairy. When Clover terminated its contract with Woodlands Dairy, Woodlands signed the contract to another company called Crossroads.

Crossroads wanted all of Clover`s employees in the transportation & logistics business to be transferred to its job, as the transfer of the contract from Clover to Crossroads represented a takeover of an ongoing business, but Clover wanted to retain the services of some of them. Basson J. approved saa and dismissed the application on the grounds that “Parliament`s intention with respect to section 197 of the LRA certainly could not be to grant workers a lump-sum or uncontrolled right to transfer their contracts from one employer to another.” In some cases, compliance with section 197 must be strictly observed, especially in the following circumstances: – If the enterprise is gradually transferred from one enterprise to another, customary law stipulates that the sale, transfer or merger of an enterprise results in the termination of employment contracts between the enterprise and its employees. Thus, under the old Employment Relations Act 1956, due to the termination of employment contracts and the transfer of the enterprise, deemed necessary with regard to the requirements of the enterprise, employers were required to pay their severance pay to the workers and the workers were subsequently dismissed. The new Employment Relations Act 66 of 1995 (“LRA”) defines a different position by automatically transferring the employment contracts of existing workers to the new employer, thereby null and neat the need for “no-fault” dismissal. It is important that the rights and obligations of the transferred workers are no less favourable than those they had with their former employer. In cases where the transfer is less advantageous, the matter may be referred to the CCMA for a subsequent decision. A great deal of responsibility is therefore placed directly on the shoulders of the new employer vis-à-vis the workers who have been automatically transferred within the meaning of Article 197. .