Mobile Telephone Networks (Pty) Ltd and others v CCI SA (Umhlanga) (Pty) Ltd and others
| Jurisdiction | http://justis.com/jurisdiction/166,South Africa |
| Judge | Waglay JP, Sutherland JA and Gqamana AJA |
| Judgment Date | 15 June 2023 |
| Citation | 2023 JDR 2268 (LAC) |
| Hearing Date | 02 May 2023 |
| Docket Number | JA 12/2023 |
| Court | Labour Appeal Court |
Sutherland JA:
2023 JDR 2268 p2
Sutherland JA
Introduction
This appeal is about whether or not section 197 of the Labour Relations Act [1] (LRA) is applicable to the consequences of the elapsing, by effluxion of time, of the contract between the first appellant, MTN, and the first respondent, CCl, who had in terms thereof, supplied Call Centre services to MTN. [2] The call centre services provided by CCI were thereafter provided by the second and third appellants, Ibridge Contract Solutions (Ibridge) and Ison Xperience South Africa (Ison). In an urgent application brought before the Labour Court, it was held that section 197 does apply and an order was made that the business unit of CCI that had performed services for MTN, had been transferred as a going concern to MTN, Ibridge and Ison and that all three appellants were therefore obliged to take over the MTN component of the workforce of CCI, seemingly on a joint and several basis. The appeal lies against that order and the ancillary orders dependant on that primary order.
The controversy is not rooted in the relevan legal principles nor to any material degree derived from a dispute of fact. Rather, the locus of the controversy is about the significance of several pertinent facts in determining whether or not the test for the existence of a transfer of a business as a going concern has been proven.
2023 JDR 2268 p3
Sutherland JA
The critical facts
MTN is a premier telecommunications service provider with millions of customers. An aspect of its business is continual interaction with its customers. The subject matter of such interaction ranges across the full gamut of customer queries from changing a SIM card to technical assistance with the operations of voice and data devices. To cope with such enquiries, it is necessary that many persons be mustered who have the necessary product knowledge and communication skills, to respond when the ‘help line’ is called by customers. At an early stage of the delivering this service to customers, the task was carried out internally by staff employed by MTN. By about 2006, the policy of outsourcing of the customer ‘call centre’ work to others was initiated by MTN.
CCI was already in the business of providing call centre services, when, in 2018 it was contracted to perform a call centre service for MTN. [3] The contract was for a fixed period of five years ending on 31 December 2022. For the first year, CCI was to be the exclusive provider of call centre services, save a discreet portion which MTN reserved to perform itself. Thereafter, MTN was entitled to contract other service providers to provide the same call centre service as CCI. Axiomatically, this meant two things: first, the other call centre service providers would be direct competitors of CCI, and second, the ‘work pie’ comprising the customer calls would have to shared, thereby reducing CCI’s 100% share to something less. This is exactly what happened. Ibridge was contracted in 2021. Ison was contacted in 2022. The pot was shared as MTN saw fit.
The contractual terms of the agreement between MTN and CCI are elaborate and delineate the character of the business operations required by MTN to be performed by CCI. Aspects which are significant for this case are listed. CCI was obliged to establish within its organisation a discrete unit to deal with the MTN work. The staff to be deployed by CCI had to be physically segregated from other staff whose duties might have given rise to conflicts of interest between the MTN work and that of another client of CCI. Operationally, a ‘Chinese wall’ had to be established, a common label in commerce to mean
2023 JDR 2268 p4
Sutherland JA
that staff in different sectors of a business were to keep strictly confidential any information within their sector about the client whom they serviced and divulge nothing whatever to other staff in other sectors of the business. If an employee in the MTN sector was to be redeployed to another sector of CCI’s business, a 6-month sanitisation period was required. The locale of the MTN unit was prescribed: only the Umhlanga office and the Sandton office of CCI couId be used even though CCI had other offices too. CCI undertook to have in its employ sufficient individuals, as consultants, to meet the demand of the calls volume expected. The call volume fluctuated, owing to several reasons and the two parties were, in terms of the contract, in a state of constant liaison: MTN would monitor the call flow and issue forecasts over forthcoming months to which CCI had to make such staffing accommodations as were required. This involved increasing the complement or reducing the complement of staff deployed on the MTN work. When decreasing the complement, it was open to CCI to redeploy those persons to other sectors of CCI’s business dealing with other customers, whether those customers were local or abroad, or to retrench the surplus staff. Lastly, the staff deployed on any particular client would axiomatically need to be briefed or trained on the particular product knowledge necessary to engage meaningfully with a customer. CCI was contractually obligated to provide such training for MTN business unit staff. This training was over and above generic call centre techniques and skills training.
CCI states that it complied fully with these terms and established the necessary structure of consultants to field the calls together with layers of supervisory management. Over time, the MTN business unit complement fluctuated between 900 and 250 staff. MTN challenges the figure of 250 which it says should be closer to 138 at the time of the contract ending, but this is immaterial to the controversy.
There are peculiar aspects of the circumstances which cloaked the conclusion of the contract that are notable. Prior to engaging CCI, MTN had endeavoured to conclude a similar contract with Adcorp. MTN staff had been transferred to Adcorp pursuant to section 197. The relationship between MTN and Adcorp was severed for reasons immaterial to this controversy. Thereupon, CCI was
2023 JDR 2268 p5
Sutherland JA
contracted and the MTN staff that had been transferred to Adcorp were again in terms of section 197 transferred to CCI. The contracts in both cases were drawn unequivocally to describe and regulate an outsourcing of services. This is manifestly plain in the provisions of clause 46 which, in some detail, set out a process that prescribes the duties of both parties upon the termination of the fixed-term contract. This involved a requirement for an exit plan to ensure no disruption of the service to which MTN was entitled when a transition to a ‘replacement’ service provider eventuated. These provisions loom large in the controversy and the question of what might trigger them is in dispute.
These several attributes of the transaction between the parties show that CCI was, in respect of the MTN business unit, subordinated to MTN to a material degree. The operation of access by CCI consultants to the customers who called the helpline were intermediated by MTN. The customer would contact the MTN contact point, and thereupon, a computer sifting program forwarded the call to a particular consultant within CCI (or, later on, within one or another of the three service providers) to deal with. The redirection was random, and no one service provider had a fixed customer base. The customer who called several times would be unaware of the existence of the various call centre service providers. Access was given to the MTN computer system, Citrix, which held the substantive product information to enable the consultants to perform their allotted task Remuneration was calculated on call volumes processed.
When the CCI contract lapsed, the calls that would have been redirected to CCI were, axiomatically, redirected to the other two call centre service providers, who had already been receiving a measure of the calls. Neither Ibridge nor Ison required any transfer of equipment or other tangible or intangible assets to perform their contractual functions, which, obviously they had already been carrying out before the termination of the CCI contract. Indeed, the return by CCI to MTN of the system access devices or codes went no further than MTN’s storeroom. A handover of historical call records by CCI to MTN was not a necessary component of current and future operational requirements and, also, was not made available to Ibridge or Ison.
2023 JDR 2268 p6
Sutherland JA
What is however plain is that both Ibridge and Ison had to increase their staff complements to cope with the additional call volumes. 45 CCI staff took preemptive steps and resigned in 2022 in order to join Ibridge, which was located in KwaZulu-Natal. Ison, which services MTN from its offices at the Cape did not have any CCI staff try to join it; it recruited an additional 270 staff...
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