National Education Health and Allied Workers Union v University of Cape Town and Others

• Jurisdiction: South Africa
• Citation: 2003 (3) SA 1 (CC)

National Education Health and Allied Workers Union v University of Cape Town and Others
2003 (3) SA 1 (CC)

2003 (3) SA p1

Citation	2003 (3) SA 1 (CC)
Case No	CCT 2/2002
Court	Constitutional Court
Judge	Chaskalson CJ, Langa DCJ, Goldstone J, Kriegler J, Madala J, Mokgoro J, O'Regan J, Ngcobo J, Sachs J and Yacoob J
Heard	September 17, 2002
Judgment	December 6, 2002
Counsel	M J D Wallis SC (with him A A Gabriel) for the applicant/appellant.; W R E Duminy SC (with him R G L Stelzner) for the first respondent.; G J Marcus SC (with him A M Breitenbach) for the second respondent.

Flynote : Sleutelwoorde B

Constitutional practice — Appeal — Leave to appeal — Application for — When to be granted — Leave to appeal to Constitutional Court — Granting of in discretion of Court — Interests of justice crucial in deciding C question — Whether in interests of justice depending on number of factors, inter alia prospects of success — Applicant to show reasonable prospect that Court will reverse or materially alter judgment if permission to bring appeal given — Prospects of success, though important, not decisive — In application to CC for leave to appeal against decision of LAC, central question being meaning of s 197 of D LRA — Important factors in considering prospects of success: fact that members of LAC and LC divided on proper construction of s 197 of LRA — Such suggesting, at least prima facie, prospects of success — Given clear division among labour Judges, desirable for CC to consider issue — Further considerations weighing in favour of E application being heard being, first, fact that this being first occasion which CC having to consider and define approach to take in interpretation of provision being part of legislation aimed at giving effect to constitutional right — Correct approach being that Legislature and Courts having tandem duty to give full effect to Constitution — Necessary for CC to apply such approach in present matter — Secondly, 267 workers losing F employment — Thirdly, application raising important questions in relation to appeals from LAC, procedure to be followed and circumstances when CC will hear such appeals — Leave to appeal granted.

Labour law — Courts — Labour Court and Labour Appeal Court — Labour Court and Labour Appeal Court specialised Courts functioning in G

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specialised area of law — These Courts established by Parliament specifically A to administer Labour Relations Act 66 of 1995 — Such Courts charged with responsibility of overseeing ongoing interpretation and application of Labour Relations Act and development of labour relations policy and precedent — Through their skills and experience, Judges of LAC and LC accumulating expertise enabling them to resolve labour disputes speedily — In public interest B that labour disputes be resolved speedily by experts appointed for that purpose — Constitutional Court will therefore be slow to hear appeals from LAC unless they raise important issues of principle.

Labour law — Courts — Labour Appeal Court — Appeal from — To Constitutional Court — Constitutional Court being highest Court in respect of all constitutional matters and decisions of all other Courts C on constitutional matters subject to appeal to Constitutional Court — Appeal from Labour Appeal Court on constitutional matter therefore lying to Supreme Court of Appeal — However, nothing preventing litigant from appealing directly to Constitutional Court pursuant to s 167(6)(b) of Constitution of the Republic of South Africa D Act 108 of 1996 read with s 16(2) of Constitutional Court Complementary Act 13 of 1995 and Rule 18 of Constitutional Court Rules — Rules of Constitutional Court distinguishing between appeals from Supreme Court of Appeal and appeals from other Courts — Appeals from Supreme Court of Appeal governed by Rule 20, while those from other Courts governed by Rule E 18 — Appeal from Labour Appeal Court to Constitutional Court thus governed by Rule 18.

Labour law — Labour Relations Act 66 of 1995 — Employment contract — Transfer of — Section 197 of LRA — Employer deciding to outsource certain non-core activities, employing contractors to perform activities — Employer giving notice to workers of termination of employment — Workers tendering to continue F employment with employer who rejected offer and invited employees to apply for employment with contractors instead — Employer stipulating in contract with contractors to consider favourably employment of workers — Most of employees accepting invitation and majority accepting, but not working for contractors for very long — Employees' union bringing application to G Labour Court for order declaring that outsourcing being transfer of part of employer' s business as going concern within meaning of s 197(1)(a) of LRA; that employment contracts transferred automatically to contractors in terms of s 197(2)(a), and that termination of employees' employment contravening s 197(2)(a) and of no force and H effect — Application dismissed by LC — Union appealing to Labour Appeal Court, which dismissed appeal, without considering facts — In application for leave to appeal to Constitutional Court, held that outsourcing amounting to transfer of business as going concern as contemplated in s 197 of LRA — Fact that no agreement to transfer workforce between employer and contractors not preventing such I finding — Upon transfer of business as going concern, workers transferred to new owner — Effect of s 197 being that new employer taking over workers and all rights and obligations flowing from contracts of employment — By operation of law, new employer substituted in place of old employer in respect of all contracts of employment — Union entitled to J

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leave to appeal and appeal upheld — As LAC not considering facts, case to be sent back to LAC for consideration in light of present A judgment.

Labour law — Labour Relations Act 66 of 1995 — Employment contract — Transfer of — Section 197(1) of LRA — Purpose of Legislature with s 197 involving protection of interests of both employers and workers — Properly construed s 197 for benefit of both employers and workers — Facilitating transfer of businesses while at same time protecting workers against unfair job losses — Such being balance consistent with B fair labour practices.

Labour law — Right to fair labour practices — 'Fair labour practice' in terms of s 23(1) of Constitution of the Republic of South Africa Act 108 of 1996 — What constitutes — Concept not defined in Constitution — Concept incapable of precise definition — What is fair depending upon circumstances of C particular case and essentially involving value judgment — Neither necessary nor desirable to define concept — Concept to be given content by Legislature and thereafter left to gather meaning, first, from decisions of specialist tribunals including Labour Appeal Court and Labour Court — Those Courts and tribunals responsible for overseeing interpretation and application of Labour Relations Act 66 of 1995, which was enacted to give effect to s 23(1) — In D giving content to concept, Courts and tribunals to seek guidance from domestic and international experience — Constitutional Court also having crucial role in ensuring that rights guaranteed in s 23(1) honoured — Constitutional Court also having important supervisory role to ensure that legislation giving effect to E constitutional rights properly interpreted and applied.

Labour law — Right to fair labour practices — To whom available — Such rights guaranteed to workers and employers, and including both natural and juristic persons — Section 23(1) of Constitution of the Republic of South Africa Act 108 of 1996. F

Labour law — Labour Relations Act 66 of 1995 — Employment contract — Transfer of — Transfer of business as going concern — Meaning of in terms of s 197 of Labour Relations Act 66 of 1995 — 'Going concern' — Meaning of — Phrase not defined in Labour Relations Act — Therefore to be given ordinary meaning unless context indicating otherwise — What transferred having to be business operation so that business remaining G same but in different hands — Whether that occurring being matter of fact to be determined objectively in light of circumstances of each transaction — In deciding whether business to be transferred as going concern, regard to be had to substance and not form of transaction — Number of factors relevant to question whether business transferred as going concern, such as H transfer or otherwise of assets both tangible and intangible, whether workers taken over by new employer, whether customers transferred and whether or not same business carried on by new employer — List not exhaustive and none decisive individually — Each transaction to be considered on its own merit, regard being had to circumstances of transaction in question — Fact that no prior agreement to transfer workforce between old employer and new employer not as matter of law I preventing finding that business not transferred as going concern.

Headnote : Kopnota

In an application for leave to appeal against a judgment and order of the Labour Appeal Court (LAC) dismissing an appeal by the applicant against the J

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judgment and order of the Labour Court, the central question concerned the meaning of s 197 of the Labour Relations Act 66 A of 1995 (LRA) and whether, in terms of s 197, upon transfer of a business as a going concern, the workers were transferred automatically with the business without a prior agreement to that effect between the transferor and transferee employer. The case had its origin in a decision taken by the first respondent to outsource certain of its non-core activities which were performed by members of the applicant. B The first respondent appointed...