The LAC has decisively held that so-called “second generation transfers” are governed by s197 of the Labour Relations Act, 1995. In other words section 197 of the LRA applies not only to a “first generation transfer” of a part of a business, including a service such as cleaning, as a going concern but s197 also applies whether that part of the business reverts back to the “old employer” or is transferred to another contractor on the expiry or cancellation of the original contract [a “second generation transfer”]. The effect of this important decision is that all employees and their contracts of employment relating to that part of the business are automatically transferred back to the original “old employer” or to the new contractor.
AUSA obo Barnes v SA Airways (Pty) Ltd (LAC) [2009] JOL 24395 (dated 9 October 2009) is a unanimous decision of the LAC with both Zondo JP and Davis JA providing detailed reasons for their findings. The LAC allowed an appeal against the judgment of Basson J in AUSA obo Barnes v SA Airways (Pty) Ltd[2008] 1 BLLR 20 (LC).
The LAC adopted a purposive interpretation of the LRA and s197 as opposed to a literal interpretation as advocated by amongst others Wallis J, before he was elevated to the bench in the High Court. The approach adopted by Murphy AJ (as he then was) in the case of COSAWU v Zikhethele Trade (Pty) Ltd [2005] 9 BLLR 924 (LC) was approved.
However, the LAC adopted a cautious approach when framing its order because the events took place in October 2007 and such evidence had not been placed before the LAC. A declaratory order was made to the effect that s197 of the LRA was capable of applying when at the end of the “contract between SAA and LGM SA, the services that were provided by LGM SA to SAA are transferred to SAA or are contracted out by SAA to another party”.