In Enviroserv
Waste Management v Interwaste (Pty) t/a Interwaste Environmental Solutions and
Others (P408/15) [2015] ZALCPE 6, the court had to decide if the
expiry of a limited duration contract with a service provider and the awarding
of the tender for the provision of such services to a new service provider,
constituted a transfer of a business as a going concern.
Enviroserv handled
General Motors South Africa’s (“GM”) on-site waste management. When the service
provider agreement ended, GM contracted Interwaste as its new supplier.
The crisp question
that the court had to decide was whether the termination of a service agreement
entitled the employees of the first service provider to have their contracts
transferred to the new service provider.
The court considered the effect
of section 197 of the Labour Relations Act which provides that if a
transfer of a business takes place, the new employer will be “automatically
substituted for the old employer in respect of all contracts of employment in
existence immediately before the date of transfer”.
Section 197
contemplates a transfer of a business as a going concern. The section depends
on the presence of three factors, namely, “business”, “transfer” and “going concern”.
The court held
that the activities of Enviroserv and GM did not constitute a “business” as
envisaged by section 197, on the basis that the nature of the waste management
industry is one in which businesses win and lose tenders to provide services
for a limited period, which did not constitute a “business” for the purposes of
section 197. On that basis, the employees did not have a reasonable expectation
of being transferred to Interwaste, and the court dismissed the application to
have the employees transferred to Interwaste.
