Does insourcing trigger employee transfer obligations in. While section 197 of the labour relations act, 1995 deals with transfers of a business as a going concern, the impact of the section 197 transfer on employee benefit schemes becomes a key focus in the transfer. The transfer does not interrupt an employees continuity of employment. Cliffe dekker hofmeyr ccma ruling on the interpretation of. Section 197 of the labour relations act, 1995 the lra was enacted to regulate the employment consequences where the whole or a part of a business or service is transferred as a going concern. Section 65 of the lra has been amended to make it clear that the right to strike or lockout is limited if the issue in dispute is one that a party has the right to refer to arbitration or the labour court in terms of the lra or in terms of any other employment law i. Except as otherwise provided in this section, the term amortizable section 197 intangible means any section 197 intangible a which is acquired by the taxpayer after the date of the enactment of this section, and b which is held in connection with the conduct of a trade or business or an activity described in section 212.
The question that arises is whether section 197 of the lra is applicable. An employer who employs 50 or less employees are subject to the process set out in section 189 of the lra, which. Section 197 of the labour relations act 66 of 1995 1999 20 ilj 87 at 87. With acts you are guaranteed the latest and most up to date resource for your legislative needs. Aug 22, 2016 if so, then make sure that you know about and comply with the provisions of the labour relations act. Section 197 of the labour relations act, no 66 of 1995 lra was enacted to change the common law position, with the effect that an automatic transfer of contracts of employment from the transferring employer previous employer to the acquiring employer new employer now takes place in the event that the. Previously, section 197 allowed for the automatic transfers of employees when there was transfer of the whole or part of a business, trade or undertaking. In terms of section 197 of the labour relations act the lra, the sale of a business as a going concern takes place subject to the provisions of the lra. Section 197 of the labour relations act lra places heavy responsibilities on the employer who takes over the business or part thereof of another employer as a going concern. Transfer of employment contracts section 197 labour law. This is a handy checklist to be used for the sale or transfer of any business, trade, undertaking or service or any part thereof, as a going concern to ensure compliance with the lra. Oct 02, 2017 this morning, it was reported in the media that productivitysa has called for section 189 of the labour relations act lra to be amended. Previously, section 197 allowed for the automatic transfers of. To give effect to and regulate the fundamental rights conferred by section 27 of the constitution, including the right to fair labour practices, to form and join trade.
The labour relations act back to the act bilingual pdf 1. This article will give you a bit more insight into what your obligations are in terms of this section of the lraa. Previously, section 197 allowed for the automatic transfers of employees when there was transfer of the. The labour relations act aims to promote economic development, social justice, labour peace and democracy in the workplace. On the face of it, it may appear that a transfer of services from a service provider to. The bill of rights in the south african constitution provides, in section 23 1, that everyone has the right to fair labour practices.
The labour court upheld the application and matter was appealed to the labour appeal court lac and ultimately the constitutional court. May 18, 2015 section 197 of the labour relations act lra places heavy responsibilities on the employer who takes over the business or part thereof of another employer as a going concern. An exploration of section 197 of the labour relations act in south africa slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. Section 189a applies to employers with more than 50 employees and. By the implementation of section 197 of the labour relations act 1995 and the amended sections 197. This booklet is a summary of the new section 198 of the labour relations act lra of 2014. Dismissal related to transfer of business sme toolkit sa. If you continue browsing the site, you agree to the use of cookies on this website. Summary of the labour relations amendment act 6 of 2014 elrc. Transfer of employees in terms of section 197 of the.
An employee may refer a dispute concerning an alleged unfair labour practice to the labour court for adjudication if the employee has alleged that the employee has been subjected to an occupational detriment by the employer in contravention of section 3 of the protected disclosures act, 2000, for having made a protected disclosure defined in. It is for this reason that section 197 of the labour relations act lra requires. Section 197 of the labour relations act, no 66 of 1995 lra provides that if a transfer of business takes place, all the rights and obligations. Checklist section 197 of labour relations act, document. The labour relations act requires that consultation must take place when the employer contemplates retrenchment. A registered trade union who seeks organisational rights at the workplace needs to comply with section 21 of the labour relations act lra. Contract transfers a section 197 takeover hr pulse. 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. To hold otherwise would allow for an abuse of section 197 of the lra.
The sale of a business as a going concern takes place subject to the provisions of the lra. A recent constitutional court judgment download case here 93 in the case of city power v grinpal energy management services pty ltd proves that organs of state are not immune to section 197 of the labour relations act. The date on which the amendments will come into operation is still to be determined but it. In particular, you need to be aware of section 197 which deals with the transfer of the employment contract from the old employer to the new employer. It is hereby notified that the president has assented to the following act which is hereby published for general information. To change the law governing labour relations and, for that purpose to give effect to section 27 of the constitution. Business to include the whole or part of any business, trade, undertaking or service. Labour relations act, 1995 lra the lra regulates various aspects of labour relations for most ontario workplaces. The labour relations amendment act lraa 127 of 1998 introduced the concept of section 197 transfer. It had been argued that the term everyone did not include a university or a company, but the court held otherwise. On 17 august 2014, the president of the republic of south africa signed into law the labour relations amendment act, 2004 act no.
This section forces the new employer to take over all the labour related obligations of the old employer. Section 197 of the labour relations act 66 of 1995 regulates the transfer of a business as a going concern. If the labour court or an arbitrator appointed in terms of this act finds that a dismissal is unfair, the court or the arbitrator may order the employer to reinstate the employee from any date not earlier than the date of dismissal. Section 197 of the labour relations act lra requires the new employer, in a takeover as a going concern, to take over all the employees of the old employer. The act ensures that labour legislation gives effect to fundamental constitutional rights, including the right to fair labour practices, to. Section 197 6, read with sub section 2 and 7 of the lra, however, gives the. Section 197 of the labour relations act, no 66 of 1995 lra was enacted to change the common law position, with the effect that an automatic transfer of. This morning, it was reported in the media that productivitysa has called for section 189 of the labour relations act lra to be amended. Cliffe dekker hofmeyr ccma ruling on the interpretation.
Employees rights under a new employer when a business is. Effect of notice under section 61 effect of notice to revise, etc. In terms of section 197 a business includes the whole or a part of any business, trade, undertaking or service. A critical analysis of section 197 of the labour relations act 66 of. Every employee has the right not to be unfairly dismissed. Act to change the law governing labour relations and, for that purpose to give effect to section 27 of the constitution. Section 189 what is section 189 of the labour relations act. Section 189 1 of the lra provides that, before retrenching, employers must consult any person whom the employer is required to consult in terms of the collective agreement. Section 211 states that any registered trade union may inform an employer in writing should he or she wish to exercise one or. The new labour relations act 66 of 1995 the lra sets out a different position in that the contracts of employment of the existing employees. Meaning of dismissal dismissal means thata an employer has terminated a contract of employment with or without notice. These are defined as requirements based on economic, technological, structural or similar needs of the employer. Sep 19, 2014 an exploration of section 197 of the labour relations act in south africa slideshare uses cookies to improve functionality and performance, and to provide you with relevant advertising. The section is essentially aimed at minimising the conflict that arises from the transfer of a business and the negative impact it may have upon.
Retrenchment is a specific legal process governed by sections 189 and 189a of the labour relations act. Sep 17, 2014 to hold otherwise would allow for an abuse of section 197 of the lra. This practice is illegal and not acceptable morally or in terms of the labour relations act. The act in section 197 thereof deals with the transfer of a contract of employment and defines. Transfer of employees in terms of section 197 of the labour relations act in outsourcing arrangements go. The labour relations act provides that in the event of a transfer of a business, there is an automatic and obligatory transfer of contracts of employment from the old employer to the new. If transferring employees are able, following the transfer, to remain contributing members of their existing pension fund, then no difficulties arise. Section 197 of the labour relations act, no 66 of 1995 lra was enacted to change the common law position, with the effect that an automatic transfer of contracts of employment from the transferring employer previous employer to the acquiring employer new employer now takes place in. Can the new owner of a business dismiss existing employees.
Remedies for unfair dismissal and unfair labour practice. If so, then make sure that you know about and comply with the provisions of the labour relations act. New labour relations act the lra section 197 of the lra states that the contracts of employment of the existing employees are automatically transferred to the new employer subject to the provisions of the section. A critical analysis of section 197 of the labour relations. A take over of an enterprise as a going concern essentially means that the new employer is carrying on. We are the leading resource for freely available legislation in south africa and are used daily by thousands of professionals and industry leaders. Acts online provides legislation, including amendments and regulations, in an intuitive, online format. Matters dealt with include the certification and decertification of unions, the collective bargaining process, mandatory grievance arbitration, strikes and lockouts, unfair labour practices, the ontario labour relations board.
The new labour relations act 66 of 1995 the lra sets out a different position in that the contracts of employment of the existing employees are automatically transferred to the new employer and thus negate the need for any nofault terminations. Business sold as a going concern legal obligations of the old and. Temporary employment whats changed for employers and. Title checklist section 197 of labour relations act description section 197 of the lra must be strictly adhered to. The case concerned the interpretation of section 198a3b of the labour relations act 66 of 1995 lra and whether this deeming provision resulted in a sole employment relationship between a placed worker and a client or a dual employment relationship between a temporary employment service tes, a placed worker and a client. Organs of state not immune to section 197 of the labour relations act by sandile july, director and zaryl bhero, candidate attorney. Every employee has the right not to be a unfairly dismissed. Transfer of employees in terms of section 197 of the labour relations act. The legal question that arose was whether such insourcing would trigger section 197 of the labour relations act the lra, which sets out the employee transfer obligations on employers whenever there is a transfer of business as a going concern. Section 197 of this specifically says that the staff must be taken over by the new owner on the same. The termination of a franchise agreement by the franchisor does not in itself constitute a transfer of a business as a going concern, even if the franchisor thereafter appoints another franchisee in the same area, and serving. By stephen khola, national labour relations and hr manager, ecasa preamble. In terms of the act the following treatments amount to unfair labour practice, i. Business sold as a going concern legal obligations of.
The transfer of undertakings with specific reference to the. Section 189 what is section 189 of the labour relations. Section 197 lra regulates transfers of undertakings. This section which sets out the guidelines for retrenchment procedures currently limits the parties who must be consulted to. What are the employment implications of the transfer of a. If the retrenchment takes place after the transfer, only the new employer can be sued. Click on the link if you like to more information on werksmans expertise in the labour. Furthermore, the court ruled that, under the original section 197 of the labour relations act 1995, contracts of employment transferred automatically when businesses were transferred, irrespective of the wishes of the employers. The purpose of section 197 of the lra, is to give effect to the right to fair labour practices in relation to the transfer of businesses on the one hand, and also to facilitate commercial transactions to avoid the constraints common law places upon the transfer of contracts of employment. Your guide to labour law in south africa labour guide. The phrase going concern is not defined in the lra. Provisions of section 197 labour relations act transfer.
The labour relations amendment act 6 of 2014 act was assented to by the president and published in the government gazette no. Where disciplinary action is unfair labour practice referral to board referral by minister saving clause as to wages. Section 185 of the labour relations act, 66, 1996 provides that. Section 197 of the labour relations act deals with the transfer of a business and the rights of employees affected by such a transaction. The summary is a popular version of the new rights and is aimed at everyone involved in defending or organising such workers.
It is clear that should the factors discussed in this judgment be met, a transfer of a going concern can be said to occur in outsourcing arrangements. The summary is a popular version of the new rights and is aimed at everyone involved. May 24, 2017 the section 189 retrenchment process in terms of the labour relations act section 189 of the labour relations act lra permits employers to dismiss employees for operational requirements. Transfer of employees in terms of section 197 of the labour. Section 197 of the labour relations act, no 66 of 1995 lra provides that if a transfer of business takes place, all the rights and obligations between the old employer and an employee at the time of the transfer continue as if they had been the rights and obligations between the new employer and the employee. A take over of an enterprise as a going concern essentially means that the new employer is carrying on the same business as the old employer after a takeover. The general consequence of this provision is that all employment contracts are. The changes to section 198 of the labour relations act 66 of 1995 lra is considered as one of the most significant, as this will deal with the issues regarding temporary employment service or labour brokers as they are more commonly known. An analysis of employee protection in business transfers. Section 197 of the labour relations act states the following. Section 1972c effectively allows the employee to sue the new employer even if it was the old employer who retrenched the employee unfairly. Provisions of section 197 labour relations act transfer of. I have recently been requested by a consultant to submit a brief memorandum pertaining to the statutory rights and obligations as stipulated in section 197 of the labour relations act, act 66 of 1995 as amended the lra. Second generation transfers in terms of section 197 of the lra.
In the case of a transfer in terms of the provisions of section 197 of the lra going concern transfer, the transfer assignment of the employees contracts of employment from one employer to another does not automatically bring about the transfer of the. This case reiterates and reasserts the nature and scope of application of section 197 of the lra. In a ruling handed down by the commission for conciliation, mediation and arbitration ccma on 29 june 2015 in the matter between assign service pty ltd v krost services and racking pty ltd and another ecel165215 the commissioner ruled on the interpretation of the deeming provision contained in s198a3b of the labour relations act 66 of 1995 lra. The act provides for the regulation of unfair treatment in the workplace via a provision on unfair labour practices.
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