By Avani Singh and Duncan Wild  on 5 December 2013

This matter, which first arose in the Labour Court as an application in terms of section 77(1) and (3) of the Basic Conditions of Employment Act 75 of 1997 (“the BCEA“) for the payment of salaries, raises the question of whether an agreement whereby parties agree to the transfer of a contract of employment without the employee’s consent is unconstitutional.

A majority of the Constitutional Court found that there was no constitutional issue raised, and even if there was the appellant had no prospects of success and so leavel to appeal was refused.  This judgment was written by Cameron J with Justices Fronean, Mhlanta, Skweyiya and Van der Westhuizen concurring.  Justice Madlanga agreed that no constitutional issue was raised, but was the of the view that there was therefore no need to consider the prospects of success. 

Justice Jafta wrote a minority decision in which he found there was a constitutional issue because the BCEA was enacted to give effect to the right to fair labour practices, and that the appeal should be upheld. Deputy Chief Justice Moseneke and Justice Nkabinde concurred in this judgment. Justice Zondo also wrote a separate minority judgment and would have held that there was a constitutional issue involved, and that the appeal should succeed, but for different reasons that Justice Jafta.

The applicant and two others were employed by the University of Zululand (“the University“) until 31 December 2005. Thereafter, the staffing of these employees was taken over by Isikhungo Sesichazamazwi Sesizulu (“ISS“) in terms of paragraph 2.4 of a tripartite agreement between the Pan South African Language Board (“PanSALB“), the University and ISS (“the tripartite agreement“), and the applicant became the chief executive officer of ISS. The funding arrangement was that PanSALB would secure funding which it would provide to the University for payment to ISS. In 2008, the funding ceased after PanSALB suspended its funding, and the applicant’s salary was not paid. The applicant’s argument was premised on the view that, notwithstanding the tripartite agreement, the University was his employer and was therefore obliged to pay his salary as it had done from the inception of his employment.

The Labour Court (per Pillay J) dismissed the application with costs on the basis that the applicant failed to establish that the University was his employer, and the court was consequently not in a position to grant any relief at all.

On appeal before the Labour Appeal Court (per Mlambo JP, Jappie JA and Molemela AJA concurring), the court dismissed the appeal, holding that the employment relationship between the applicant and the University had ceased to exist beyond December 2005. The court held further that there was no genuine dispute of fact on the papers, noting that the applicant had elected to make out a case that left out material facts while the University on the other hand had produced the facts relevant to the matter. Lastly, the court dealt with the issue of whether there was a transfer of the business, and concluded that the facts – especially as presented by the University – demonstrated that the employment contract of the applicant had been taken over by the ISS and that the applicant had acted in accordance with such changed circumstance. This was, in the court’s view, a classic case of the transfer of a business as a going concern as contemplated by section 197 of the Labour Relations Act 66 of 1995 (“LRA“). Accordingly, the court dismissed the appeal with costs.

In its application for leave to appeal before the Constitutional Court, the applicant sought to argue that an employment contract cannot be transferred without the employee’s consent, and that the relevant clause in the contract to this effect should either be declared unconstitutional for infringing the applicant’s dignity and for being in breach of the LRA, or should be interpreted in conformity with the constitutional value of dignity in line with the common law and the LRA. In response, the respondent argued that there is no relationship between the applicant and the University, and that it is apparent from the evidence that the applicant consented to the transfer. In any event, the respondent argued further that the transfer was a transfer as a going concern in terms of section 197 of the LRA, and that the applicant’s contract of employment transferred  by operation of law and thus did not require the applicant’s consent.  

Download the judgment here.