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ARTICLE · 18 JULY 2005

The end of Outsourcing as we Know it?

Cliffe Dekker Hofmeyr
Cliffe Dekker Hofmeyr
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Cliffe Dekker Hofmeyr

Cliffe Dekker Hofmeyr

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Section 197 of the Labour Relations Act (the Act) regulates the employment law consequences of a transfer of the whole or part of a business as a going concern.

South AfricaStrategy
Jacques Van Wyk
Jacques Van Wyk

Section 197 of the Labour Relations Act (the Act) regulates the employment law consequences of a transfer of the whole or part of a business as a going concern.

For several years the South African courts have debated what constitutes the transfer of a "business as a going concern". Until recently, it has been accepted practice to differentiate a transfer as a going concern from an outsourcing, on the basis that an outsourcing involves the handing over to a third party of only the function of providing services which were previously supplied by in-house personnel or departments.

Typical outsourcing scenarios involve what are referred to as non-core functions such as gardening, cleaning and security. The employees who formerly provided the in-house services which are outsourced are usually retrenched due to redundancy. Following a recent decision of the Labour Appeal Court in South African Municipal Workers' Union & Others v Rand Airport Management Company (Pty) Ltd & Others

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