s197

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Businesses - or part of a business - are taken over by new concerns, or required services are outsourced. Then the service provider may be replaced by a second service provider. When do these business transfers fall under section 197 of the Labour Relations Act? Ivan Israelstam explains why it is so important to understand what business transfers are defined as transfers as a going concern.  


A second generation transfer arises when a company first outsources a part of the company to a service provider company, who takes over the employees related to that company department or service. The contract is for a fixed period and the orginal company then re-tenders to a different service provider company to take over the provision of the services. The question arises: does the second service provider company have to take over those employees who were part of the original transfer? The answer has not been clear, and the courts have differed on the correct interpretation of s197 of the Labour Relations Act. This week Ivan Israelstam explains these different interpretations.

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