Volume: Volume 8(1) - 2004
Article type: Refereed article
Author/s: Du Toit, Darcy
Section 197 of the Labour Relations Act ('LRA') provides that, where an enterprise is transferred as 'a going concern', all rights and obligations between the old employer and its employees at the time of the transfer continue in force between the new employer and the employees. Focusing on the increasingly common practice of outsourcing, the article poses two main questions relating to the protection of employees' employment benefits such as medical aid and pension rights in the event of outsourcing: first, whether outsourcing in principle falls within the definition of a transfer; and second, whether employment benefits fall within the ambit of constitutionally protected socio-economic rights and if so, the effect this has on the interpretation of section 197 as a provision on which employees' continued enjoyment of those rights depends.
The article concludes that such benefits fall squarely within the definition of socio-economic rights and, for this reason, section 197 should be interpreted as in principle including outsourcing transactions.