By Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or Web Address: 

Section 197 of the LRA requires that, where a business or part thereof is taken over as a going concern the new owner must take over the staff from the old owner. And outsourcing of services to contractors normally constitutes the takeover of a going concern for the purposes of section 197 of the LRA. 

However, not all transfers qualify under this legislation because not all are transfers ‘as going concerns’. Unfortunately, the statutes are not clear enough to tell the parties whether the new entity must or must not comply with section 197 of the LRA. We have therefore offered below our view as to what circumstances would be likely to characterise a merger or takeover as the transfer of a going concern. 

  • If the new undertaking continued the running of the business as a going concern in much the same way as it had been run before the takeover this would point to the takeover of a going concern.
  • Such a takeover would also be likely to qualify if the new undertaking served the same client market as did the old undertaking.

In SAMWU and others vs Rand Airport Management Company (Pty) Ltd & others (2002, 12 BLLR 1220) the Court found that the transfer of part of an employer’s structure that did not comprise a recognisable entity did not constitute the transfer of a going concern. 

However, the Labour Appeal Court in SAMWU and others vs Rand Airport Management Company (Pty) Ltd & others (2005 3 BLLR 241) overturned the Labour Court’s Rand Airport case decision. 

The legal pendulum has thus swung far in favour of the view that outsourcing of services constitutes the takeover of a going concern depending on circumstances. 

Due to the complex nature of section 197 legislation and its powerful but unclear constraints on contractors and other employers nobody should enter into takeovers or outsourcing agreements without first acquiring the necessary know-how. 

The innovative video series WALKING THE LABOUR LAW TIGHTROPE provides very inexpensive training that allows the managers of every employer to obtain essential labour law know-how, and to do so at times suitable to their very busy schedules. Its 48 chapters, averaging 10 minutes in length each, can easily be watched at junctures when the manager has time. 

The employer has the option of using this groundbreaking video series to train its managers and HR practitioners in groups and then follow-up by getting them to view the video chapters again at convenient junctures in order to ensure that they retain the learning gained. Alternatively, employers with self-learning systems can simply give their managers and HR practitioners access to the entire series for viewing at times that suit their busy work schedules. 

This greatly informative yet very engaging and practical video series provides crucial and user-friendly learning through the use of a stimulating, animated case study that runs throughout the 48-chapter series. Each chapter contains clear and important advice needed by workplace management on the basics of labour law over a very wide range of topics. 

A further advantage is that the manager can, for a full year, easily go back to any of the 48 videos for purposes of refresher training or in order to access information on how to deal with a current workplace issue. This solves the problem of managers forgetting what they have learned and sustainably builds the managers’ capacity to manage the workplace effectively and in line with the law. 

That is, this video series helps management to walk the shaky labour law tightrope and to run the workplace productively without falling into the labour law abyss. 

To access our 48-part video series, WALKING THE NEW LABOUR LAW TIGHTROPE. Just go to or contact Ivan on