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CAN EMPLOYEES IGNORE AUTOMATIC TRANSFER UNDER SECTION 197?
In the case of Miyambu and 2 others (Lex Info 5 February 2025. Labour Court case number 2025-002049) it was common cause that the province of Mpumalanga took over the licensing function of the Steve Tshwete Municipality on 30 June 2024 as a section 197 transfer. Despite this the 3 applicants continued to report for work to the municipality from 1 July to 31 December 2024 and were not prevented from providing their services. The 3 employees ignored their transfer to the province because they had misgivings about the terms of said transfer and insisted on their concerns be dealt with by the municipality.
As the municipality considered the applicants’ employment with it to have ended on 30 June it refused both to deal with their concerns and to pay them for the period after the 197 transfer had commenced.
The Labour Court noted that section 197 provides that, on date of transfer, the new employer is automatically substituted in place of the old one. Despite this the Court ordered the municipality to pay the employees for the 6-month period after the province had automatically taken the employees over.
Was the Court correct in ignoring section 197’s automatic transfer provision?I don’t think the case is precedent allowing employees to ignore the consequences of a section 197 transfer. The issue in dispute was whether the employees were entitled to be paid because they had tendered, and the municipality had accepted, their services pending the outcome of their discussions. In other words, their transfer, in effect, had been suspended for the period during which the old employer accepted their tender of services.
I respectfully disagree with Ingrid and Herman because, at the time that the employees reported for work at the municipality they were already, by virtue of section 197’s automatic transfer provision, in the employ of the province. That is, although the employees were, at that point, providing services on the municipality’s premises, they were, under the law (section 197), providing the services that the province had taken over on 30 June. Therefore, the services they provided during the 6-month period were legally provided to the province and not to the municipality. Based on this, the remuneration that they earned should have been claimed from the province and not from their former employer.
Very very debatable!!! Anna makes a very valid point. Possibly the answer may lie in which entity benefitted from the employee’s work …… the municipality or the Province? Section 197 is there to protect the employees. If the old employer chooses to continue to accept and benefit from the tender of their services post transfer, surely the old employer is still liable. The new employer cannot be held responsible if it does not benefit from the work done by these employees or if they did not “assist in carrying on or conducting their business. The definition of an employee in the LRA namely an employee is any person other than an independent contractor who works for another person or for the State and who receives, or is entitled to receive, any remuneration also includes any person who assists in carrying on or conducting the business of an employer.
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