South African Airways (Pty) Limited v Aviation Union of South Africa and Others

South African Airways (SAA) outsourced its infrastructure and support services to LGM South Africa Facility Managers and Engineers (Pty) Ltd (LGM) with effect from 1 April 2000. In terms of the outsourcing agreement, SAA’s employees were transferred to LGM under s 197 of the Labour Relations Act 66 of 1995 (LRA). In 2007, following a change in LGM’s ownership, SAA lawfully terminated the outsourcing agreement and invited tenders for the services previously rendered by LGM. LGM notified the affected employees of possible retrenchments due to operational requirements. Trade unions representing the employees contended that the termination of the outsourcing agreement, or the award of new tenders, triggered a further (so-called “second generation”) transfer under s 197, either back to SAA or to new contractors. SAA denied any obligation to take over the employees. The Labour Court dismissed the unions’ application, but the Labour Appeal Court held that s 197 applied. SAA appealed to the Supreme Court of Appeal.

The appeal was upheld with costs. The order of the Labour Appeal Court was set aside and replaced with an order dismissing the appeal with costs, thereby restoring the Labour Court’s dismissal of the unions’ application.

The case is a leading authority on the interpretation of s 197 of the Labour Relations Act, clarifying that the provision does not automatically apply to so-called second generation outsourcing. It affirms strict limits on purposive statutory interpretation and reinforces the separation of powers by cautioning courts against rewriting clear legislative language under the guise of fairness or constitutional values.