Horn and Others v LA Health Medical Scheme and Another

The appellants were former employees of LA Health Medical Scheme (previously LAMAF) and members of the Cape Joint Retirement Fund. In 2005 LA Health transferred its administration division to Discovery Health in terms of section 197 of the Labour Relations Act, resulting in the abolition of the appellants’ posts at LA Health. Although they continued employment with Discovery on no less favourable terms, they claimed entitlement to an additional redundancy or retrenchment benefit under rule 7.1A(1) of the Pension Fund Rules. That benefit, over and above their members’ share, was payable only if the employer’s conditions of service provided for it and had to be funded by the employer. The appellants withdrew or preserved their pension interests but reserved their rights to claim the additional benefit. The High Court and Full Court held in their favour, but the Supreme Court of Appeal set those decisions aside.

Condonation was granted. The appeal was dismissed with costs, and the decision of the Supreme Court of Appeal stood.

The case clarifies the interaction between section 197 of the Labour Relations Act and pension fund rules relating to redundancy benefits. It confirms that a section 197 transfer does not, without more, amount to retrenchment entitling employees to redundancy benefits, and that pension fund rules requiring employer-funded benefits are enforceable only where employees’ conditions of service expressly provide for them. It also illustrates the Constitutional Court’s approach to jurisdiction where no true constitutional issue arises.