Zeda Car Leasing (Pty) Ltd t/a Avis Fleet and Others v Belinda Perlee and Nine Others

The respondents were employees of Avis Fleet working in its Car Mall unit, which handled the collection, termination and disposal of vehicles at the end of lease terms. In 2020, following economic pressure caused by the COVID-19 pandemic, Barloworld (Avis Fleet’s ultimate holding company) initiated a restructuring process under section 189A of the Labour Relations Act. As part of this process, Avis Fleet decided to close Car Mall and to contract DealersOnline to provide vehicle disposal services on a variable cost basis. All Car Mall employees were retrenched. The respondents alleged that the closure of Car Mall and the outsourcing of its functions constituted a transfer of a business as a going concern under section 197 of the LRA, rendering their dismissals automatically unfair in terms of section 187(1)(g). The Labour Court upheld this claim, finding a section 197 transfer and ordering reinstatement. The employers appealed to the Labour Appeal Court.

The appeal was upheld. The Labour Court’s finding that there was a section 197 transfer and that the dismissals were automatically unfair was set aside. The respondents’ cross-appeal was rendered superfluous. No costs order was made.

The case clarifies the distinction between the outsourcing of a service and the transfer of a business as a going concern under section 197 of the LRA. It reaffirms the importance of identifying the true causa of the transaction and cautions against treating internal business units as independent economic entities. The judgment reinforces that not every outsourcing arrangement triggers section 197 and underscores the need to consider the dominant and proximate cause of dismissals when section 187(1)(g) is relied upon.