National Education Health and Allied Workers Union v University of Cape Town and Others

The University of Cape Town (UCT) decided in 1997 to outsource non-core services such as cleaning, gardening and sports ground maintenance, which were performed by employees who were members of NEHAWU. UCT appointed several contractors to perform these services. As a result, approximately 267 workers were retrenched. Although UCT consulted with NEHAWU, no agreement was reached. UCT invited the workers to apply for employment with the contractors, and while many were hired, they were employed on less favourable terms. NEHAWU sought declaratory relief in the Labour Court, arguing that the outsourcing constituted a transfer of part of UCT’s business as a going concern under section 197 of the Labour Relations Act 66 of 1995, with the result that employees should have been transferred automatically to the contractors.

Leave to appeal was granted; the appeal was upheld. The Constitutional Court set aside the decision of the Labour Appeal Court and held that section 197 provides for the automatic transfer of employees’ contracts when a business is transferred as a going concern. The matter was remitted for determination of the factual question whether the outsourcing constituted such a transfer.

This is a leading Constitutional Court authority on section 197 of the Labour Relations Act. It established that employees are automatically transferred when a business is transferred as a going concern, strengthening protection against job losses due to outsourcing. The case also clarified the Constitutional Court’s jurisdiction over labour matters raising constitutional issues and the proper appellate procedure from the Labour Appeal Court.